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Mapping investment opportunities on "Rail Baltica" route

13 februārī 2017  ·  ordo capital
Following the regain of independence of the Baltic States in the 90s of the past century, an idea about connecting the Baltic States to “the heart of Europe” was born. The idea intended to renew direct connection to the railway network of Europe by building a new European standard 1435 mm gauge railway in the Baltic States and connecting such metropoles as Tallinn – Riga – Vilnius – Warsaw – Berlin and prolonging the route to other European cities up to Venice in the future. Indirectly this route includes also Finland, since the planning incorporates an idea to build an underwater tunnel, which could connect Tallinn and Helsinki by train. We provide you a brief analysis of property that has the most potential in each capital city of the route.


In December 2016, the turnover of retail trade enterprises was 619.4 million euros which is 3% higher than in December 2015. Prime yield for retail premises in Estonia equals 6.7%, with extremely low vacancy rate of 0.9%. In Q3 2016, the Tallinn retail market remained reasonably active. Q3 2016 saw the start of construction work on expansion of several shopping centres in Tallinn harbour area.


In the highest annual rise for more than nine years, average apartment prices in Riga rose by 9.75% y-o-y in November 2016 to €1,159 per square metre (sqm), after growth of just 0.28% a year earlier. Demand remains strong. During 2016, the number of real estate transactions increased 10.5%. Rental rates are fluctuating up to € 12 sqm/month, hence yield reaches 6%. Quite big demand for apartments for rents come from students who have moved to Riga for studying.


Since new supply is carefully planned and new warehouse projects are covered with pre-lease agreements, the vacancy rate remains low, amounting to 2.1% in Q3 2016, thus reflecting continuously strong demand for industrial premises. Industrial sector is a driver of Lithuanian investment activity, for instance, Aukso Toliai acquired a warehouse building at Pirkliu St. 5 (5,754 sqm) in Vilnius from Nuomos verslas.


Warsaw’s purchasing power is 68% above the national average. The city’s shopping centre market is becoming increasingly matured and saturated. Compared to shopping centres or other major European cities, high street shops have only marginal relevance. This is mainly due to the limited supply of high-quality, multi-storey high street properties. But the city has large potential to develop its high streets, including Nowy Swiat and Chmielna Streets as well as those of Three Crosses Square.


Record demand combined with moderate new-build activity has led to an ongoing drop in vacancy. The current amount of space available for immediate tenancy has dropped to a critical 3%. Around 205,000 sqm of office space is scheduled to be completed by the end of the year, roughly 65% of which has already been preleased. A slightly higher amount of new space is scheduled to become available in 2018 (approx. 245,000 sqm), around 45% of which has already been taken up. Prime rent continued to grow in light of exceptionally high demand for space. Over the course of 2016, prime rent increased by 17% to a current €28.50 per sqm.


European Outlook 2017 Changing Landscape


Office Leasing and Investment. Berlin

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