Commercial RE in the Baltics Continues to Expand – Colliers International Real Estate Market Overview 2020
Colliers International has just released its 17th annual real estate market overview which covers
- the latest market trends in commercial real estate
- the latest statistics and market insights
- forecasts for the Baltic real estate market.
The report reveals interesting insights into the rise of the RE market in the Baltics, pinpointing to the potential entrance of more new investors in the region and the emergence of new market trends that will dominate 2020.
The overall market forecast for all three Baltic states remains positive with multiple active and dynamic developments ahead.
The Baltic States on the Rise
The Baltic states have demonstrated an extraordinary resilience to global challenges, continuing to expand notably in 2019 despite worsening external market factors. Moreover, the growth rate has in fact exceeded all initial expectations.
For the fourth year in a row since 2015, the total volume of commercial real estate investment in the Baltics has exceeded the EUR 1 billion mark with Lithuania acquiring a particularly record-breaking investment volume.
New Investors Enter the Market
Scandinavian and domestic investors remained the most active in all three Baltic States throughout 2019.
While most investors are already well established in the Baltic states, 2019 was marked by a noticeable increase in interest from other markets and several new market entrants, including the Austria-headquartered VIG Fund.
Offices Still Top the Investment Charts
The office segment has remained the top choice among investors, attracting over 50% of the total investment volume and maintaining a consistently high activity in all three Baltic capitals.
The influx of investment was led by two core deals in Vilnius CBD, standing among the all-time largest office transactions in the Baltics: the acquisition of the Quadrum BC and the S7 office complex (stages I, II, III). Consequently, Vilnius has entered a new phase of monumental development activity.
Meanwhile, Tallinn saw one of the highest levels of development activity in the past decade, and Riga experienced the largest stock increase in the last 10 years.
Retail Switches to Omni-channel Approach
The overall sentiment in the retail sector remains optimistic as local and international brands maintain interest in further expansion.
Overall, retail in the Baltic states has been driven by a robust development activity in Latvia where the market experienced the largest retail stock increase in the last decade with over 100,000 sqm of leasable space added to the retail stock.
On the other hand, developments in Lithuanian and Estonian retail markets have been largely driven by refurbishment and expansion of existing shopping centres.
Meanwhile, shopping centres aim to increase their share of tenants by providing leisure and sports activities in addition to catering in their multi-use strategies.
Omni-channel approach has also become more common in the Baltics. Several brands in grocery, fashion and other segments are adding click & collect, home delivery, and other digital solutions to their services in order to improve customer interaction with their products and consequently, enhance customer satisfaction.
The Demand for Modern Industrial Properties Will Continue to Grow
In terms of new developments, the warehouse and industrial property market segment remained active in 2019. The segment can also expect to grow in 2020, due to the high and growing demand for modern, top quality spaces.
Overall, real estate in the Baltic states continues its path of active development. As noted in the report, the three Baltic capitals are expected to reach ca 1.5 million sqm of new RE supply within the next two years.
Baltic Real Estate Leaders Forum 2020
These and other market trends will be reviewed at the Baltic Real Estate Leaders (BREL) Forum 2020 which takes place in Riga on November 6.
The forum brings together leaders in real estate, investors and specialists from the Baltic states and accomplished industry leaders, experts and CEOs from around the world.
Its program covers the latest industry trends in the world, best practices across different market segments and sustainable business, real estate, investment and urban development strategies.
The forum is always an occasion of and an opportunity for top level networking and business growth.
Click here to book your seat at the BREL Forum 2020.
To purchase the full Colliers International Real Estate Market Overview 2020, please, reach out to anastasija.ruza@colliers.com
