Author: Egidija Bružienė (https://lt.balticsothebysrealty.com/en/team/egidija-bruziene/)
Every year, as the temperature drops, Lithuanians look for alternatives to spend the winter season away from their homeland. There is a growing trend of individuals willing to purchase a second or third property in sunny and convenient travel destinations.
Real estate values in Palanga and Nida compete with those of the South of France
Families typically purchase these kinds of properties to spend the winter outside Lithuania or to invest in real estate to earn a profit. Once the buyers decide to acquire property abroad, they compare what they may get on the coast of Lithuania for the same price.
Since real estate prices on the Lithuanian coast have risen significantly in recent years, buyers compare similar real estate on the Lithuanian coast and other European resorts. It is safe to say that real estate values in Palanga and Nida are starting to compete with those of Southern France, Italy, Spain (and its islands) or the United Arab Emirates (UAE).
A number of criteria are considered, including the price of the property, the length of stay during the year, whether it is going to be used only during summer season or half a year when it is cold in Lithuania.
The primary focus is on evaluating quality and cost ratio. Buyers with higher incomes might not consider the price as the most essential factor. Nevertheless, it needs to be fair and correspond with the property value. For instance, a 50 sq. m luxurious apartment in Palanga may cost from EUR 0.5 to EUR 1 million. However, the unique Lithuanian nature will be the main advantage as the property won’t include outdoor and indoor swimming pools or a gym available all year round. In this case, the buyer will likely opt for the property of a similar price abroad. Of course, if a person with a higher income can afford it, s/he buys a second home on the coast of Lithuania and a third in a foreign country.
On the average, Lithuanians are willing to spend from EUR 0.5 to EUR 1 million abroad
The general tendency is that while citizens of our country were once convinced that real estate abroad is more expensive or extremely expensive, now they are more and more willing to look around and compare the prices. Some even go on vacation to the same destination several times, and then decide which town or region in the chosen foreign country they favour the most. They get used to it and then decide to buy a property there.
Typically, Lithuanians are now willing to spend from EUR 0.5 million to EUR 1 million abroad. Spain and its islands are currently the most popular choice for such purchases, though demand is also high throughout all southern Europe. Lithuanians feel safer investing in EU countries since they tend to purchase real estate in the countries with cultural similarities, transparent tax and legal systems.
Although most transactions are completed with the buyer’s own funds, there are instances in which housing loans from the bank of the chosen country are used, particularly when the buyer is purchasing a second home in that country and is well-versed in the local real estate market.
Another part of Lithuanians is drawn to invest in the United Arab Emirates (Dubai), which is a rapidly developing country and has a growing supply of goods. For EUR 0.5 million you can buy a two-bedroom luxury apartment in a brand-new building in Dubai that features several indoor and outdoor pools, a sports club, and personal staff to manage the property. The staff looks after the property all year long, manages the guests’ leisure, and rents the accommodation, if desired. It is also worth to mention that the investment return in Dubai is approximately 7% (residence has a great return on investment and is comparatively affordable).
One of the most common concerns when purchasing real estate in any foreign country is who will look after it while the family is in Lithuania. It is important to note that the market is actively adjusting to this “hibernation” of people and the need for property management. There are companies offering property management services in every country.
Let’s say, if someone decides to spend three to four months of the year in Dubai, they can rent their home for the remaining months with the help of a property management company. Most of the time, Lithuanians buy the property abroad to not only use it for themselves, but also to make a profit. Building developers and individual companies handle all aspects of building administration, including management, rent, and other concerns, depending on the project.
Depending on the property’s value and other variables, such as whether they purchased the property furnished or made their own improvements, some Lithuanians choose not to rent their properties. If the owners install the house with the help of Lithuanian architects and interior designers, the property is exclusive and, of course, not available for rent. It is possible to sell it later and profit from the price growth.
Determined to spend from EUR 15 to EUR 20 million on castles in the South of France
A separate group of buyers consists of individuals seeking a unique property within the EUR 15-20 million price range. Due to specific preference criteria, it may take several years to find the exact type of property you are looking for. We schedule visits based on the client’s preferences and indications. In such cases, a more thorough search is performed, the location is investigated, and the decision is made as to whether the region is suitable or whether the search will continue in another country.
There are Lithuanians who want to buy castles in the south of France with the intention to restore them. In this case, they have to consider not only the price of the property but also the time it will take to complete such a project. Resultantly, one has to decide whether real estate is an investment, a hobby, or a dream.