Future opportunities in Baltics
Bonava is building apartments in the Baltic capitals – Tallinn, Riga and Vilnius. The markets differ, but all have good con¬ditions for growth with profitability. The low quality of the existing housing stock combined with growing demand for energy efficient and well-planned housing presents opportunities for the future, including resource-efficient and modern rental apartments.
Market potential and drivers
Bonava is the largest residential developer in Latvia and among the top three for a number of years in Estonia. Despite challenging markets and reduced volumes, this position was successfully maintained in 2023. In Lithuania, where Bonava commenced operations in 2020, the company has established a solid organisation and developed its first projects. Here, Bonava has the potential to become a leader.
The markets in all three Baltic capitals have displayed growth in recent years, although they encountered a mild economic downturn in 2023. However, the expectation is that there will be a return to growth in 2024. Low unemployment supports the markets, but increased interest rates have reduced consumer confidence and purchasing power. Interest rates are expected to settle during 2024. The low quality of the existing housing stock combined with growing demand for energy-efficient and well-planned housing presents opportunities for the future, including resource-efficient and modern rental apartments. Increased energy prices have entailed a push for eco-friendliness. In addition, banks are active in Baltic markets competing for housing loan customers. Accordingly, there are several factors that support a return to a more favourable market in 2024.
Strategic focus going forward – growth
The Baltics segment is in the third phase of maturity, with the right conditions for cautious growth. As the markets develop more favourably, profitable growth will be secured by maintaining control over purchasing, design and production and having a strong team in place. Bonava will continue to invest in the immature consumer markets and continuously develop the customer offer. The capital city of Vilnius, situated in the largest country in terms of population, offers additional growth potential over time as it is the most recent market Bonava has entered.