Page 50 - CE Outlook Regions 2023

In the environment of rapidly increasing housing prices, vendors often
entered the market during 2022 with prices higher than the current
market price. In demanding a higher price, they expect the general level
of housing prices to quickly catch up with the prices they have set,
thereby hoping to have their real estate sell for the highest possible
price.

Earlier, in the context of the previously prevailing optimism and fast
price growth, such expectations would actually turn out to be
well-founded for the majority of sellers. But the purchasers’ optimism in
the real estate market has faded in the second half of 2022, which has
reduced the market activity overall, and extended the whole deal
process. The vendors who have to sell housing more quickly are
therefore forced to reconsider the purchase prices offered and reduce
their expectations, which no longer match the current reality. So, sellers
will need in 2023 to gradually decrease the asking price of their
property, although usually, even after the price correction, they still will
likely remain above the dominant price level in the market.

Meanwhile, the sellers who carry a realistic outlook on the current
situation and offer housing at the market price might expect their
housing to attract enough interest from potential buyers and be sold in
a more usual period in 2023 too. The most recent apartment market
data shows that the activity in the largest and the most important
housing segment in the Baltics, despite a slight reduction, has
remained stable during the second half of 2022.

The industrial premises sector in the Baltic countries has also shown
growth potential in 2022 with various production purpose, logistics
centre projects and stock-office type projects being implemented not
only in areas around the Baltic capitals but also in other big cities and
their surroundings. The growing consumption and the expanding
e-commerce have provided momentum not only for the construction of
bigger projects but also for the development of smaller multifunctional
projects close to the final user in the Baltic states’ second and third
largest cities.

The trend is likely to remain throughout 2023, however, at a much
slower pace – due to the war spillovers and a possible recession in the
Baltics, the EU and the world.

3.2.6 Major Sectors

Tourism in the Baltics has been hit hard by the depth and duration of
the crisis triggered by the COVID-19 pandemic. Just as the sector was
starting to rebound, the economic fallout from Russia’s aggression

50 CE Outlook 2023 www.intellinews.com