Eika director: no new housing contracts in a month, new projects are postponed

By easing quarantine, the property market is gradually recovering.

D. Dargis says that the Lithuanian property market is governed by expectations and that the quarantine has had a very strong effect on people’s emotions.

“It’s been a decade that transactions have fallen as people’s incomes have grown. People are reacting strongly to media reports, analysts say, so the market is undulating. For example, the sudden jump last year still makes it difficult for me to explain why I suddenly needed so much housing in Vilnius, ”says the businessman.

He also notes that the quarantine in Lithuania had a much stronger impact on people’s expectations than in Latvia and Estonia, where the expectations of both companies and individuals are slightly better.

However, D. Dargis says that by easing the quarantine, people’s expectations are also changing and the market is gradually recovering: meetings are already taking place, calls are increasing and new deals are planned for next week.

“The river of transactions has also dried up, because people are uncertain and fear long-term commitments or very important decisions for the future. As quarantine is reduced, the number of cases is decreasing, which It increases people’s expectations. After every good number, there is a recovery: there will be more calls, people will talk about offers and we are already planning to make new offers next week, “says the head of Eika.

No contracts were signed in April, transactions were postponed

D. Dargis tells “Delfi” that fears and expectations have held people back: in April, the real estate company did not sign any new contracts, it only formalized previously concluded contracts.

“Virtually all previously agreed sales have taken place, and we are currently writing a large number of notarial contracts. Everything is going quite well, but there were no new agreements in April,” says the interlocutor.

The businessman adds that only a few people have completely terminated the contracts. Most often, residents are said to postpone transactions for a month or two.

“Because we collect significant advances, 10 or 15 percent, it would be very painful for people to terminate the contracts. However, if there are solvency problems (banks do not want to provide credit, we agreed to postpone the transaction a little), perhaps after quarantine, customers will recover the income or the banks will see it more favorably ”, he explains.

New projects are coming

The Eika chief notes that new real estate projects are currently underway, and the company has been postponing them for several months. According to him, this does not have a significant impact on the company’s operations. However, if the projects are postponed to next year, then the challenge will be greater.

“We had to start several projects in April and May, but we changed them to September, October. We don’t want the apartment warehouse to be too big, we want to actively respond to the market. We have construction permits, we are ready to start at any time, ”he says.

The interviewee identifies several factors that led to the postponement of new real estate projects.

“Our goal is to sell the existing portfolio so that there are dozens of apartments left and then start investing. Another thing is that we monitor how banks finance clients, how they will finance our projects. That is why we are having a debate: we have agreed to finance the projects that we have started and continue.

As for the new ones, we are talking carefully about the conditions. It will depend on bank financing for apartment buyers and on the absolute number of transactions that will take place in the market ”, explains D. Dargis.

Some house prices did not recover in 2008. level

The head of Eika assures that real estate prices are currently inviolable, because the company, as he explains, does not have many apartments.

“Perhaps that is why we do not have such a great financial need to sell those apartments as soon as possible, because we have the opportunity to wait a little for our clients, and we will not be able to build new apartments quickly either. Now we have a small portfolio of apartments built of This way and we don’t need to sell them as soon as possible. It is important for us to agree on prices that are right for us, “he says.

When asked if apartment prices will be different than before quarantine, D. Dargis notes that non-functional apartment prices can be revised.

“I think the prices of individual apartments, which have unfavorable parameters, for example, are planned for the North or have too low ceilings, can be revised. We try to plan all the apartments in a functional way, so we are not talking about that yet “Says Eika’s boss.

According to him, if the impact of the quarantine and the coronavirus on the economy is broad, for example, unemployment will remain high for a long time, it will naturally affect the real estate market through macroeconomic parameters. D. Dargis points out that it is necessary to invest effectively in the economy and that the state can do it, because currently it has a lot of free money.

“The state is active in this place: it has borrowed another 2 billion. Euro: it has extremely large financial resources to save the economy. If they can use money quickly, people will not lose their jobs, companies will not go bankrupt and they will not close, so I believe that the effect on prices will be very short term, “considers the interlocutor.

Commenting on how long it will take for the property market to recover, D. Dargis counts months, but not years. In addition, it indicates that some housing segments have not yet been updated in 2008. price level

“2008 The recovery from the crisis was very great. Today, I would venture to say that house prices in a certain segment are still lower than in 2008. As a result, we have not yet fully recovered from this crisis, with housing prices in certain segments that are not yet recovering in 2008. prices, “says D. Dargis.

You have taken advantage of the loan vacation, but do not expect rent compensation

In addition, Eika used the loan deferment facility. According to D. Dargis, the company agreed to postpone the loan payment with three banks.

“We have a currently suspended hotel, several supermarkets, a student dormitory, where most of the students from abroad live. They were all very affected by the quarantine, so we had to ask for help,” he says.

D. Dargis adds that he expected to receive other support measures: rent compensation, but did not meet the requirements.

“We hope that it will be possible to observe the rent compensation, but we have exceeded the maximum limits of the company, our group is too large, so we will not claim the rent compensation.” But for smaller companies, I think it will help a lot, “he says.

Eika’s boss says the quarantine had the biggest impact on the hotel the company is developing.

“Immediately people had to go into downtime, the activity stopped and we had absolutely no income.” When revenue fell from tens of thousands to zero in one week, the impact was extremely strong and significant. The changes in the supermarkets were temporary, unstable, but have now resumed operations. We hope to leave, “hopes the interlocutor, adding that the real estate market is also showing many signs of recovery.