Deal of the year in the Baltics: ReInvest acquires brand new SEB HQ in Vilnius CBD
Luxembourg based ReInvest Asset Management acquired the property, making its debut in the Baltics. Baltic region demonstrates solid economic performance, which is expected to spill over into the real estate market.
Today, ReInvest acquired the newly built SEB HQ located in the heart of Vilnius CBD, Lithuania. The landmark property is ca. 12,800 m2 of net leasable area. It is single let to the Swedish SEB bank on a long-term basis. The property features the only one in the Baltic market BREEAM Outstanding certification. SEB HQ has been developed and sold by Lords LB Asset Management. Newsec in the Baltics acted as the transaction advisor.
Interest from international investors
“During 2020 we saw an increasing interest for the Baltic real estate from international investors despite the uncertainty caused by Covid-19. Our market liquidity might seem an issue “on paper”, however, prime real estate receives a lot of attention from both local and international investors. This has also been the case with SEB HQ and other latest transactions”, says Andrius Svolka, Head of Transactions at Newsec in the Baltics.
Besides the recent transaction by ReInvest, last year German Deka acquired its first office property making it the record 156m EUR transaction in the Baltics. Since 2015 the market witnessed quite many new international names transacting in the Baltics: Deka, Corum, WP Carey, Blackstone, Vienna Insurance Group, Partners Group, just to name a few.
Baltic real estate market
Typically, international investors in the Baltics are attracted by the yield gap, relatively new and quality stock (majority of the properties are built after 2010 and are BREEAM/LEEDS certified), ease of doing business, low m2 prices and low rent levels (15-17 EUR/m2). The market is dominated by international tenants, especially Nordic and German, such as Swedbank, Danske Bank, Telia, Western Union, SEB, Nasdaq, Moody’s, Revolut, etc.
Vilnius’ prime office market remained very healthy during 2020 with ca. 70,000 – 100,000 m2 annual take-up (last 5y average) and prime office vacancy being around 2-3%. With work from home concept being validated, it is expected that the nearshoring trend of SSC/BPO will continue due to the existing labour cost gap. In addition, local start-ups and fintech companies are becoming an important office market occupier too (Vinted, Skype, Bolt, Tesonet, Transferwise, etc). Lately, due to political turmoil in neighbouring Belarus and Ukraine there has been a strong influx of businesses and talent pool into the countries. Baltic real estate market will benefit directly because of all these developments.
The Baltics – economic convergence to EU
According to Andrius Svolka, Head of Transactions at Newsec in the Baltics, the Baltic countries are poised to recover and grow faster than the EU average due to their solid macro fundamentals: low debt to GDP level (both sovereign and household), surplus current account, emerging re-emigration of talent pool, wage growth, etc. “Today, the Baltics are characterized as the CEE region, however, we are very optimistic that the ongoing economic, social and cultural convergence to the Nordics and EU will continue, making the Baltics an extension of the Nordics in the coming decade”, says Andrius Svolka.
According to the IMF, in 2020 Lithuanian is estimated to surpass Slovakia, Slovenia and Spain by GDP per capita (PPP adjusted). Assuming the GDP growth gap continues, Lithuania, Latvia and Estonia are expected to catch up with Italy by 2025, the UK and France by 2030, and the Nordics by 2040.