Real estate companies are launching projects in the fall: some expect better times, others need them now. Deal

Inreal Group announced the suspension of several projects in the last week of May, and the head of the company Gediminas Pruskus 15 minutes I declare that It is not yet the construction of the house.

“We have a project in Neringa, the development of which could have started in the early summer. This did not happen due to the changing market situation. The decision to start construction is currently postponed to the fall. Other projects are not stopped either, design continues Because when you don’t know when to start, it is important to keep the starting position low, ”he explained.

State aid is lacking

According to G. Pruskus, other countries in the world have actively promoted tax businesses and adhere to the principle that support must be provided first, and then it must be verified that it is always used correctly. And in Lithuania, in his opinion, everything happens backwards.

“The money does not arrive at the business on time: redundant and specially formalized protection and control mechanisms are being developed, the inspections are so exhaustive and slow that there is the possibility that when it ends, there is nothing to promote. The real estate sector is not An exception and expectations are also the main driver of the market here.During this difficult period, good mechanisms have been established, such as rent compensation, but it has been limited by new requirements, such as the registration of contracts in the Center of Records. Such restrictions complicate the process and make it much more difficult to implement. ” 15 minutes I speak.

According to G. Pruskus, individual payments are adequate for promoting consumption in the short term, but several hundred euros do not solve possible long-term complications.

“Citizens must know that with state aid, companies will be able to survive the crisis, and their employees will have more confidence to buy goods and services, which will boost economic activity,” he said.

He decided to assess the situation.

In April, the real estate development company Merko Statyba announced that it was blocking new projects. Saulius Putrimas, CEO of the company. 15 minutes He said he decided to take that step because it was necessary to understand what was happening to assess the situation.

“All the work started was continued, here we have just completed the construction of a new residential neighborhood in Vilnius” Vilnelės sl “nis”. We see that after the quarantine has decreased, the interest of buyers in the apartments is becoming more active. Meanwhile, we are monitoring the market situation and deciding when to start new projects.

It is too early to draw powerful conclusions about the situation in the real estate market. Your question about whether there will be a housing shortage is difficult to answer, it will depend on demand. If projects are stopped or postponed, the choice of new apartments can be significantly reduced. ”

It is true that Domas Dargis, the head of Eika, was the first to announce the suspended projects on the market. The 15 minutes He said that the first steps had been taken even before the quarantine, when it was decided to suspend the project in Pilaitė, for which the foundations had already been laid. It is true that the construction of the other two apartment buildings in the same area, as well as the project in Naujamiestis, the company decided to continue.

“We stopped to see how we were doing. One place would be too concentrated. The project on Skroblų Street was also supposed to start in August, but we reviewed it and moved it to October. Another project that we cannot announce will also expire the building permit in a few months because we took the opportunity to see if everything we are doing is actually done. We have been doing that for the past two months, “he said, adding that, with the exception of the apartment building in Pilaitė, the remaining projects they were postponed for several months.

At the same time, the company plans and has a building permit to connect Eika’s business centers on Goštauto Street with a hanging tunnel that would cover 1.2 thousand square meters. kv. However, this project is waiting for the tenant and when he arrives he intends to start work.

Signals a stricter banking policy

What challenges, in addition to declining sales, has the company faced? D. Dargis said banks are skeptical of new projects during this period, especially if sales have not started.

“It now appears that around 40 percent. Own funds will need to be invested in construction work, most of it, so bank financing is possible. But banks are very cautious about new projects that have no sales yet. It appears that in Fall, when we see that transactions continue to grow at this rate, I think banks will start to see again that demand has held up, house prices are stable, we will be able to negotiate financing in September and construction can start very soon, ” said.

G. Pruskus echoes it too: Banks are also increasing margins and interest rates, affecting both developers and buyers. Supposedly, this is due to low expectations and uncertainty from the banks themselves.

“On the other hand, all the former real estate developers in the market have successfully negotiated relationships with banks: loan payments moved, etc. Therefore, they will definitely not lower prices on new projects. It is better not to start with new ones until he sells the developed ones. “Inflationary processes are also expected, which will activate the market, because people will want to invest their money where they will best maintain value,” he said.

Contractors may have problems

During the economic rebound, house prices were said to have not increased in double digits as developers were able to bring enough new apartments to market. However, according to D. Dargis, these developer steps will not change anything in the long run, because they are ready for construction at any time.

On the other hand, he believes that contractors may have problems later. Dargis said that prior to the crisis, the company was having trouble finding a suitable contractor, as these were crowded with orders.

“It’s now easier to find contractors who can build for the budget you want. If we say we want to start construction in September, there will surely be a number of contractors who will agree. In January, February, that would have been difficult to achieve, and There are now many more contractors who would agree to start the project here and now, and we can start with a hand show. The most difficult times in the fall may come for contractors, there will be a gap. They are implementing projects they signed early. of the year, but they are not signing new contracts now, “he said.

The projects are hampered by local and foreign companies.

According to the Lithuanian Builders Association (LSA), currently about 85 percent. Companies face stagnant private and investment projects. According to LSA President Dalius Gedvilas, real estate developers are stopping construction of new projects, and some private builders, even after paying advances to contractors, are also calling for all pending work to be stopped during quarantine.

“Foreign customers who have suspended negotiations on the implementation of previously planned construction projects, such as the development of a new Continental plant in Kaunas, are also lagging behind. During the quarantine period, our association received at least some weekly notifications of suspended private investments, so we believe that only a few dozen large investment objects could stop today. ” 15 minutes He explained.

According to D. Gedvilas, the consequences of the pandemic affected the companies that had more large projects. He explains that the suspension of such projects is linked not only to layoffs, the loss of advances paid to suppliers, the additional costs of extending insurance guarantees, but also the cost of maintaining the facilities.

Currently, the biggest problem in the construction sector is late payments for work done.

“The pandemic has hit companies working with private clients the hardest. Nearly 65 percent. Companies surveyed by the LSA say they face late payments from private clients. Delays typically last anywhere from a month to two. The smallest Concerns today are those construction companies that work with government orders, “he said.