Real estate trends in the first quarter of this year: businesses chose a “wait and see” position

The first quarter of this year for commercial real estate (NT) companies is difficult to predict. The prevailing uncertainty in the market due to price changes had a direct impact on commercial real estate transactions as well, which were slow, says Mindaugas Liaudanskas, SBA group’s investment management company Capitalica Asset Management. General Manager. He shares insights and forecasts, whether the trends that emerged in the first months of this year will continue throughout the year.

At the beginning of this year, the commercial real estate sector, like last year, was dominated by price uncertainty caused by the change in bank financing and the increase in EURIBOR, as well as the geopolitical situation affecting overall demand. This changed the structure of real estate buyers in the region and brought uncertainty to the size of the liquidity bonus for investors.

“Against the background of all this situation, the majority of Lithuanian investors have chosen a “wait and see” position in the last six months. We can see that local businesses with commercial real estate have accumulated a considerable amount of earnings, which allows them to “live” the significantly increased interest without any real estate sales. Some businesses are fundamentally changing their approach. Those who followed the strategy of owning their commercial properties now want to sell them and become only tenants.”

Despite the fact that investors’ capital became very selective in the first quarter of this year, according to M. Liaudanskas, the bond market remained one of the most active asset classes in the recent period.

What to expect next?

The CEO of Capitalica Asset Management says that today’s outlook for the rest of the year is optimistic. It is likely that the European Central Bank will reduce EURIBOR by about 0.75 percent. and 6 months EURIBOR will approach 3%. limits, which should stabilize real estate prices and increase investors’ yields. So those who are looking for ways to further increase their capital will turn to traditional real estate funds, says the expert.

Also, according to him, it is likely that the gap between high-quality and low-quality real estate will increase even more this year, and the latter will require revaluations.

True, M. Liaudanskas notes that the uncertainty will not disappear anywhere this year. This will be mostly influenced by the country’s still unclear geopolitical situation and the upcoming elections of major powers:

“The market situation will depend on the politicians’ agreements on geopolitical issues. The more rational and clear they are, the less tension and fear we will see in investors’ decisions,” says M. Liaudanskas.