VILNIUS - Newly compiled results from one of the region's biggest real estate companies, Re&Solution, has shown that Lithuania had the highest value of real estate transactions in the Baltics, with Estonia and Latvia suffering from shaky economies and high amounts of personal debt.
"Despite a small number of completed investment transactions, 2008 was the best-ever year in Lithuania in terms of the total volume of investments, which have exceeded 300 million euros," Andrius Stonkus, Investment Director of Re&Solution Group, said in a press release.
In 2008 the property investment market was dominated by the sales of retail property of Akropolis SC and Maxima portfolios, totaling nine properties. However, the transactions on a wide choice of prime properties, available for sale in 2008, were not completed. A number of them were terminated even after agreement of the main sales conditions because many transactions depended on the borrowing conditions set by the creditor.
Latvia only experienced one considerable investment transaction in 2008, despite the promising outlook and expected all-time-high investment volumes in the beginning of the year.
In Estonia, the investment market remained relatively stagnant and many investors disappeared from the market due to high volatility and remarkably worsened financing conditions.
Re&Solution said, however, that many investors are still actively watching the market with the intent to enter it. The most active players remained local funds and equity players.
"The obvious impact of the global credit crunch and subsequent financial crisis followed by a remarkable supply of new investment opportunities were the features best describing the situation in the Baltic property investment market in 2008. In addition to higher borrowing costs and price of capital in general, international real estate investors' intentions in the Baltic countries have been challenged by a vague macroeconomic outlook," said Ricardas Cepas, CEO of Re&Solution Group.
Cepas told The Baltic Times that despite the crash in Estonia and Latvia, the problem is the same globally and that foreign investors will look after their own backyard first before delving into foreign markets.
"The investment market is international and we are also in the EU, but investors are dwindling and they are looking for opportunities first in their own countries, but this is giving local investors a good chance," he said.
Peter Gage Morris, the managing director of Oberhaus real estate in the Baltics, told The Baltic Times that there is little credit available at the moment.
"These trends are worldwide 's there just isn't any credit out there at the moment. There is less liquidity and prices are moving downwards."
"For commercial objects, local businesses don't have the power and foreigners don't want to come here anymore," he said.
Morris said personal debt was part of why Lithuania has done well over the last year.
"Lithuania is doing the best out of the three Baltic countries because it is the least in debt 's not the government, but normal people. Latvians and Estonians are in lots of debt."
Foreclosures are likely to occur in the housing market during 2009, but Cepas doesn't believe that this will be prevalent.
"It won't be the major issue, but I think it will come to an end by the end of 2009, but it will not be significant," he said.
"This market brings a lot of opportunities and it's a good time to go shopping. There are lots of opportunities."
