YIT Lietuva has recorded another active quarter in the housing market, but is monitoring signs of market stabilization
There were enough challenges and uncertainties in the real estate market last year. Developers, however, are positive about 2020 and optimistic about the future. According to the preliminary estimates of YIT Lietuva, a sustainable urban development and construction company, last year it managed to achieve similar results in most business segments as the year before last. This year, the company is going to increase investments in all sectors and invest approximately EUR 74 million, with an even allocation thereof over the housing and commercial property segments.
The pandemic did not knock out the housing market
Kęstutis Vanagas, General Manager of YIT Lietuva, says that majority of the company's plans, despite the pandemic, were successfully implemented last year. In some areas, the results even exceeded expectations.
"In spring, housing sales actually stopped. However, after the initial panic, residents started considering real estate purchases again. In the last quarter of the year, apartment sales were higher than in the respective period of 2019. In October and December, for example, we sold about twice as many apartments as in the same months the year before last. We predict that growth will continue this year as well. The market dynamics is also demonstrated by the consistently rising housing prices,” notes K. Vanagas.
In 2020, YIT Lietuva sold 282 apartments. As comparison, 305 apartments were sold in 2019. Last year, the company commenced the construction of 217 new apartments under 4 projects in Vilnius and Kaunas. In Vilnius, it completed the projects “Raitininkų Sodas,” Naujoji Rivjera,” and the second phase of the project “Matau Vilnių.” In Kaunas, the construction of “Šilo namai” and the 8th phase of the urban project “Piliamiestis” were accomplished.
The company's investments in the residential and commercial real estate segments amounted to EUR 35.1 million last year. This year, the company is planning to allocate EUR 36.9 million for housing projects alone. These will be the projects in Vilnius and Kaunas, which are going to bring respectively 288 and 102 apartments to the market. A similar amount is planned to be invested in the development of commercial real estate projects.
According to K. Vanagas, in terms of the choice of housing, the residents still give priority to a convenient central location of the city, from which all the necessary facilities and entertainment would be accessible within a fifteen-minute walk. However, more and more residents look for larger homes and opt for a spacious living room and terrace. Prospective buyers also pay a lot of attention to the housing environment, quality and sustainability of equipment.
“We will continue to invest in advanced digital construction solutions and LEAN methodology to optimize work deadlines, as well as in environmentally friendly construction technologies. We have set a goal to reduce the carbon dioxide emissions of all our enterprises by half by 2030 and to increase the sustainability and efficiency of construction work,” says K. Vanagas.
Infrastructure and contracting projects did not suspend
According to the General Manager of YIT Lietuva, there was no shortage of activities in the infrastructure segment during the pandemic time. Preliminary estimates suggest that infrastructure projects were implemented for over EUR 48.5 million in 2020. In comparison, in 2019, the turnover of this segment amounted to approx. EUR 63.8 million. The pandemic has actually made the infrastructure market more competitive, since some contractors reduced their service costs in order to receive additional orders.
"In the infrastructure sector, we implemented a number of large projects and achieved our goals last year. We accomplished a large-scale reconstruction of Tilžės Street and Šilutės Highway in Klaipėda and the regional road Dituva - Priekulė - Dreižiai in Klaipėda District. In addition, we invested in increasing infrastructure development capacity, by purchasing extra equipment for road construction works.
Upon the renewal of the road construction season, YIT Lietuva will continue the reconstruction works at the sections of the trunk road A1 (Vilnius-Kaunas-Klaipėda), start the construction of the Vievis underground intersection under the railway, reconstruct the bridge over the Vilka River, and carry out other works. We plan to grow in the infrastructure segment next year. The expected commencement of Rail Baltica project should provide further opportunities in this area,” says K. Vanagas.
According to him, the segments of commercial real estate development and contracting were the most sensitive to the impact of the pandemic. In this case, some projects were suspended for a certain period. However, according to K. Vanagas, all the contracted works, scheduled last year, were successfully completed. Besides, at the end of the year, new major projects were commenced, for example, the construction of the plant of the German polymer manufacturer Rehau in Klaipėda FEZ.
"Of course, the pandemic gave rise to some questions regarding the need for workspaces and, possibly, forced some companies to defer their plans to buy or rent premises last year. Nonetheless, companies will still need comfortable offices. Trends in the layout and fitting-out of office space might change, for instance, fragmented space will be preferred to open space plans. However, the demand for office space is likely to increase again this year. As early as in the second half of last year, we observed more activity. In November, we closed a really big deal for 5K square meter premises for lease,” says K. Vanagas.
As the representative of YIT Lietuva argues, this year, the company has planned the construction of a few new business centres in Vilnius.