The prices of luxury real estate (RE) in Vilnius, the Lithuanian capital, have been inching towards the level of Western European capitals, but, even in most marvellous locations of Vilnius Old Town, they still fall behind when compared to those in luxurious districts of Paris, London, Milan and Madrid. “For example, the luxury real estate price in the most-sought places in Paris is almost double the price in Vilnius Old Town” Paulius Gebrauskas, co-owner of Baltic Sotheby's International Realty, a real estate company specializing in selling luxury estate in Lithuania and the entire Baltics, told The Baltic Times Magazine. Yet the businessman is convinced that the luxury RE market in Lithuania faces very good prospects.
What is real luxury for you?
True luxury is exceptionally good service, being with the client here and now, even though it sounds banal, an exceptional emotion that a person gets when purchasing property, or even a special connection. I talk with the client not only about the deal or the interest rates, but much more – about the best stores to shop nearby, the best doctors nearby who will help if something goes wrong with health. If the client has children, I feel the responsibility and the need to recommend the best kindergartens and schools near the property to be purchased. In short, it's not enough to be a very good real estate salesperson – it's necessary to create additional value. This is true luxury.
I recently attended a conference in Las Vegas, where I found out that one of the speakers who participated had moved five or six houses in his lifetime. I asked him if he always used the services of the same broker. He answered affirmingly. Having bought his last home somewhere by the sea, he was pleasantly surprised when he opened the fridge door to find the same food he kept in his fridge when he bought his first home. Moreover, milk, butter, and cheese and all the other products were of the same brand! Moreover, they were placed on the same shelves as when he bought his first home. This is a luxury service!
It may seem that the buyer of luxury estate in Lithuania is kind of mystical, unwilling to open up much about himself, and the process of purchasing such properties takes much longer and is much more personal. Do you agree?
That it takes longer and gets more personal, yes, I agree. Especially earlier it used to be quite a long process. The old generation of our buyers, between 45 and 55 years old, used to pick a property very carefully or even scrupulously, sometimes they would spend up to a year for that. But in the last three years, the new generation (of our buyers) has grown – between 30 and 40 years old and they make decisions much faster. As a rule, most of them come from the IT and fintech sectors. With a lot of new technologies out there, money is earned faster, and a dwelling is also changed much faster amid change in life circumstances, say, after starting a family.
Of course, I also try to establish good personal relationships with the younger generation of buyers – to find out the whole spectrum of their interests. Every broker on our team does that.
I like to say that luxury housing is not about square meters, but it is all about lifestyle. In the luxury real estate segment, buyers often become friends of brokers. I have many such examples. Former clients sometimes call me and ask about various things. “Paulius, could you advise us about where we can have a good meal here? And what is the best way to travel from there?”
Such questions are absolutely natural for me, and, trust me, it feels good to be able to help.
Are you involved in every transaction? Do you follow the rule that the bigger the deal, the bigger your involvement as the co-owner?
I don't participate in every deal. There is no need for that.
My experience says unequivocally that it is up to each real estate professional, each broker, whether he or she has loyal customers and if they keep coming back to them.
I also like to say that every last real estate transaction we've done is already programming the next one – with the same person or someone they know. As a rule, if you provide very good service and establish a very good feedback-based personal relationship, sooner or later such a customer will come back again. But, of course, other industries can say the same.
I recently read that only six percent of real estate brokers in America keep in touch with their clients after the deal, and 74 percent never do. I constantly remind myself and my team that staying in touch with the customer is very important even after the deal is done.
What kind of real estate is considered luxury in Lithuania?
In every country, this definition is very different. Although I would not like to define luxury in terms of euros and square meters – we usually do not define luxury by these categories, but by the location of the real estate.
But to give you a sense of which real estate is deemed luxurious or higher quality RE, I will tell you this. In Vilnius Old Town, among the other properties, we also sold relatively small apartments, up to 30 square meters, the price of which was up to 210 thousand euros. However, in exclusive individual real estate projects, the price can reach 15 thousand euros for one square meter.
Altogether, the luxury property market in Lithuania is pretty small. It accounts for about plus or minus 10 percent of the entire real estate market. In addition, the entire concentration of luxury real estate is in Vilnius – about 90 percent, and the remaining 10 percent is on the seaside, almost all in Palanga.
Neither Kaunas, the country’s second-largest city, nor Klaipeda, the third-largest city, can compete with them. But this is also characteristic of the luxury real estate market of other countries – capitals and resorts have the largest share in the luxury real estate market.
Speaking illustratively, the coronavirus pandemic simply blew up the seaside – real estate became very popular there, and more luxury projects appeared there.
Since 2020, Baltic Sotheby's International Realty has been working very intensively on the seaside – we sold almost everything we had to sell there.
It is interesting that some objects were purchased by buyers only from their visualizations. We last saw such a phenomenon only in 2008, but the difference is very big: now we don't have a real estate “bubble”, buying is rational and logical.
In Palanga, recently the highest prices were registered there since the restoration of our country's independence in 1990.
As for Nida in Neringa, the ambitions of developers are limited by strict environmental requirements. Only one luxury real estate project was completed there over the last couple of years, “Auksines Kopos” (“Golden Dunes"). About 66 dwellings were sold there.
Palanga accounts for approximately 70 percent of all luxury real estate sales at the seaside, Neringa – about 30 percent.
According to the data of the Registry Centre, one of the biggest sales in Palanga took place in 2022 – a house sold for above 2 million euros. Recently, I have been observing more and more real estate projects in Palanga, the prices of which are equal to the prices in Vilnius Old Town, where the average price of one square meter is about 6-8 thousand euros. Since the supply in the luxury real estate market is still not high, I see no reason for it to decrease.
Before the interest rate increase, the majority of our customers whose property value was up to one million euros, used bank loans to acquire their desired property. However, especially expensive luxury properties are usually purchased without loans.
How does the Vilnius luxury real estate market look compared to that of big European cities?
Generally speaking, prices in the Lithuanian luxury real estate market have gradually approached the level of Western European capitals, but, for example, the price in the best places in Paris is almost twice higher than in such places in Vilnius.
Notably, the price difference that we see in Vilnius Old Town and in the so-called sleeping neighbourhoods is too small. Besides, developers of luxury real estate often cannot realize their ideas in the old town due to the lack or scarcity of space. So looking forward, that will also increase the price of luxury real estate in the Old Town in the future.
But speaking overall, a luxury housing market has perhaps the best immunity against recession. Here in Lithuania, its demand is growing, and its supply does not always keep up.
Characteristically for Lithuania, luxury real estate is usually developed by smaller or medium-level niche builders.
Will the luxury real estate market flourish in the future due to an increasingly prevalent sustainable lifestyle – young people often prefer compact housing, they tend to rent rather than buy, because they want to travel?
Indeed, there is such a trend, and it is a good one. I think we are moving toward a situation where an environment-friendly, energy-sustainable house with a very high energy efficiency coefficient will be a luxury house.
Looking forward, I’d also say, especially keeping in mind the example in Palanga, that future buyers of luxury real estate will increasingly want more services from the developer. Not only a cottage or a house with a beautiful view from the window, but also with a spa, parking, private green spaces, a swimming pool, tennis courts. It is far from being here yet, but the trend in Central Europe, like Poland, and the Czech Republic, is clear and it is arriving in Lithuania too.