More than 1,500 new apartments in the year 2023 alone, clients’ eyes directed toward the center, and the demand for spacious apartments that remains despite the slowdown of the economy – these and other similar tendencies show that Kaunas residential real estate market is undergoing radical changes. They are noted by the increasing number of investors and real estate developers, who see new opportunities in the venture.
As Andrius Veršinskas, Head of the Business Department of the Kaunas Economic Development Agency Kaunas IN observes, the supply of new housing in Kaunas has been limited for quite a long time, and only in recent years has it grown both in terms of quantity and in terms of quality, especially in the city center and its surroundings. “This is an encouraging trend because the supply of more diverse and high-quality housing also strengthens the overall attractiveness of the city for current or future residents. In addition, despite the rapid growth of real estate prices across the country in recent years, we can see that housing affordability indicators in Kaunas still remain good.”
Kaunas real estate is becoming more attractive to foreign investors
According to Ober-Haus real estate experts, investors and real estate developers have already noticed the untapped potential of Kaunas in 2016 – 2017, therefore, the rapid growth of the housing market in the city has been recorded in the last five years, which was also determined by the growth of the entire country’s economy.
“We saw how, after a long break, not only new business centers, warehouses, and factories began to sprout in Kaunas, but also increasingly ambitious residential projects started to be designed. Seeing that the demand for new housing in this city is high, not only local but also nationally known real estate development companies began to invest more actively in Kaunas,” Raimondas Reginis, Ober-Haus’ market research manager for the Baltic countries, says also noting that a big push for housing market came from the investments in industry and modern workplaces in Kaunas.
The increasing number of permanent residents of Kaunas was recorded in 2019 (according to the data of the State Data Agency, in the last five years the number of permanent residents in Kaunas city municipality alone has grown by 5.8% or almost 16,800 residents). It has made business more optimistic and thus in recent years we observe a record number of apartments built for sale in Kaunas. According to Ober-Haus’s data, in 2022, the developers in Kaunas built 1020 apartments and this is the highest annual number of apartments built since 2008. And in 2023, Kaunas should exceed all previous supply indicators, as around 1,500 apartments should be built in a year. This means that Kaunas is becoming an important city in the Baltic States. Based on the relative number of apartments built (compared to the number of permanent residents), Kaunas will overtake Riga in 2023 and will take third place among the largest cities in the Baltic States (Vilnius remains in the first place, Tallinn in the second place).
“Equally important is the fact that in addition to Lithuanian companies, foreign ones have also started investing in the city’s real estate market. We see how modern and income-generating commercial property is being bought in Kaunas, with investments from countries such as Estonia, France, Norway, Denmark, Finland, and the USA. And investments are not only made in commercial real estate. In 2023, the first traditional apartment blocks intended for long-term rent will open their doors in Kaunas. The Estonian investment company EfTEN Capital invested in their development,” R. Reginis explains.
As the glamor of the periphery fades, attention returns to the center
UAB YIT Lietuva is developing two vibrant residential projects – Piliamiestis and Matau Kauną – in the central parts of Kaunas. The company’s business director Gytis Jakučionis notes that fashions and trends have changed a lot in the last 15 – 20 years, “One wave of development spread to the suburbs, when many people moved to the outskirts of the city, private plots, condos, and fields without developed transportation system or social infrastructure. Now we see a reverse wave. People, who want convenience – transportation, shops, schools, public events – and are thus moving from the suburbs to the center.
There is another noticeable trend. Large private houses built 40 or 30 years ago became outdated. They no longer meet modern housing requirements, and when the children grow up, they remain empty. Owners of such houses sell their property and move to comfortable and modern housing closer to the center.
Of course, nature is another important factor when choosing a place to reside. Perhaps this is what makes us so different from other European cities, where one of the key criteria is a convenient public transportation system, for example, the distance to the nearest metro station. Here, people choose and appreciate the river, the forest, the hill, or the lake the most.”
According to G. Jakučionis, growth in Kaunas is dictated by demand and the buyers’ needs. Today, the people of Kaunas prefer quality housing in the city center, and YIT Lietuva has chosen precisely this business model for its projects Piliamiestis and Matau Kauną. “We call this model the 15-minute city. It is a city, in which you can access all necessary services, entertainment, and spaces for recreation in 15 minutes. In other words, it is a city where the boundaries between work, entertainment, and living areas disappear. Such a city has a well-developed service and mobility infrastructure, high-quality housing projects, and maintained public spaces, which create conditions for a more comfortable, interesting, and healthy living. Both projects that are being developed in Kaunas attract residents’ attention and are desirable. It’s nice to observe the changes in reviews of the Baltic countries, which already feature not only the capitals Tallinn, Riga, Vilnius, but also Kaunas.”
Customers are becoming more demanding every year. Construction developers notice that a significant number of those who are not buying their first home, but rather seeing their purchase as an investment, have much higher requirements. It is no longer enough for them to have a roof over their head or just a building sandwiched between other old buildings. They mostly value a location and well-maintained territory with a developed infrastructure and accessible public transport.
In addition to the spaciousness, buyers of new housing in the center of Kaunas are looking for greenery
SBA Urban, which is developing the ambitious Nemunaičiai project in Žemoji Freda area, also notices that for today’s buyer, quality housing is not limited to just four walls – the investment is viewed much more broadly.
“Our team is not simply creating individual buildings, but an urban environment adapted to modern people. This is exactly what the modern customer values. Today, we see the need for mixed-use projects in Kaunas, when the construction developers create a neighborhood having considered not only peaceful sleep but also opportunities to build your life close to home. In mixed-use projects, peaceful life in one’s own home is combined with everyday life needs, where you have your office, the most important shops, convenient public infrastructure, and recreation nearby,” says Egidijus Ripkauskas, head of SBA Urban’s company Urban LIVE.
According to him, the renaissance experienced by the Kaunas real estate market in recent years is determined by various factors, but one of the main indicators is the population growth of the Kaunas region that is being recorded since 2020. This means that the city creates jobs, and convenient infrastructure, which is attractive to businesses and residents that are established here.
“Four years ago, together with the SBA Urban team, we saw that Kaunas was becoming more and more attractive to international companies, and we offered them modern offices in the city centre. Attractive spaces help to attract workers, who also start looking for housing close to their places of work. Of course, like the whole world, we are currently living at an economic turning point, and the real estate market is particularly sensitive to such fluctuations. However, after half a year of stagnation, we again feel the increase in the residents’ interest in looking for new houses in Kaunas. This trend makes us very optimistic,” E. Ripkauskas says.
Observing trends in the residential housing market, SBA Urban representatives say that those residents, who are searching for a new house, find it important to live in the city, but also to be able to enjoy nature. They also notice the main trend in Kaunas – migration of residents from the suburbs closer to the center – due to their Nemunaičiai project. Clients are interested in large houses (over 120 sq. m.), and they seem to move from their spacious private houses into equally spacious apartments in the city. They value location and views from the windows. And although the economic situation has a significant impact on buyers’ decisions, high-end housing still remains in demand even now.
“Kaunas is unique in its geographical location between the Nemunas and the Neris, so we see the greatest potential on the banks of these rivers. Therefore, together with our partners, we are planning to create the newest district right on the riverbank, next to the currently developed Nemunaičiai, where residents will be able to enjoy the proximity of nature and rivers and the advantages of the city center,” E. Ripkauskas tells us about the plans for the near future.
As the developers of the Nemunaičiai quarter note, the area’s vitality and attractiveness are also promoted by the projects implemented or planned by the municipality: the Nemunas island bridge, the M. K. Čiurlionis concert center, H. and O. Minkovskių Street reconstruction. The active involvement of the local government in the integral planning of the territory stirred these spaces up and now helps create the new riverbank of Nemunas – full of life, quality, and attractive to Kaunas residents and guests.
