The record sales of real estate by Dargis, the head of Eika, are not gratifying: they are reminiscent of a risky game

Dargis: we sell air, virtual models

Domas Dargis, CEO of Eika, told the Lithuanian Real Estate Development Association (LNTPA) CORE annual conference that until September last year, real estate prices had been growing steadily, less than wages, but slightly more. than inflation.

“The whole post-quarantine summer period cooled down the desire to raise prices, they rose to the level of inflation. Everyone was glad that we didn’t give in to pressure. We didn’t have a lot of supply, so we didn’t have as much pressure. Sales have started to grow strongly in Vilnius since September. Each month is more impressive and January, according to the press, is a record, ”says D. Dargis.

According to him, judging from the first quarter of this year, it seems that Eika will have the highest sales in the capital, but the manager is not happy about that.

“We are not happy with that, because it is a sign of an abnormal market. Perhaps being really at home will change the way people think: they start buying stocks online and on stock exchanges driving prices to unprecedented heights, buying silver, and raising prices to higher numbers than normal markets. you might realize, maybe something is happening in real estate as well.

Our world is turned through the computer screen, it is less real and reminds people of the game. I think they play stocks, silver, crowdfunding and NT is a slightly higher risk game. I am not very happy with those sales figures, the fact that he sold 700 apartments a month in Vilnius. Seen from the other side, in the capital you can buy and move into 500 apartments – both apartments are real, everything else is under construction, on foundations or on paper. This means that we sell aerial, virtual models ”, says D. Dargis.

In four years, house prices in Vilnius grew by around 30 percent.

The CEO of Eika was surprised by the prices of some properties in Vilnius. He provided pricing examples for different phases of the same project.

“It is very easy to compare when the stages of the project are progressing. For example, the average for the first stage of the project is 1.6 to 1.7 thousand. Eur (square meter – Delphi). The second stage of the project – 2.3 thousand. EUR. Location and layout have not changed, maybe A ++ class appears, then quality improves. With 30 percent. Has the quality improved due to class A ++? I don’t think so, “he says.

Eika conducted a study of changes in real estate market prices over four years. In Vilnius, they grew on average 28 percent.

“In four years, everything seems to be in order, nothing terrible. However, when we started evaluating by district, we saw that prices in Šnipiškės increased by 50 percent. We were one of the first to develop the Žalgiris 135 project in Šnipiškės – offices with apartments (square meter – Delphi) price – 1.6-1.8 thousand. EUR. Now the average price is 2.5 thousand. EUR. Nobody has questions.

In Naujamiestis, prices grew on average 30 percent. There is a great need for housing in Žirmūnai, there is not a great supply. There we had a project “Homemade Braids”. When we started with prices, the average of the first sales was 1.8 thousand. Eur, when we finished the project, the price increased to 2.1-2.2 thousand. Eur ”, comments D. Dargis.

According to him, some districts of the capital are winning, but those farthest from the center are losing. For example, in four years, prices rose the least in Pašilaičiai, Perkūnkiemis (10%), Pilaitė – 15%. In the last district, there is a lot of competition, a lot of sales, but price growth is lagging behind.

“Analyzing what is happening in different segments is much more interesting than evaluating general market trends. Prices are going up, but not the same. There are those who are lucky, they have plots in good places, people want to live near the center to have infrastructure. The result is that prices go up there ”, says the head of Eika.

“We saw the same a little earlier with the prestigious class, than after 2008. The crises have recovered more quickly and are already above the peak of 2007. sales averages. Now we see that the middle class is much closer to the center of the city, higher.

At the castle, prices are still around 10 percent. lower than in 2008 This shows that Vilnius is changing differently. In some places it rises, in other places prices rise more slowly. Naturally, inflation is happening everywhere, because both wages and material prices are increasing, the needs of the city are growing a lot, the desire to develop the city with the money of investors is also growing sometimes, and the expectations of land sellers are a separate issue. “Dargis said at the conference.

The effect of Šnipiškės awaits the southern part of the capital

During the discussion, Diana Dominienė, Chairman of the Board of Directors of Galio Group, pointed out that the eyes of developers are currently directed towards the south side of Vilnius, where there are still territories to carry out the conversion. He also believes that in terms of price increases, this part of the capital will have the same effect as Šnipiškės. For example, the developer is preparing soon to start a project near the Vingis park “REVINGIS”.

“Today there is a large empty plot where there is nothing. There is a river, a park, but there is a problem with the infrastructure, it will have to be built. It reduces the appeal, but when things develop, I think a lot of people will want to live there.

We see that here it is very promising both for us and for others. The city also plans Delphi) half to develop. I very much hope that the city takes care of the social infrastructure there, which is the most deficient. We will have to contribute to this, other developers, but also the city ”, says D. Dominienė.

It is estimated that this year about 6,000 apartments will be sold in the capital

Discussion participants also shared their predictions on how many apartments will be sold in Vilnius this year. The CEO of Omalia, Dalia Andrulionienė, and the chairman of the Galio group’s board of directors, estimate that there are around 6,000. The Eika manager’s forecasts are higher: 6,600 apartments.

“It just came to our notice then. According to forecasts, there are still some people, about 500, who did not have the opportunity to buy a home last year for various reasons. We believe that the demand has not gone anywhere and will move until 2021 , then we calculate the natural growth of the market. If we do not get very stagnant with the acquisition of plots, approval of the general plan of the city of Vilnius, we believe that in the second half of the year the supply and demand relationship should stabilize and we should have a much better result than in 2020, but not a bubble ”, says D. Andrulionienė.

“It just came to our knowledge then gopšiems And don’t get bogged down in the price fuss and keep quality. If the market doesn’t stop artificially when prices go up, I see a number: 6600. This is the number of apartments that can be sold ”, guesses D. Dargis.

There will be no shortage of housing for the population

According to a member survey conducted by the Lithuanian Real Estate Development Association (LNTPA), the expectations of half of real estate developers last year were not met, it was exceeded one in ten. It also showed that this year, market participants expect house prices to rise.

No major changes are expected this year in the residential sector, which broke records last year. Only a third of those surveyed expect higher sales than last year, but the majority (64%) believe that new home sales will not change significantly.

Looking at new home sales statistics in recent months, some market participants have estimated earlier in the year that there may be a shortage of supply this year. However, two-thirds of the real estate developers surveyed by LNTPA are confident that the company will be able to offer enough new homes to meet the growing demand. 14 percent convinced that there will only be a shortage of apartments or larger houses.

Almost half (46%) of the respondents intend to develop the same number of apartments (units) as last year, to increase the number by 38%. An absolute majority (71%) indicated that the average area of ​​housing under development will not change, a quarter intend to increase the average area of ​​housing.

Prices are expected to increase by 5-10 percent.

Although the supply of housing should be sufficient, prices should rise for several reasons: three-quarters of those surveyed are convinced. Most believe that prices should rise by 5-10 percent. There are no people who think that they will decrease.

“The main reasons for the projected price hike are several: the economic stimulus and income growth, as well as the savings accumulated during the pandemic, provide a good opportunity for part of the population to improve their living conditions. It coincides so much that as of 2021. the energy requirements for new buildings come into force, making construction more expensive. And the closing of borders and labor shortages in Ukraine and Belarus also create labor costs. One of the most important factors continues to be the lack of suitable plots for development, ”says M. Statulevičius.

According to the survey, which ended in 2020, it met the expectations of just over a third of developers, and half of those surveyed had higher expectations. The survey was conducted from January 21 to February 5 and was completed by managers or development managers from 30 real estate companies.