Lithuanian commercial real estate market functioning peculiarities

Komercinio nekilnojamojo turto rinka, kitaip nei būsto rinka, yra tiesiogiai priklausoma nuo ekonominių pokyčių ir tendencijų šalyje, bei laikoma vienu patraukliausių investavimo į nekilnojamajį turtą segmentų. Straipsnyje analizuojami Lietuvos komercinio nekilnojamojo turto (NT) rinkos funkcionavimo ypatumai, nulemti ekonominių sistemų transformacijos.Most of the real estate markets usually used for comparison (in most cases Scandinavian countries) have formed significantly earlier than Lithuanian real estate market and, moreover, operated under different economic conditions over a long period of time if compared with the whole existence of Lithuanian commercial real estate market. Therefore, it is relevant to analyse Lithuanian commercial real estate market functioning peculiarities and make forecasts taking into consideration fundamental differences of markets, formed mainly due to different surrounding (economic) systems. This helps to reduce inaccuracy of any forecast important for market participants’ expectations and decisions. Qualitative market formation analysis was performed by reviewing and comparing two commercial real estate distribution mechanisms – Soviet era distribution-based mechanism and market economy- based mechanism – and their major elements (objects, participants, functioning of distribution mechanism, state’s role, environment, real estate in terms of user market, development market, financial assets market and land market). The analysis provided several conclusions: In almost twenty years of development and functioning the Lithuanian commercial real estate market has been developing fast; real estate distribution mechanism has improved significantly and currently matches characteristics of market economy distribution mechanism; currently, first of all, due to global economic recession, real estate developers have no possibilities to offer new objects to the market (in the shortrun demand for any objects is limited, oversupply of real estate prevails), moreover, it is hard to acaccomplish projects in the pipeline. Effective demand currently is very low and has a significant impact on commercial property market functioning in all segments; therefore, mismatch between supply and demand exists. Effective functioning of financial intermediation is prerequisite of the whole market mechanism functioning; Due to the limited market size, low liquidity and low market transparency, the Baltic commercial property market at the moment is not very interesting to investors; Complicated economic situation and weak abilities of the state to support business by stimulating the need for new projects (educational/social purpose and residential property renovation, infrastructural projects, industrial parks promotion through tax initiatives and infrastructural support, new business stimulation, attracting of FDI, etc.) limits creation of new working places, increase of consumption as well as activity of commercial property market in general. Other countries, where state budget and financial abilities are much stronger, it real estate market renaissance is more evident in the near future. Despite the fact that the Lithuanian commercial property market meets the matured market criteria in terms of distribution mechanism, user, and development market, it still differs in terms of financial and land markets Despite the fact that the Lithuanian commercial property market meets the matured market criteria in terms of distribution mechanism, user, and development market, it still differs in terms of financial and land markets and state role. Therefore, currently it is irrelevant to compare homologous different markets, which have formed in different economic systems and were functioning under different conditions. All of the above suggests applying different patterns for prognosis when several different markets are being compared