Lithuania has made construction easier than in its neighbouring countries

Lithuania is getting used to the euro and building new and energy-efficient apartments. The affluent middle class is already buying second homes.

Lithuania was the first of the former Soviet socialist republics to declare its independence from the Soviet Union in 1990. This did not create much of a head start, but it does say a lot about the country and its attitude.

Lithuania understands how significant economic growth is to development. In recent years, Lithuanian GDP has grown at an average rate of three per cent per year. This is the second-highest rate of growth in the European Community, trailing only Slovakia.

There is substantial interest in Lithuania among international corporations. Many of them have already located service centres in Lithuania to carry out activities such as financial administration, accounting, invoicing and IT administration. Lithuania’s Free Economic Zones and corporate income tax rate of 15 per cent also make it attractive to investors. Finland’s total new direct investments in Lithuania totalled some EUR 30 million last year.

Lithuania adopted the euro at the beginning of 2015, which brought the country closer to Europe in a very concrete sense.

“The effect that joining the eurozone has on the construction industry has been outweighed by the impact of the Ukrainian war, which has slowed down major investments, such as the buying of apartments. The situation has now become stabilised,” says Kestutis Vanagas, Managing Director of YIT Kausta.

YIT has operated in Lithuania for 17 years. The operations began with export projects

involving a local company named Kausta Ab. The collaboration was successful and the local partner turned out to be a capable and reliable construction company. When the Berlin Wall came down in 1989 and Lithuanian businesses were privatised, YIT identified the country as an attractive market and acquired a majority stake in the company in 1998.

Flexible bureaucracy

The housing stock in Lithuania largely consists of apartment buildings constructed in the Soviet era, which do not meet today’s standards. Living space per person is well behind the Western European level. Energy prices are high, and heating costs eat up a substantial proportion of wages. Some old apartment buildings are now being comprehensively renovated or demolished to make way for new buildings.

“There will be much development and construction to do in Lithuania for a long time yet,” says Tom Sandvik, Vice President, Central Eastern Europe.

While in the neighbouring countries bureaucracy is slowing down construction, Lithuania has developed its construction legislation and permit processes.

Sandvik praises the clarity and transparency of Lithuanian official procedures and building permit practices, which are among the most transparent across all of YIT’s operating countries. In some countries, construction projects are suspended partly for groundless reasons when someone wishes to delay the implementation of a construction project that is in line with city plans and zoning decisions. This does not happen in Lithuania. The speed and predictability of permit processes is important for the implementation of investments. Smooth permit practices have a positive impact on the economy and the employment rate.

Housing trends in Lithuania

In Lithuania, location is a very important selection criterion for buyers of new apartments as well as in other construction projects. Vilnius is a large city with traffic congestion. People there prefer to live close to the city centre. Conversely, the residents of Kaunas, the country’s second-largest city, like to live in the suburbs.

“Three out of five projects in Kausta are situated by the river. This year, we will also launch the development of the Piliamiestis area in Kaunas. It is located along the Neris River and has direct views of Kaunas Castle and the Old Town. It offers residents a great location with the strong infrastructure that comes with living in the city", says Vanagas

Lithuanians typically want to put the finishing touches on their apartments themselves. YIT builds apartments mostly with plaster substrate on the surfaces, without the final wall and floor surfaces, bathroom surfaces, bathroom fixtures, kitchen furniture and household appliances. Spacious balconies, terraces, garages and good storage spaces are important.

Emigration has become a problem in Lithuania. After the country joined the European Union, some half a million highly educated Lithuanians have moved to the UK and Ireland. In spite of this outflow, Vilnius and Kaunas have maintained their population numbers, and even grown.

Second homes and area development

YIT Kausta’s primary business is self-developed housing. It has projects in Vilnius, its hometown Kaunas, and Klaipeda. YIT Kausta is constantly looking for good plots and areas in these cities to offer interesting projects to its corporate and consumer customers.

Lithuania’s economic growth is already reflected in a minor new housing trend that YIT is prepared to respond to.

“The strong economy is leading to growth in property investments. Many of our customers are actually buying their second homes,” says Kestutis Vanagas, Managing Director of YIT Kausta.

Interesting projects in Lithuania

YIT is the only significant international housing developer in Lithuania. This year marks the 50th anniversary of YIT Kausta.

YIT Kausta has carried out several construction projects of national significance.

These include the construction of Vilnius Airport, the National Library of Lithuania in Vilnius, and the reconstruction of Christ’s Resurrection Church in Kaunas. The project took more than ten years.

The most recent commercial property development project is Grand Office in Vilnius, the first building in Energy Efficiency Class A in the Baltic countries. YIT Kausta also built a 10,000 square metre Prisma shopping centre in Vilnius.

Residential projects

1. Kaunas: Silo Namai by the Nemunas River Away from the bustle of the city, yet providing quick access to the city by both private car and public transport. The area consists of 11 different apartment buildings. The buildings are energy saving buildings.
2. Vilnius: Solo City is ideal for families with children. There are large outdoor areas, playgrounds, schools and day-care centres nearby. The residents have had the opportunity to participate in the planning of the area. Solo City consists of 84 apartments.
3. Vilnius: Užupio etiudas consists of three housing companies of three buildings each, located on rolling terrain. The special architectural design creates a sense of privacy. The apartments include two-room and three-room apartments with sizes ranging from 40 to 104 square metres. A comprehensive range of services for families with children is available nearby.

A short history of Lithuania

• Lithuania has a long shared history with both Poland and Russia. As a small country, it went through significant upheaval as a result of the World Wars. In 1939–1944, the Soviet Union and Germany took turns in occupying the country. The country became the Lithuanian Soviet Socialist Republic in 1940.
• The Gorbachev era in the Soviet Union created belief in independence. In March 1990, Lithuania became the first Soviet Republic to declare its independence. The last Red Army troops left the country in 1993.
• Today, Lithuania is a member of both NATO and the European Union. In January 2015, the country adopted the euro as its currency. Lithuania’s population is approximately three million. The capital is Vilnius, with a population of over 500,000.