Artūras Valaitis, the owner of the real estate company Memelhaus, says that in the port city and its environs, processes have already begun when people buy houses and apartments that have not yet been built, and builders do not even know at what price to sell, because building materials are becoming more expensive.
“Expanded polystyrene panels have risen in price by 50 percent per month, all other building materials have risen in price by 10-20 percent recently,” says A. Valaitis. According to him, and with rising prices for materials is already difficult to obtain, the desired building blocks or other materials have to wait 2-3 weeks.
Raises prices
“There are already cases when only the reservations of real estate objects are being suspended and project developers are already trying to negotiate with customers who have signed preliminary contracts at a lower price, because they see that the profitability of projects is falling significantly,” says A. Valaitis.
“Building materials are becoming more expensive, metal prices have risen by 30 percent – the world is recovering from a pandemic, the amount of money in the market is huge,” says A. Bružas.
According to him, the fact that a record amount of EUR 19 billion in deposits in private bank accounts is recorded in Lithuania is only the tip of the iceberg. Everyone knows Lithuanians’ attachment to cash, and keeping money in banks at the moment is even unprofitable. Real estate is once again becoming very popular as a means of simply preventing money from depreciating.
“Prices have been rising for almost a year, the market was stopped only a couple of months last spring,” says A. Bružas. He estimates that over the year, the price of old construction housing rose by 10-15 percent, and new construction – by 15 percent and more, depending on the location and object.
However, A. Valaitis notes that 10-15 percent of the price In Klaipeda arose this year alone. Growth trends are particularly noticeable in May.
“In the beginning, the prices of apartments became more expensive, and later the prices of houses went up,” says A. Valaitis. According to him, the situation is also used by builders, who are already raising the prices of their services, but still have work to do.
Wait three months
“If you have now decided to start building a house, the builders will probably tell you that work can only start in 2-3 months, because today there are many orders,” says A. Valaitis.
According to him, the real estate market is stimulated not only by the investment of Lithuanian emigrants in real estate in the homeland, which became more active during the pandemic, but also by a relatively new phenomenon.
“Such processes are taking place as the early emigration of Lithuanians to Europe. At the beginning, a man leaves, works for several years, and later brings a family who needs housing, ”says A. Valaitis.
According to him, although such tendencies are more noticeable around the capital, there are already cases in Western Lithuania as well.
According to A. Bružas, Klaipėda is already becoming an attractive place for Lithuanians to buy a second home by the sea, because the prices here are lower not only compared to Neringa, but is Palangaand nearby is Sandstone, great beaches.
© DELFI / Rita Gečiūnaitė
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Lack of supply
According to A. Bružas, Real estate prices Lack of supply also grows in Klaipeda.
“Currently, some new projects are being developed, practically sold out, we see new plans, but they will be offered to the market in about half a year or even later,” notes A. Bružas. He predicts that prices will continue to rise steadily by about 10-15 percent in the coming years.
“An infrastructure charge has been introduced. New taxes are planned for real estate developers on land leased from the state, which will reach about 50 percent of the market value of the land plot, all this will affect the final prices, ”says A. Bružas. According to him, the jump in building material prices is likely to be temporary, as it is related to the spring construction boom.
The rise in price is temporary
A representative of one Lithuanian foam production company interviewed by Vakarų ekspreso confirmed that production has really increased in price by 50 percent. This was due to the fact that for three months in a row, raw materials became more expensive, with the price per tonne jumping by as much as € 1,000. Commodity prices were expected to start falling as early as this month, but they have risen slightly further. However, even with the drastic rise in the price of foam, manufacturers are barely able to meet demand.
Still, this price bubble is expected to collapse quickly. There is no reason for an objective price jump of this magnitude, as the primary raw material for foam production, oil, has become more expensive on world markets, but not so significantly.
Buy plots
“The real estate market was significantly affected by the pandemic. Already a year ago, the demand for houses, land plots and garden plots grew noticeably, people felt that the restrictions on quarantine could be prolonged, ”A. Bružas sees the desire of people to escape from cramped apartment buildings. According to him, it was this year that construction began by people who bought land last year.
However, A. Valaitis says that everything is being bought at the moment: both apartments and houses. “Buyers of housing for rent and as an investment to protect money are more focused on modern housing of new construction,” says A. Valaitis.
Ecology makes an impact
According to A. Valaitis, the head of Memelhaus, the topic of ecology became especially relevant last year. The pollution scandal of Grigeo Klaipėda and the constant escalation of the problem of odors in the southern part of the city, for some time this was reflected in the behavior of real estate buyers and influenced their decisions.
“However, you don’t really stink every day, maybe the ecological situation has improved, but today I don’t think that it affects the decision of buyers,” says A. Valaitis.
According to him, this is also illustrated by the fact that the prices of newly built individual houses and plots in the southern part of the city (near the BIG 2 shopping center) are quite high and equal to house prices in other parts of the city.
“A lot is determined by location, communication, nearby infrastructure”, – A. Valaitis names the main criteria when choosing housing.
According to him, housing of old construction is traditionally cheaper in the southern sleeping areas of Klaipeda. However, even in this part of the city, real estate prices rose proportionately, although there were no objective reasons for this, such as higher prices for construction materials or labor, which have a direct impact on the price of new real estate projects.
Rent stable
According to A. Bružas, the real estate rental market in the port city has avoided major shocks and downtime and is relatively stable. The decrease in the flow of foreign tourists caused by the pandemic is compensated by the increased internal flow of holidaymakers who choose Klaipeda as an alternative to seaside resorts for short-term trips by the sea.
The rental market is also significantly affected by the flow of immigrants from neighboring Eastern countries working in the port, transport and construction sectors. More and more real estate objects are appearing on the market, which are adapted for accommodation of employees on short-term lease terms.
Price scissors
Real Estate AgenciesUpper houseAccording to the data, the average price per square meter in an old apartment building in the southern part of Klaipeda starts from 720 euros, and in the northern part of the city, in a new building, it reaches 2,200 euros and more depending on the level of decoration.
According to the Agency, the price growth in Klaipeda in January-April this year in the port city was about 5 percent. Cheaper housing became more expensive. In terms of prices, Klaipeda is not far behind Kaunas. Compared to Vilnius, in separate segments Real estate prices in the port city are lower by 20 to 100 percent. In terms of real estate prices, Klaipeda also lags behind the country’s major resorts Neringa, Palanga and Druskininkai.
Bureaucracy also stops
According to A. Bružas, the Klaipėda real estate market is also influenced by the fact that business does not receive the general plan of the new city being prepared for the sixth year in a row. As a result, landowners cannot start developing new projects. The municipality is also criticized for the fact that the city itself, unlike other big cities in the country, has a lot of arable land that belongs to the municipality itself.
“We lack the initiative of the government, the mayor in solving these issues,” says A. Bružas. He also notices another threat to the real estate market.
“The new order leaves a lot of freedom for interpretations by officials. It may be that when starting to develop a new project, officials will be able to request the preparation of a new detailed plan of the territory at their own discretion, without major arguments, ”A. Bružas sees future threats.
According to him, this means that in this case the implementation of a new project would be postponed for at least 1-1.5 years, as this is usually the planning procedure. And that will certainly not have a positive effect on a market that is currently short of supply.
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