Survey: Expectations for Office and Apartment Rentals Are Changing Dramatically

“Due to the coronavirus pandemic and the economic recession, the expectations of real estate market participants have cooled dramatically in the first half of the year: demand for offices is expected to be lower, their employment will fall and rental prices will fall. “. The attractiveness for investment of new apartments also decreased, before the pandemic in the country’s largest market, the capital, one in three newly built houses was bought and, during the virus outbreak, only one in five ” says Vaidotas Šumskis, senior economist in the Macroprudential Analysis Division of the Bank of Lithuania.

Most real estate market participants believe that in the next 12 months. Prices for new apartments in the largest cities of Lithuania, Vilnius, Kaunas and Klaipeda, will not change. That the prices of these apartments in the centers of these cities will not change, they indicated 50, 64 and 50 percent, respectively. surveyed. 49, 82 and 50 percent, respectively. respondents hope that apartment prices will not change in residential areas of large cities. These are much more moderate expectations than half a year ago, when sufficiently optimistic expectations of price growth prevailed.

Survey participants’ expectations regarding the outlook for the commercial real estate market deteriorated significantly during the first half of the year.

Most of those surveyed expected that in the next 12 months. Under the new contracts, less modern offices will be leased than in the previous 12 months. Eighty-two percent thought less would be rented in Vilnius and 50 percent in Kaunas. surveyed. Compared with the results of the survey conducted six months ago, the number of those who believe that fewer offices will be rented in Vilnius and Kaunas has increased by 51 and 50 percent, respectively. P.

There was a significant increase in the number of survey participants who felt that over the next 12 months. Office rental prices in Vilnius will decrease. Class A and B office rental prices in Vilnius were expected to fall 46 and 57 percent respectively. surveyed. In the last half of the year, 6 and 24 percent, respectively. Survey participants felt that rental prices for Class A and B offices would drop.

There was an increase in the number of real estate market participants who noticed an excess supply of offices in Kaunas and Kaipėda. Two out of three (63%) respondents who assessed the Kaunas property market thought that the supply of offices for rent in Kaunas exceeded the demand, and 40% saw the risk of an excess supply of offices in Klaipėda. surveyed. During the first half of the year, the proportion of evaluators in these cities increased by 13% and 15%, respectively. P.

Most of the real estate market participants indicated that as of 2020. March. At banks, borrowing conditions for investments in the development or acquisition of office buildings in Vilnius and Kaunas have tightened. This was the opinion of 92% and 88% respectively. respondents who assessed the office markets in these cities.