Press Release, October 8, 2024
Over the past decade, global megatrends—such as land conservation, evolving technologies, and socio-demographic shifts—have significantly influenced investment processes worldwide. These trends have also impacted the Baltic real estate (RE) market. While some topics remain distant dreams in the region, others have already taken root and are shaping the decisions of developers and investors, says Gabrielė Gegevičiūtė, Investment Project Manager at Capitalica Asset Management.
According to the expert, the Baltic states still pay little attention to circular economy principles, renovating old buildings, utilizing vacant spaces in city centers, and ensuring quality living conditions for the aging population.
Despite this, new living concepts, sustainability commitments, and the use of advanced technologies, including artificial intelligence in building development and management, are global trends that are also rapidly emerging in the Baltic region, notes the SBA Group’s investment management company project manager.
A Sustainability Certificate Is No Longer Enough
In the Baltic states, sustainability in buildings is a top priority. Developers of new business centers and other real estate projects, office tenants, and investors evaluate buildings based on their durability, environmental resilience, indoor air quality, material sustainability, and other factors.
G. Gegevičiūtė points out that, ten years ago, simply presenting a sustainability certificate was enough to impress investors, tenants, or buyers—but today, the situation has changed.
“Certificates such as BREEAM, which prove a building’s environmental friendliness, are now a market standard rather than a competitive advantage. Even buildings that are just a few years old are being certified to demonstrate their high quality. Today, the priority of commercial real estate developers is ensuring tenants well-being—providing optimal lighting, air quality, ventilation, sound insulation, and other comfort features. In this regard, we are not lagging behind; in many cases, we are even ahead of Western European countries,” she explains.
Digitization Goes Beyond Efficiency
The management of buildings in the Baltic states is increasingly relying on data collection and artificial intelligence (AI) analytics.
“Companies have started collecting building data, analyzing it, and making informed decisions to optimize building operations. For example, at several office properties managed by Capitalica Asset Management in Lithuania and Latvia, we use a system that monitors heating, ventilation, and air conditioning. It detects technical issues and suggests solutions. During office hours, the temperature is maintained at the tenants’ preferred level; after hours, it automatically lowers to a minimum, and in the morning, it is adjusted back to the set level. This not only conserves company resources but also prevents unnecessary energy waste,” explains the expert.
The real estate market in the Baltic states is also being transformed by virtual reality (VR) tools, which are now being adopted by an increasing number of companies.
“B2C (business-to-consumer) companies, in particular, use VR headsets or offer virtual tours on their websites to showcase future spaces and offices while they are still under construction. These tours include not only the interior but also the view from the building’s windows,” says G. Gegevičiūtė.
Societal Changes Drive Real Estate Evolution
According to the expert, societies worldwide are undergoing fundamental shifts that are reshaping lifestyles and expectations for real estate.
“The number of people living alone is increasing every year. In the past, couples would rush to get married, buy a home, and start a family. Today, young people have different priorities, often focusing on their careers and personal growth. As a result, their housing preferences are changing. Large three- or four-room apartments are no longer as popular as one- or two-room apartments, studio-type flats, or lofts—designed for single-person living,” she explains.
Additionally, co-living apartments are becoming more common in the Baltic states, particularly in Lithuania’s major cities, where this trend originated. These small but fully furnished apartments, equipped with all necessary appliances, are especially attractive to young professionals and students who cannot afford larger rental spaces.
“While we have not yet reached the level of Asian countries where people live in capsule apartments, we are moving in that direction,” concludes G. Gegevičiūtė.
