Although the majority of real estate deals in Lithuania take place in major cities, the real estate market in smaller towns and cities has recently been growing. The number of new-build homes or conversions of old buildings into modern premises is increasing - the expert explains the reasons behind this.
"For many years, the new-build residential real estate market has been most active in the three major Lithuanian cities – Vilnius, Kaunas and Klaipėda. In the smaller cities the real estate market has been stagnating. However, now we are starting to see an upturn in activity: we have examples of both new housing construction and various conversions, where old buildings that are not in use are being turned into new high-quality apartments or commercial premises," says Deividas Urbanovičius, head of investor relations at InRento.
He says there have been several recent examples of strong regional property development. First of all, the market is growing in resort towns. In Birštonas, for example, the conversion of holiday homes is underway, with refurbished apartments being adapted for short-term rentals. In nearby Prienai, former barracks have been converted into exclusive apartments. Near Nemunas, the conversion of a former orphain’s home has recently been completed, which has also led to further development, with new cottages springing up nearby.
"In other smaller cities, there is also more activity. In the centre of Panevėžys, on the banks of the Nevėžis River, an old six-storey building is being modernised into lofts and flats which recieved InRento. Meanwhile, in Biržai, on Vytauto Street, we are investing in a modernisation project that will include both accommodation and commercial space," says Urbanovičius.
Lower price is not the only factor
The expert says the recovery of real estatemarket in the regions is due to several main reasons. Attractive prices are one of the most important factors. According to the data of Ober-Haus real estate agency, in the centre of Vilnius, the prices of one-room newly built apartments with partial finishing can reach EUR 4,200-6,200/sqm, while in the centre of Druskininkai, they are EUR 2,300-3,000/sqm, and in the centre of Šiauliai, they are even less at EUR 1,750-2,000/sqm.
"Buyers also compare the prices of apartments in different cities – if they don't have a big difference where to live, smaller towns that offer more accessible, affordable housing are increasingly winning. Regions attract property buyers due to lower housing prices and often betterquality of life – relatively lower cost of living, less traffic and pollution, closer communities and relatively less crime", - says D. Urbanovičius.
"According to the InRento representative, the demand for real estate development in the regions has also increased due to remote working - employees who can work from anywhere often choose to live in smaller towns for rational reasons.
"In some cases, nostalgia also plays an important role: people want to return to their hometown, where they had their best years and where pleasant memories abound. But when they come back here, they want the same quality modern housing they can get in big cities," says Urbanovičius.
Offers a comfortable life in the regions
According to the representative of InRento, all of the trends mentioned above lead to the fact that investments in regional real estate, which have been less attractive for a long time, are now becoming more frequent and more promising.
"People want to live well not only in Vilnius or other big cities but also in their hometowns or other smaller towns. For this reason, we are increasingly financing housing projects in towns and small cities in order to provide as comfortable life as in a big city," says Urbanovičius.
The representative of the crowdfunding platform InRento notes that real estate projects located in strategically attractive, picturesque areas of the city, in or near attractions and resorts, offer attractive financial returns.
"Investors in our projects outside the major cities not only receive a monthly income but also contribute to the better quality of life in those cities. We have noticed that building conversions have a positive effect on the environment. When one building is renovated and brought back to life, the whole environment and neighbouring buildings are gradually renewed, attracting new residents and new customers to commercial buildings", says Urbanovičius.
