Interesting trends on the Lithuanian property market

Future possibilities and Lithuania's breakthrough in manufacturing

Lithuania has become more attractive to foreign investment in the manufacturing sector. The country boasts a strong industrial base, and the government has encouraged foreign investment through incentives and grants. Access to skilled labour and innovative technology also makes Lithuania a desirable location for foreign investors. This has led to a surge in manufacturing investment in recent years, with nearly EUR 1 billion earmarked for projects involving the construction and expansion of 600,000 sqm of factory premises from 2022–2023. Both domestic and international companies see opportunities to grow and develop high-value-add industries in Lithuania.

Industrial and logistics market is set for significant warehouse projects

Speculative development in the industrial and logistics segment has been substantial. In the present geopolitical and macroeconomic environment, only large developers have the equity to assume the risk of speculative projects. Small and medium-sized developers have plans but are wary of starting them. The warehouse market offers two paths for development: large projects for in-house use and speculative projects for those taking a broader outlook. Both options will result in a significantly increased quality of assets, often certified, ensuring long-term prospects for growth and strong market positions.

Office projects will boost business efficiency

The new supply of small-to-medium office projects serves businesses of various sizes, offering new quality, consolidation opportunities, and easily accessible, high-visibility locations. Developers are confident in planning and building these projects due to the growing demand they foresee. Adjustments to vacancy levels and rental rates are expected in 2023. Smaller-scale projects are better equipped to quickly adapt delivery schedules and follow market trends.

Population growth creates new demand for property

The rising population of the country has brought changes to many real estate segments, with Vilnius approaching a population of 600,000 due to internal and external migration. The residential rental market has had to keep pace with this growth, while changes in office market demand have been absorbed by companies relocating rather than investing and growing in the country, stimulating market activity and higher rental prices.

Project planning is hot in the Vilnius CBD

Demand for office space is high and competition for prime locations is fierce, with office demand in Vilnius having noticeably increased over the past four years. Developers, faced with a long-term low vacancy rate, now have a pipeline of new office and mixed-use projects planned for delivery in 2024–2025 and beyond. Class A offices in the CBD will remain in high demand as the growth in demand for office space is expected to continue.