Investments in Baltic commercial real estate predicted to exceed EUR 1 billion
Colliers International just released a market overview highlighting recent investments in the Baltics. The report shows that investments in commercial real estate in the Baltics totaled at EUR 511 million in the first half of 2017. This is fairly similar compared to the same period last year.
The report shows that most investments goes to Lithuania, followed by Estonia. Most investments (43%) goes to the retail segment followed by the office segment (28%). Average transaction size in the region was EUR 4 million and Colliers predicts the transaction volume for the year to exceed EUR 1 billion.
Follow us here for continuous updates on the opportunities in the Baltic commercial real estate market. For the full report, please see here.
OECD predicts stronger growth in the Baltics
The OECD (Organization for Economic Cooperation and Development) recently raised the GDP prediction in its latest forecast for all three Baltic states. According to the OECD, the region’s economic growth is expected to pick up in 2017, due to factors such as stronger growth in the euro area, Russian support of exports and the disbursement of EU funds, factors that can boost investment according to OECD. The organization also predicts that household consumption will be robust, supported by strong wage growth.
Latvia to grow most
Latvia is predicted to have the strongest economic growth among the three nations, with a predicted GDP growth of 3.5 percent this year (earlier prediction 3.0%) and the same growth next year. Baltic Horizon Fund has both office buildings and commercial retail centers among its properties in Latvia, very well positioned to benefit from future growth.
Estonia is predicted to grow by 2.6 percent this year (earlier prediction 2,4%) and 3.1 percent next year. The funds properties in Tallinn currently constitutes the largest part of the total portfolio, and consists of a good mix of office buildings and retail centers.
For Lithuania, a GDP growth of 3.1 percent this year is predicted (earlier prediction 2,7%) and 2.9 percent next year. In Lithuania, we can find Baltic Horizon Funds latest investment, the Duetto 1 office building, with strong tenants such as Lindorff and Pernod Ricard.
Baltic Horizon Fund benefits from the growth
It is clear that the Baltics are experiencing a strong growth, predicted to beat the OECD member state average growth of 2.1 percent this year. And it is also stronger than the 1.8 percent growth predicted in the euro area this year. Baltic Horizon Fund is benefitting from the overall growth and increased demand for commercial real estate from local and international companies who are increasing their presence in the region. Contact for us more information on how you can benefit from the growth by investing in our fund.
Invest where you live – or partner up
There is an old saying in real estate investment that you should focus on investing where you live. The notion is that it is difficult for an outsider to gain enough knowledge of a market if you are not living there, that you might miss key nuances of change that could affect your portfolio.
Is the old saying true, and how would one relate to it when it comes to investing in the Baltic commercial real estate market as a Swede?
First, it is reasonable to state that a geographical distance could be put in relation to the strength of the opportunity. Estonia for instance has one of the strongest public finances in Europe and a robust domestic demand. The Baltic region as a whole is taking advantage of globalization trends, with Swedish companies increasing their presence and outsourcing parts of the operations to the region. Past surveys show that a majority (70%) of Swedish companies consider the Baltics a good place to do business and 63 percent plan to invest further in the coming year.
On a second note, it can be interesting to highlight that Tallinn is actually geographically closer than many would think, being on a closer distance to Stockholm than Malmö. Being part of EU and with ever closer political, business and personal ties, Sweden and the Baltics are continuously further integrated.
Thirdly, Baltic Horizon Fund acts your local proxy and partner, the next best thing to living there yourself. With BHF you partner up with a team that has vast experience and local knowledge. The team has a great track record of property investments across the region – Northern Horizon group is the result of a merger in 2011 and manages 8 real estate funds across Baltic sea region, total assets under management exceed 1.2 billion EUR. The structure of the Baltic Horizon fund makes it possible for you to take advantage of a growing market teamed up with local experts.
You do business together with a team who understands the locations and can connect local events to the bigger development of the region. Who can combine looking at spreadsheets with looking outside the window. Who can hear the gossip on the town first and can connect it to opportunities. Who can understand and influence local retail trends and key political developments.
So it is fair to say that while the Baltics offer exciting opportunities it is neither very exotic or distant. In fact, by partnering up with local experts you can bridge the geocultural distance and take advantage of opportunities you might have dismissed in the past. Baltic Horizon Fund is the first listed fund to offer you this kind of opportunity and we hope you will find it exciting.