Lithuania » Market Report

Lithuania boasts a rapidly expanding economy, educated workforce, a strong work ethic, good quality of life at relatively low cost, and the legal protections afforded by the rule of law. Detracting from an otherwise good investment climate are a shrinking labour force, prevalent petty corruption, an abundance of bureaucratic red tape, and the lack of a national strategy to attract new investment.

Lithuania has one of the fastest growing economies in Europe, with GDP growth of 9.7 percent in 2003, 7 percent in 2004, and 6.9 in the first three quarters of 2005. Among the attractions of Lithuania's investment climate are a diversified economy, investment laws that conform to EU standards, a low corporate profit tax, a well-educated workforce, the region's best-developed infrastructure, a stable democratic government and banking system, and membership in the European Union and proximity to Eastern European markets.

Vilnius is home to 553,000 inhabitants and this number is growing every year. Approx. 1,000,000 tourists visited Vilnius last year - twice as many as two years ago. More and more people are discovering and falling in love with the capital of Lithuania. A real estate market began to develop in Lithuania as early as 1991, when the national parliament passed the Apartment Privatization Bill, allowing citizens to buy their state-owned apartments. At the beginning of 90s the class of small entrepreneurs started to form and soon became one of the main players at the real estate market.

 

When the Soviet army finally left the country in 1993, a number of properties became available and the market increased profit margins even more values rose at a vast rate, and the stable economy of the country helped things no end. In line with regulations for Lithuania to enter the EU, laws were changed to allow foreigners to purchase property freely, though special permission must still be granted for land purchases. It should be noted that as a former Communist state, Lithuania is subject to the same potential pitfalls as other former Soviet countries and all land titles should be checked in detail by more than one independent party to ensure legality of ownership, as reclamations can be lost and confused over time.

In the Vilnius downtown the new apartments and houses cost around $1000-$1100 per sq.meter (1 sq.meter=10 sq.feet). The old but renovated residential properties can be found for $900 per sq.meter and the unrenovated reach as low as $500-$600 per sq.meter. In the prestigious suburbs the prices are $700-$750, $500-$650 and $350-500 respectively. Lithuania, where the development of a property market began a little later than in Estonia and Latvia, is currently experiencing the fastest increase in property prices. Vilnius Old Town has recently seen increases of almost 50% and even outside the centre the figure has reached 30% in the new developments. There is increasing interest from investors. Unlike Latvia and Estonia, where the new developments are concentrated mainly around the capitals, in Lithuania house building is quickly developing in other towns as well.

International Property Brokers forecast that the property prices will rise in the coming years.