Private property in Lithuania

  • 1998-10-22
A real estate market began to develop in Lithuania as early as 1991, when the Law on Apartment Privatization was passed by the Parliament. At that time, citizens could privatize their state-owned apartments for either cash or privatization vouchers. A market in apartments was made by entrepreneurial individuals who bought and sold city center and Old Town residences in Vilnius.

At that time prices were $100 per square meter rising. When the Soviet army left Lithuania in 1993, officers sold apartments they had privatized. The extra supply brought prices down 20 percent.

In 1997, the larger commercial banks began to offer residential buyers 10 year mortgages on apartments, with interest rates at approximately 12 percent per year. Contract values were pegged to the U.S. dollar.

Residential prices

Today, prices for individual unrenovated apartments in the center of Vilnius run about $500-$600 per square meter. Individual apartments renovated by private developers are selling in the range of $1,000-$1,200 per square meter. Outside the center, in the concrete-housing suburbs built in the 1950s and 60s, apartments sell for around $300-$400 per square meter, or about $20,000 for a typical three-room apartment.

Foreign workers looking for a Western-quality apartment may have a difficult time due to lack of supply. Large, mid-range renovated apartments are not plentiful. In the Old Town, a typical two-bedroom apartment goes for about $1,000 to $1,500 per month.

Retail space

The fastest price increases have been seen in retail properties in the city center. Vilnius has one main street, Gedimino Avenue, which attracts nearly all shoppers and tourists. Rents for ground floor retail on Gedimino average $60 per square meter per month, plus 18 percent Value Added Tax (VAT). Developers and speculators have rushed to buy the limited space on this one kilometer strip, and have pushed sales prices as high as $4,500 per square meter for ground floor retail space.

Second and third floor retail and offices on Gedimino rent for around $20 per square metre, and sell for $1,000 to $1,500 per square meter. After Gedimino, the most popular retail streets are Pylies, Didzioji, Vilniaus and Vokieciu, all in the Old Town. There, retail rents range from $30 to $55 per square meter. Off the main streets, retail space prices average 1,000 per square meter to buy and $20 to $25 per square meter to rent.

Office space

The choices for office space in Vilnius are limited. To date there has been no Western standard class "A" office space developed in the city. All available office space consists of prewar or Soviet era class "B" and "C" space, with a new coat of paint and telephone outlets. Such space typical rents for $15 to $25 per square meter in the center of Vilnius.

A lack of empty lots in the city centre, and tight restrictions on the demolition of standing structures has discouraged the development of downtown office projects. And while there have been plans for five years now for the construction of new office buildings on municipal owned land across the Neris River from the city center, the municipality has not, to date, granted development rights to any company.

There are no limitations on the acquisition of buildings for foreigners. Foreign companies from European Union countries have the right to own land only directly attached to a building, and only with government permission. In addition, the land must be used for the purposes outlined in the company's foundation charter.

In all other cases, the company can only lease the land from the government. An amendment allowing the unrestricted sale of land to foreigners and foreign companies is expected to only take effect upon Lithuania's acceptance into the EU.

General leasing guidelines

The minimum lease period in one year, and the maximum term is generally three years. The consent of both tenant and landlord is generally required to terminate a lease, unless the tenant gives the owner three months notice.

Rental contracts are typically denominated in U.S. dollars. Because leases generally run for a short term, there are no rent adjustment indexes.

Quoted rents generally do not include any public utilities. All utilities and taxes must be covered additionally by the tenant.

With a minimum of supply on the market, landlords are less flexible with rents in Vilnius than in either Riga or Tallinn.