Baltic States – CIS, Lithuania, Real Estate

An advertising campaign calls on residents of Belarus to take a loan and buy a flat in Lithuania, writes ELTA.

The promotional campaign in Belarus started with publications in the press, advising people to make safe investment in Lithuania during crisis times by purchasing real estate in the Old Town of Vilnius. A new block of flats named Mikalojaus Ziedas is offered for purchase to Belarussians. The project got ill-fame in Lithuania a couple of years ago when a near-by dwelling house collapsed in course of construction of the apartments.

In order to buy a decent flat in Mikalojaus Ziedas, one should have at least a million litas, an equivalent of 289 000 euros, but Rita, a representative of a Sektor Real Estate Company, says they have no shortage of clients from Belarus.

"We receive inquiries every day. Potential buyers have already visited Vilnius and inspected some of the flats," Ms. Rita said boastfully to a journalist who introduced himself as a friend of a resident of Minsk interested in buying a flat in Vilnius.

Asked whether apartments at Mikalojaus Ziedas were not likely to become cheaper with the current general fall in housing prices, the woman was adamant stating that prices of luxurious dwellings in the Old Town of Vilnius remain stable, so there is no need for the company to reduce them. She added that residents of Belarus were allowed to pay cash, and were advised to take a loan from SEB Bank if they were short of finance.

Meanwhile, Justinas Murauskas, the head of the product expansion department at SEB Bank, noted that residents of Belarus seldom appeal to them concerning taking loans. There have been just a few clients that have taken a loan.

"As money-lending to citizens of foreign countries is not a priority of our bank, we consider such applications very carefully and reject them if we have the slightest doubt," Murauskas explains.

The bank is able to lend to residents of Belarus only a half of the sum needed to acquire the housing. The maximum term for the loan to be paid back is twenty years. Lithuanian nationals, meanwhile, can take a bank loan for as many as forty years and the loan can constitute 80% of the price of the flat. Some other banks operating in Lithuania, for example, Swedbank or Nordea, do not give loans to citizens of Belarus at all at present because of the currently high risk.

"Citizens of foreign countries bought housing in Lithuania very intensively several years ago, when the prices were almost twice lower. I hear nothing about such foreigners now," says Saulius Vagonis, the head of the appraisal and marketing division of the OberHaus Company that offers mediation services in acquisition and sales of real estate.

Earlier, foreigners used to buy flats in downtown Vilnius. Their only goal was to rent the flats to other people and later sell them, as prices for housing went up. The majority of such buyers were from Western Europe.

"Should a resident of Minsk ask me whether it was worth buying a flat in Vilnius now, my answer would be negative," says the head of the Belarus real estate agency Beltcn and, at the same time, of Belarus Real Estate Development Association Nikolai Prostolupov.

He maintains that it does not pay at present to invest in real estate or in means of transport. It is better to save money, the value of which is certain to keep growing as time passes.

Belarussians are not scared by growing interest rates on housing loans in Lithuania. In their native country, the interest rates are as high as 20-25%. Mediation services to citizens of Belarus and Russia wishing to buy real estate in Vilnius are offered by a Baltrietl company that has been established for that particular purpose.

Vecheslav, a resident of Minsk who calls himself a consultant of the company, told the journalist of the Lietuvos Rytas that most of his clients were Russians who had business interests in Lithuania.

"Flats in Vilnius are too expensive for people of Belarus. They mainly come to Vilnius for shopping or entertainment at weekends and staying at hotels is convenient them," says Vecheslav.

He doubts whether his compatriots would be brave enough to buy real estate during a crisis when its value is falling and banks are reluctant to give loans.