Lithuanian Real Estate Market - 3Q Commentary
Commercial
When analysing the trends of Q3 2009, the conclusion could be drawn that rents and sale prices for commercial premises have reached the bottom. Rents and sale prices in all segments slumped below the level of 2003. The main economic indicators of the country also decreased to the level of 2003–2006. Even if there were improvement in the country’s economic indicators, the speedy recovery of prices for commercial premises is hardly to be expected, however. The main reason is the rapid growth and still growing supply of commercial premises in the past 5 years. The existing area of commercial premises will suffice for recovering businesses not only in the near future but also for a longer period. It is therefore unlikely that a growing demand in the future will surpass supply and cause a significant rise in the prices of these premises. (...)
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Residential
In Q3 2009, the housing market in Lithuania demonstrated its first signs of stability. Although sales and lease prices continued to go down in all major Lithuanian cities, the decrease was not as radical as it was in the first two quarters of 2009. In Q3 flats prices decreased an average of 6% (in Q1 drop was 11% and in Q2 it was 9%). The number of registered housing-related transactions has remained stable over the past 6 months, and some minor signs of growth are already visible. In our opinion, however, it is too early to consider these signs a revival of the market because market activity remains low compared to previous years and national economic forecasts are not very optimistic either. Yet it is obvious that housing prices, which are much lower than they were in the boom years, have started to attract an increasing number of potential buyers who were waiting for prices to go down. (...)
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