Investments in the real estate market of the Baltic States are forecast in the amount of one billion euros.

Last year, the total value of investment transactions concluded in the Baltic States reached 810 million euros, according to the Baltic Investment Outlook, 2019 review of the international real estate consulting company Newsec. The largest part of transactions consists of real estate intended for high-class offices and trade, the investments of global market players are increasing, the head of Newsec in Latvia Đirts Grīnbergs emphasizes that currently the confidence of market participants and investors in the real estate market of the Baltic States is high and conditionally comparable to the Scandinavian markets. The expert adds that the attractiveness of the region is also increased by the activity of local investors, which in the last few years stimulates the liquidity of the investment market. The potential of the commercial real estate market of the Baltic States, judging by the already created and emerging new real estate investment products and local capital activity, is at least 2 billion euros per year, but greater market liquidity is an essential condition for large foreign investors to join. Looking at the profile of investors in recent years, three stages of development of the investment market of the Baltic States can be distinguished: the first – until 2008, when more than 45% of investors were capital from Northern European countries, the second – until 2014, when more than 55% of investments in the region were from the Baltic States capital of countries, but as of 2015, more than half of the market – 55% – are investors from Western Europe, Northern Europe, the USA and other regions, observed the head of Newsec. In the past years, the Baltic region has managed to achieve high activity of local and Nordic funds and real estate (RE) investors – the total value of concluded investment deals reaches 810 million euros. Latvia’s transactions make up 32%, Lithuania’s – 49%, and Estonia’s – 19% of the sum of all investments made in the Baltic States. The most active players are those who have been operating on the market for a long time – the largest commercial real estate fund management companies in the Baltic States. “It is predicted that this year the investment transactions will be even bigger – in the amount of 1 billion euros. The growing volume of transactions in the past years allows us to hope for this – in 2018, the value of investment transactions was 19% higher than in 2017. The impressive start of 2019 already shows that the market remains active – with the Swedish investment company Eastnine purchasing a business center in Vilnius for 128.3 million euros and agreeing on two other buildings of the S7 project, the transaction claims to become the largest office in the segment in the history of the Baltic States,” emphasizes G Greenberg. According to the expert, this deal shows that we have a new generation of prime market deals that close at less than 6% yield. For comparison, in 2013, the investment return of such projects fluctuated around 7.5%. Although rental income has remained at a similar level, the value of commercial real estate in capital cities has risen by more than 25% due to the reduction of capitalization norms alone. See the full version of the article here