Increased Number Of Unsold Real Estate Properties, Canceled Contracts, And Endless Construction Disputes ' Are There Any Solutions?

• Published date: 23 January 2025
• Subject Matter: Real Estate and Construction, Construction & Planning, Real Estate
• Law Firm: Ellex
• Author: Ms Giedrė Auk'tuolienė, Simona Budreikaitė, Simona Danylė, Inese Freivalde, Kirti Jürim'e, Olga Petro'evičienė and Edvardas Racius

Rising construction costs, a complex building permit process, increasing bureaucracy, a growing number of unsold real estate properties, and housing prices that have risen by over 60,000 euros over the last five years - this is the current reality of the real estate market in Lithuania. However, despite these trends, the market today remains active, with the number of strategic and other major construction projects continuing to grow. Where there is a lot of activity, problems are inevitable, state the lawyers of the leading law firm "Ellex Valiunas."

These and other current real estate sector issues were analyzed by Lithuanian and foreign experts at the "Ellex Construction Disputes Forum 2024," organized by the law firm "Ellex Valiunas." FIDIC and construction dispute law experts were invited to share their experience, insights, and observed opportunities with guests of the event - legal professionals and other representatives of the country's real estate market.

Unsold Real Estate Properties, Complex Permitting, But There Is Light at the End of the Tunnel

According to Mindaugas Statulevičius, head of the Lithuanian Real Estate Development Association (LNTPA), one of the main challenges for real estate developers in Lithuania remains the increasing construction costs and the sometimes truly confusing legal regulations. "While we are happy about the gradually increasing wages, we must admit that this, along with various additional expenses, also drives up construction costs. This is not helped by the supply chain disruptions caused by Russia's war in Ukraine. High interest rates have persisted for a while, reducing buyer activity, while projects planned earlier continue to be developed, leading to a steady increase in the number of unsold real estate properties," said M. Statulevičius.

M. Statulevičius

The average price of a 60-square-meter apartment has increased by about 60,000 euros over the past five years. Still, M. Statulevičius noted that positive changes are already being felt in the market today, and we should see even more pronounced improvements next year. "We are gradually seeing an increase in the number of people obtaining loans, and financing is becoming more accessible. Real estate developers and buyers are adapting to our geopolitical situation, and decisions are being made with less concern about the risks of war," said the head of LNTPA.

According to him, even if positive changes occur in the market, there is a significant possibility...