Tower Prefeasibility

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Feasibility Study
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CLIENT: PAJURIO MEDIENA, LITHUANIA CANADA LTD.

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12/27/2010 ICA partners

FEASIBILITY STUDY
Table of Content
1. Introduction ......................................................................................................................................................... 3
2. Executive Summary .............................................................................................................................................4
2.1 Analysis of the object..................................................................................................................................4
2.2 Location analysis .........................................................................................................................................4
2.3 Analysis of market competitors ................................................................................................................. 5
2.4 Analysis of Klaipeda real estate market ..................................................................................................... 5
2.5 Financial analysis of alternatives ............................................................................................................... 6
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3. Analysis of the Object .......................................................................................................................................... 7
3.1 Analysis of General plan of Klaipeda city ................................................................................................... 7
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3.2 Analysis of the Detailed plan of the territory ........................................................................................... 8
3.3 Analysis of communications ...................................................................................................................... 9
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3.4 Municipalitys position regarding the territory ........................................................................................ 9
4. Location Analysis ............................................................................................................................................... 10
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4.1 Area surrounding the site ......................................................................................................................... 10
4.2 Adjacent land uses ..................................................................................................................................... 11
4.3 Existing key establishments in the area ................................................................................................... 13
4.4
4.5
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Visibility of the site .................................................................................................................................... 18
Connectivity to the site ............................................................................................................................. 19
4.6 Accessibility of the site ............................................................................................................................. 21
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4.7 Proximity to the main generators of commercial, shopping, and leisure objects in the city ............... 22
5. Analysis of Market Competitors ....................................................................................................................... 23
5.1 Competitors of residential market in Klaipeda ........................................................................................ 23
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5.2 Competitors of commercial market in Klaipeda ...................................................................................... 31

6. Analysis of Klaipeda Real Estate Market ..........................................................................................................38
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6.1 Market analysis prices, turnover, supply, demand ...............................................................................38

6.2 Future development and identification of main competitors ................................................................ 51
6.3 Analysis of main competitors estimation of liquidity ........................................................................... 53
6.4 Analysis of transactions data of Centre of Registers (Period 2010 01-06) ..........................................56
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6.5 Summary of real estate valuators survey .............................................................................................. 64

6.6 Summary of real estate brokers survey ................................................................................................. 64
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6.7 Forecasted market liquidity ..................................................................................................................... 64

6.8 Economical forecasts for Lithuania ..........................................................................................................65
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6.9 Description of economical, business and demographical situation in Klaipeda .................................... 71

6.10 Policy of banks towards financing real estate sector ............................................................................. 75
6.11 Conclusions of real estate market analysis ..............................................................................................76
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6.12 Proposed alternatives for territory development ................................................................................... 77

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7. Financial Analysis of the Alternatives ...............................................................................................................79

7.1 Assumptions on development costs ........................................................................................................79
7.2 Assumptions on developments income ................................................................................................ 80
7.3 Analysis of alternatives ............................................................................................................................. 81
7.4 Outcomes of alternatives ........................................................................................................................ 90
7.5 Sensitivity analysis ................................................................................................................................... 90
7.6 Comparison of alternatives ...................................................................................................................... 91
7.7 SWOT analysis ........................................................................................................................................... 92
8. Summary, Conclusions and Recommendations ...............................................................................................93
FEASIBILITY STUDY
1. Introduction
The Feasibility study has been prepared by ICA Real Estate, Ltd. independent real estate property
advisers. It has been prepared on the basis of information provided by the client Pajurio Mediena,
Lithuania Canada Joint Stock Company as well as on the basis of the copies of certain documents,
the information in the publicly available Register and database of ICA Real Estate, Ltd. The sole
purpose of the Feasibility Study is to suggest and financially justify the best alternative to develop
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the Project considering the location, situation in the real estate market, development costs and
liquidity of the object.
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We have not verified whether all information delivered is true and comprehensive, except to the
extent that we have specified in the Feasibility Study. ICA Real Estate, Ltd. is not liable for changes in
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information or replacement or elimination of documents, which information was used in the
Feasibility Study.
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This Feasibility study consists of several main blocks: a) analysis of the object including the site, its
location, connectivity, visibility, accessibility, etc., b) market analysis of real estate segments in
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Klaipeda determining the ones with the biggest potential for further development and identifying
the most promising development alternatives in the analysed territory, and c) financial evaluation of
chosen development alternatives in order to determine the duration of the projects, profitability,
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etc.
The key sources for this Feasibility study will be: a) data gathered by ICA Real Estate, b) data by
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Centre of Registers, c) information provided by Statistics Lithuania, and d) other publicly available
sources. We also include review of macroeconomic situation in Lithuania and Klaipeda in order to get
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a better understanding of perspectives of the country and Klaipeda.

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FEASIBILITY STUDY
2. Executive Summary
2.1 Analysis of the object
The analysed site is located in the Northern part of Klaipeda city. The site is close to several of the
most important districts of Klaipeda city - the City Centre of Klaipeda and Old Town and they can be
reached within 10 minutes. The Master plan of Klaipeda sets the territory as for industrial,
manufacturing, warehousing and other related development which can be changed to
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multifunctional development social, commercial, residential without changing the Master Plan. The
site is located next to the river as well as between already existing residential district and industrial
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area, which has a potential to be converted in the future too. Main development indices are provided
below:
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Area of the territory 155,733 sq. m;

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Intensity allowed by General plan 1.5;
Density allowed by General plan up to 82%.
Total area planned to be constructed 233,600 sq. m;
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Maximum planned height of the buildings 9 floors.
2.2 Location analysis

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The territory is located in the Northern part of Klaipeda city. Currently it is located in the industrial
zone, but it is due to change soon as local municipality has approved plans to convert it from
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industrial to mixed-use including commercial, residential and social purposes. Moreover, key
establishment in the area was an opening of new road Siaures av. three years ago which enhanced
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the communication with the central part of the city.
The closest land lots from the West are intended for commercial, residential or public development.
The territory from the Northwest is neighboured by individual houses. The site is also neighboured
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from the East by several companies related to production of construction materials. Neighbours
from the South are preparing the detailed plan, but the latter land lots are relatively small and do not
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influence much the whole conversion process. In order to do this, the biggest neighbours should join
it. However, they do not intend to join a conversion any time soon and plan to continue their
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industrial processes.
In general, the visibility of the object is good. It is mostly visible from all directions, except from the
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Southeast, where visibility is poor. From the West the object is clearly visible. The later is very
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important, because this direction (via Siaures av.) is frequently used by citizens and guests of
Klaipeda. From North the visibility is also very clear, because the land lot is next to the street (Pievu
str.) which leads to the prestigious block of individual houses. Lastly, the Eastern direction provides a
possibility to have a great view to the river Dane. However, currently this direction is blocked by
industrial objects.
Connectivity to the site is very favourable. It is next to the main roads of Klaipeda, therefore, it is
easy to access different parts of the city. Moreover, important objects such as bus station, railway
stations or city centre are up to 1-2 km distance and it takes up to 5-10 minutes to get there. Currently
FEASIBILITY STUDY
accessibility to the site is possible mostly by private transport, because there is only 1 bus route
passing through the territory. However, it is very likely that in the future, after the actual conversion
from industrial to commercial and residential territories begins, there should be more public routes
available including buses and minibuses as well as more bus stops established. At the moment, the
bus stop where route No. 18 passes through is around 200 metres from the site.
2.3 Analysis of market competitors

Residential and commercial objects, which already are participating in selling or lease markets as well
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as objects that already have permissions for construction or are in a planning stage (detail planning,
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preparation of the concept or trying to get permission for construction) are identified. The analysis is
split into 2 stages: a) analysis of residential market, and b) analysis of commercial market.
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After assessment of residential market it can be concluded that, there are no competitors in close
proximity and only few in intermediate proximity. The latter are already completed, therefore, it is
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very likely that in short term theses objects will be sold out and the supply of apartments should
decrease significantly in this area. However, current supply of apartments in Klaipeda (around 500
unsold) might be supplemented by at least 1,500 apartments in the upcoming future.
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Retail market is quite developed in Klaipeda. There are several large retail centres and many smaller
retail objects. Therefore, the market is filled. After analysing the office market it can be concluded
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that the market is oversupplied, because many objects are already constructed with high vacancies
and low rents as well as there are many objects prepared for development and stopped during the
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crisis.
2.4 Analysis of Klaipeda real estate market

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Retail market there is a niche for a retail object of around 3,000 sq. m in Siaures av. At least half of
it should be leased to grocery store. However, there are several commercial land lots next to the site
in a better location which would most likely outrival the objects in our analysed site. As a result, we
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would suggest development of retail premises on the ground floor along Pievu str. and a sport club.
However, in total, the proportion of commercial premises in the project should be very small
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around 5%. Moreover, it would be possible to open a sport club, because such is missing in close
proximity.
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Office market a lot of empty premises are available in the market. Considering current market
situation, it will be possible to lease them out in only 2-3 years. Moreover, there are at least 4 large
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scale business centres prepared for development therefore, we dont see a possibility to fit in this
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market for a new project. In addition, the territory is not in the central part of the city nor at the
intersection of main roads. As a result, we suggest developing only a small area of administrative
premises on the ground floor of the buildings.
Real estate segment of individual houses and residential land lots statistics supplemented with
opinions of brokers and valuators indicate that there is low supply in the market. There is no new
large scale projects of individual houses planned in the city. In many cases developers face a
shortage of money and do not even invest into infrastructure and communications in order to raise
the value of the land lot. What is more, buyers are sceptical regarding such land lots. However, the
demand is also limited because of relatively high land price. The latter is among the highest in
FEASIBILITY STUDY
Klaipeda in our analysed district therefore, before developing individual houses or residential land
lots, we should analyse the exact market more detailed in order to see if the product is liquid.
Low-rise block-of-flats (up to 4 floors) and cottages the analysis revealed that such products are
attractive to buyers and are the most liquid in the market. Currently such projects are absent in the
market only remainders left. Moreover, because of tough financial situation its unlikely to attain
new supply shortly (in 3 years). The main competitor in low-rise residential development is Bilukas,
Ltd - Danges Vingis (Panevezio str 25). Other low-rise projects of Metva, Ltd - Kretingos str. 100
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and EDP Group, Ltd Liepu str. will probably develop their projects later than in 3 years, because
they currently face financial problems and have postponed development plans. What is more,
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investment into cottages should be considered more carefully, because cottages are not very
popular development in Klaipeda, except, the sea coast areas. Cottages could be developed next to
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the individual houses, postponing this phase to later periods, when the market is recovered.
High-rise (5-9 floors) residential development such projects are currently quite liquid in the market,
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but not because of the projects itself, but because low-rise residential supply is very low, therefore
buyers choose flats in a high-rise buildings. However, in general, high-rise block-of-flats are not very
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preferred by residents and, as a result, the prices are lower by 20-30% in comparison to low-rise
projects. Moreover, new high-rise projects would have more competitors and would fit a different
market, were liquidity is lower. However, more detailed calculations are required in order to find out
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which scenario is more profitable to the developer.
2.5 Financial analysis of alternatives

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Two different alternatives were financially analysed. Commercial development was rejected as the
market is not favourable. Instead, we suggest residential development with minimal commercial
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area on the ground floors. We see two possible residential development alternatives: a) low-rise, and
b) high-rise block-of-flats.
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After the evaluation it can be concluded that Alternative No. 2 (high-rise development) is less
attractive in many aspects. Firstly, the construction works will most like be more expensive as high-
rise buildings require stronger foundations and other construction elements. Moreover, elevators
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will be necessary, which also cost additional money and consume NET area in the building. Secondly,
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development of this alternative will most likely take longer in comparison to Alternative No. 1 (low
rise development), because apartments in high-rise buildings are less demanded in Klaipedas
residential market. As a result, volume of transactions would also be lower. Lastly, outcomes of
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financial analysis state that Alternative No. 2 should not be preferred as it does not generate positive
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Net Present Value (NPV) and Internal Rate of Return is lower than a discount rate meaning that in
this case it is better to invest money elsewhere. For example, into a low-rise development
alternative, which seem to be attractive on many aspects such as positive NPV, higher ROI and ROE
rates.
FEASIBILITY STUDY
3. Analysis of the Object
3.1 Analysis of General plan of Klaipeda city
Klaipeda City Master Plan was approved in 2007. The Master plan points the direction of expansion
of Klaipeda, shows priorities of territories for main residential, commercial development. The
finalization of Klaipeda City Master plan will help to concentrate regional development near existing,
major urbanised areas, limiting urban sprawl in green field.
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Klaipeda City Master Plan has a high priority towards development of residential areas in the city. It is
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intended to increase the habitable fund up to 30 sq. m of living area per person. Moreover, new
residential blocks should consist of 35% high-rise and 65% low-rise buildings. Qualitative surroundings
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including residents leisure, household and parking areas must be determined in every new project. It
is recommended to initiate new high-rise residential projects only in the territories accessible by
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public transport with communications and social infrastructure or in the territories where such
infrastructure is planned to be constructed. Local shopping centres and services should be planned
next to the main streets where new work places will be created.
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The analysed site is located in the Northern part of Klaipeda city. The site is within 10 minutes drive
from the most important districts of Klaipeda city - the City Centre and Old Town. The Master plan of
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Klaipeda sets the territory as for industrial, manufacturing, warehousing and other related
development which can be changed to multifunctional development social, commercial, residential
without changing the Master Plan. The site is located next to the river as well as between already
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existing residential district and industrial area, which has a potential to be converted in the future
too.
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FEASIBILITY STUDY
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3.2 Analysis of the Detailed plan of the territory

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The detailed plan of the territory is under preparation, but there are some data analysed and
preliminary schemes prepared.
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Actual information regarding the development of the territory:

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Area of the territory 155,733 sq. m;

Intensity allowed by General plan 1.5;
Density allowed by General plan up to 82%.
Total area planned to be constructed 233,600 sq. m;
Maximum planned height of the buildings 9 floors.
It is intended to split the territory into 11 development stages. Development in stages minimizes the
risk, enables to raise necessary funds for development, allows rethinking of the strategy of the
project as well as making minimal adjustments of the concept in order to hit the market needs in
every stage.
FEASIBILITY STUDY
1st stage 3rd stage

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2 stage
4th stage
5th stage 6th stage
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th 11th stage
7 stage 8th stage
(c)9th stage 10th stage
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3.3 Analysis of communications

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New communications requirement, their location, etc. is being prepared by Progressive Projects, Ltd.
3.4 Municipalitys position regarding the territory

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Klaipedas city Municipality decided to convert the territory, where our analysed lot is located, from
industrial to commercial/ residential as this area is located close to the city centre and would provide
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additional value and benefit to the society of Klaipeda. Pajurio Mediena, Ltd was among the first who
started more active actions toward conversion of the territory. There is also Viremidos Investicijos,
Ltd which also started preparing the detailed plan. Other neighbouring land lots are still used for
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industrial purposes. The process is slow, but in time this part should be fully integrated to the city.
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FEASIBILITY STUDY
4. Location Analysis
In the following paragraphs, an in-depth overview of the site for the proposed multifunctional
development is provided. This includes the consideration of surroundings of the site, its visibility,
proximity and accessibility to the main social, commercial and leisure objects in Klaipeda.
4.1 Area surrounding the site
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The territory is located in the Northern part of Klaipeda city. Currently it is located in the industrial
zone, but it is due to change soon as local municipality has approved plans to convert it from
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industrial to mixed-use including commercial, residential and social purposes. Moreover, key
establishment in the area was an opening of new road Siaures av. three years ago which enhanced
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the communication with the central part of the city.
The analysed site is surrounded from the East and from the South by territories intended for
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conversion and from the West by prestigious residential district.
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1 Prestigious residential district, 2 Conversion territories, 3 City centre, 4 Old town

FEASIBILITY STUDY
4.2 Adjacent land uses
The closest neighbours from the West (land lots No. 1, 2, 3 and 4) are intended for commercial,
residential or public development. The territory from the Northwest is neighboured by individual
houses. The analysed site is also neighboured from the East by several companies related to
production of construction materials. Neighbours from the South (land lots No. 6 and 7) are
preparing the detailed plan, but the latter land lots are relatively small and do not influence much the
whole conversion process. In order to do this, the biggest neighbours: land lot No. 5 and No. 14 in the
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map below should join it. However, they do not intend to join a conversion any time soon and plan to
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continue their industrial processes.
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17 19
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No. Land plot Unique No. Owner Purpose

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area, sq. m.
1 4,064 4400-1607- Lithuania Republic Other Commercial
1575 territories
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2 12,175 4400-1600- Lithuania Republic Other Residential high

2732 rise territories
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3 17,036 4400-1611- Lithuania Republic, rent agreement Other Public area

1905 with Klaipeda municipality
4 14,794 4400-1005- Senpaule LTD Other Commercial
1528 territories
5 181,076 2101-0002- Lithuania Republic, rent agreements Other Industrial
0244 with APK LTD, Betono mozaika territories
LTD, Feliuga LTD, Skaldinelis LTD
and one physical person
6 1,413 2101-0002- Lithuania Republic, rent agreement Other Industrial
0552 with VIREMIDOS INVESTICIJOS LTD territories
0553 with VIREMIDOS INVESTICIJOS LTD territories
FEASIBILITY STUDY
0731 with SEB lizingas AB territories
9 7,390 2101-0002- Laivite AB Other Industrial
0301 territories
10 8,958 4400-0436- Lithuania Republic, rent agreement Other Commercial

7199 with Baltic Petroleum LTD territories
11 533 2101-0026- Physical person Agricultural
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3201 with AB VST territories
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0084 with Nekilnojamojo turto fondas LTD territories
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5180 with "Klaipedos mediena" AB, "Baltijos territories
elektriniu investicijos" LTD, "Intrac
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Lietuva" LTD
15 52,652 4400-1766- Lithuania Republic, rent agreement Other - Engineering
4305 with Klaipedos autobusu parkas LTD infrastructure territory
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4192 with Klaipedos autobusu parkas LTD territories
17 6,700 2101-0039- "Swedbank lizingas" LTD Agricultural
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18 20,000 2101-0039-
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Physical person Agricultural
19 28,180 4400-0313- Statemos Investicijos LTD Agricultural

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20 27,600 2101-0039- Physical person Agricultural
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22 10,000 2101-0039- "Swedbank lizingas" LTD Agricultural
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28 1,500 2101-0039- AIDA SERKSNIENE, ATAS SERKSNYS Agricultural
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29 5,614 2101-0039- Many physical persons Other Residential low
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0289 rise territories

30 24,965 4400-1973- Lithuania Republic, rent agreement Other Residential high
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4411 with Klaipeda national college rise territories

FEASIBILITY STUDY
4.3 Existing key establishments in the area
All key establishments in the area are at least 1 km away from the site. As the analysed object is
located in the industrial territory, which is under integration to the central part of the city, such
distance is quite normal. The establishments are divided into 3 groups: 1) existing objects, 2) objects
under development, and 3) planned key developments. We provide a map with objects and the
tables describing them. The analysed land lot is marked as red circle.
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Key objects in the surrounding area (1, 2, 3... in the map above)
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No. Object Picture

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1 Lithuania Christian College (LCC) the nationally and

internationally recognized liberal arts institution.
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2 Retail centre Studlendas opened in 2006. 8,000 sq.
m., 54 tenants. Anchor tenant IKI.
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3 Klaipeda University. Established in 1991 is the most
important scholastic centre in the region. Around 10,000
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students are taught there by more than 600 lectors each
year.
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4 Office centre - Klaipeda science technology park. Opened
in 2004. Class B1. Space 1,800 sq. m. (c)
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5 Klaipeda rail station.

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6 Klaipeda bus station.

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7 Shopping mall Mega Plaza. Opened in 2003. Space

3,500 sq. m.
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8 Mixed use commercial building Herkaus galerija.
Opened in 2009. Retail space 4,800 sq. m., office space
1,280 sq. m.
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9 Office centre Vite. Opened in 2006. Class B1. Space
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2,300 sq. m.
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10 Vite business centre. Opened in 2009. Class A. Space
10,000 sq. m.
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11 Mixed use commercial-residential project Manto

namai. Opened in 2009. Retail space 2,600 sq. m. 67
apartments were constructed.
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12 Mixed use commercial-residential project K-centras.

Opened in 2006. There are 5,770 sq. m. office space, 307
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room hotel Amberton and apartments, which are

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already sold.
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I
A
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II
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Projects under development (A, B and C in the map)

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No. Developer - Object Picture

Location
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A Pamario troba Residential project. There will be

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LTD - Dragunu around 700 apartments in the future.

str. (Sarlotes There are already 1,050 apartments
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kvartalas) sold in this project. Project is under

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development. Projects end is

unknown.
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B Bilukas LTD - Residential project. There will be
Panevezio str. around 150 apartments in the future.
(Danges vingis) There are already 150 apartments
sold in this project. Projects is under
development. Projects end is
unknown.
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C PC Liepa in Retail centre. 6,100 sq. m. Anchor
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Liepu str. tenant NORFA. Under development
end is planned in 2010 12
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Planned projects (I, II, III, IV in the map)
No. Location Object Picture

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I "Metva" LTD - Residential project. There will be
Kretingos str. 100 around 350 apartments. 3/9 store
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(Lietuvos Kino buildings, underground parking.

Studija) Detail plan is approved. Future
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project opening year unknown.
II "EDP GROUP" Residential project. Project

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LTD and other conception is approved. There will

owners - Territory be around 1,700 apartments. 6/8
between Sauliu store buildings, underground and
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property, Danes above-ground parking. Future

river, A13 highway project opening year unknown.
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and Liepu str.

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III Business centre - Office centre. 15,000 sq. m. Detail

Artojo str. 2 plan is approved. Future project
opening year unknown.
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IV "Verdispar Residential project. There will be

Gluosniai" LTD - around 500 apartments. 4/5/9/12/18
Gluosniu str. 9, 11 store buildings, underground
(Riversaidas) parking. Detail plan is approved.
Future project opening year
unknown.
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4.4 Visibility of the site
In general, the visibility of the object is good. It is mostly visible from all directions, except the No. 1
marked angle of view, where visibility is poor. From the West the object is clearly visible. The later is
very important, because this direction (via Siaures av.) is frequently used by citizens and guests of
Klaipeda. From North the visibility is also clear, because the land lot is next to the street (Pievu str.)
which leads to the prestigious block of individual houses. Lastly, from the Eastern direction provides
a possibility to have a great view to the river Dane. However, currently this direction is blocked by
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industrial objects.
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4.5 Connectivity to the site
The site is very favourably located on the connectivity point of view, because it is close to the main
roads. Moreover, it is just around 2-3 km away from the city centre as well as from the highway A13
which leads to Palanga on the Northern direction and on the Southern direction to the highway A1
and other cities of Lithuania.
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~2
3 km
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1 Prestigious residential district, 2 Object in conversion territory, 3 City centre, 4 Old town
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Palanga, Latvia
Palanga Airport
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Kaunas, Vilnius
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1 Rail station, 2 Bus station, 3 City centre/Old Town, 4 First fairy port, 5 Second fairy port, 6
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International Ferry Port
Connectivity to the site is very favourable. It is next to the main roads of Klaipeda, therefore, it is
easy to access any part of the city. Moreover, important objects such as bus, railway stations or city
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centre up to 1-2 km distance and takes up to 5-10 minutes to get there. The main objects and distance
to them are provided below:
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Local objects:
Bus station 1 km/5 min

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Railway station 1 km/5 min

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City centre 2 km/10 min
The 1st ferry 3.5 km/15 min

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The 2nd ferry 5.5 km/20 min

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Seaport 8 km/25 min
Intercity objects:
Palanga 30km/30 min
Palanga airport 35km/40 min
Kaunas 220 km/2h
Ryga 230km/2 hours 30 min
Vilnius 300 km/3 hours

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4.6 Accessibility of the site
Currently accessibility to the site is possible mostly by private transport, because there is only 1 bus
route passing through the territory. However, it is very likely that in the future, after the actual
conversion from industrial to commercial and residential territories begins, there should be more
public routes available including buses and minibuses as well as more bus stops established. At the
moment, the bus stop where route No. 18 passes through is around 200 metres from the site. Route
No. 18 is provided in the map below:
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Co
(c)
na
die
me
ju rio
Siaures stop
Bus
Panevezio str., Kretingos str., Siaures str., Liepu str., Joniskes str.,
Pa
18
Mokyklos str., Tilzes str., Sausio 15-osios str., Taikos str.
B
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FEASIBILITY STUDY
4.7 Proximity to the main generators of commercial, shopping, and leisure
objects in the city
The location of the site benefits from close proximity to demand generators of commercial, leisure,
and shopping type. Key objects, their type and distance to them are provided in the table below:
Generator Segment(s) Distance Driving

(km) time (min)
ht
Summer stage Leisure, entertainment 2 5
I Melnarage Leisure, entertainment 5 5
rig
Giruliai Leisure, entertainment 10 10
Amberton Hotel Leisure, entertainment 3 10
py
City Centre Leisure, entertainment, 2 10
shopping
Co
Klaipeda arena (under Leisure, entertainment 6 20
construction)
PC Studlendas Shopping, entertainment 1,5 5
PC Akropolis
(c)
Shopping, entertainment 5,5 15
PC Liepa (under Shopping 0,8 5
na
construction)
PC Banginis Shopping 5,5 15
die
PC Grandus Shopping 6 20
PC Arena Shopping 6 20
PCs BIG1 and BIG2 Shopping 7 25
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Klaipeda municipality Other 3 10

ju rio
B Pa
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FEASIBILITY STUDY
5. Analysis of Market Competitors
This part involves the identification of residential and commercial objects, which already are
participating in selling or lease markets as well as objects that already have permissions for
construction or are in a planning stage (detail planning, preparation of the concept or trying to get
permission for construction).
5.1 Competitors of residential market in Klaipeda
ht
Apartments
rig
In this part a map of apartment projects in Klaipeda is provided. The map represents properties
which are already developed (blue circle), under construction (green circle) or stopped after finished
py
development (dark yellow circle), because the developer went bankrupt.
As it is seen from the map, there are no competitors in close proximity and only few in intermediate
Co
proximity. The latter are already completed, therefore, it is very likely that in short term the supply of
apartments should decrease significantly in this area.
(c)
na
die
me
ju rio
B Pa
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FEASIBILITY STUDY
13
12
ht
rig
py
8
Co
(c)
na
6
15
7
die
me
16
17
rio
14 5
2 3
1
ju
10
B Pa
UA
9 11
9
FEASIBILITY STUDY
Developed, under construction, bankrupted apartment projects.
NR. PROJECT - STAGE FREE PRICE (2010 07) ADDITIONAL
ADRESS APARTMENTS INFORMATION
(2010 07)
1 Gandraliskes Under construction Free 30 of 303. From 4,200 8 houses, 7 stores,
(Northern part) - end 2010 12 LTL/sq. m (partly underground parking
Taikos str. decorated)
2 Gandraliskes Finished 2007 05 Free 60 of 164. From 4,000 34 store building,
(Pilsotas) - Kuosu LTL/sq. m (partly underground parking
str. decorated)
ht
3 Gandraliskes Under construction Free 21 of 143. From 4,400 7 store building,
(Central part A) - end 2010 12 LTL/sq. m (partly underground parking
rig
Taikos str., decorated)
Minijos str.
4 Aukstoji smelte - Under construction Free 75 of 117. From 3,800 20 store building,
Minijos str. 159 end 2010 10 LTL/sq. m (partly underground parking
py
decorated)
5 Klaipedos bure - Finished 2009 12 Free 41 of 110. 4,000-4,300 21 store building,
Co
Taikos str. 32A LTL/sq. m (partly underground parking
decorated)
6 "Privatus bustas" Finished 2008 12 Free 7 of 29. 4 5,658-8,896 6 store building,
LTD - Pievu tako reservations. LTL/sq. m (full underground parking
7
str. 8
Manto namai - H. Finished 2009 10
(c)
Free 50 of 67.
decorated)
6,000-8,934 3 houses, 6/7 stores,
Manto str. 7 16 reservations. LTL/sq. m (partly underground parking
decorated)
na
8 Danges Vingis - Finished 2009 08 Free 13 of 84. 4,200-4,400 2 houses, 9 stores,

Panevezio str. 25 LTL/sq. m (partly underground parking
(A, C bloks) decorated)
die
9 Arkada LTD - Finished 2009 12, Free 37 of 122. 5 3,600-3,800 2 houses, 9 stores,
Taikos str. 120, under construction reservations. LTL/sq. m (partly underground parking
120A end 2010 11 decorated)
me
10 Delmonas - Under construction Free 11 of 14. 3,900 LTL/sq. m 5 store building,

Debreceno str. end 2010 12 (partly above-ground parking
20A decorated)
11 BIG2 - Taikos str. Finished 2009 09 Free 67 of 120. From 2,800 22 store building,
141 24 reservations. LTL/sq. m (partly underground parking
rio
decorated)
12 Sarlotes kvartalas Finished 2009 07 Free 43 of 114. 3,500-4,000 4/19 store building,
- Dragunu str. 1 LTL/sq. m (partly underground parking
ju
decorated)
13 Sarlotes kvartalas Under construction Free 100 of 114. 4,300-4,650 9 store building,
Pa
- Dragunu str. 13 end 2010 12 LTL/sq. m (partly underground parking

decorated)
14 Lelija - Birutes str. Finished 2009 12 Free 12 of 18. 3 4,250-5,278 5 store building,
20 reservations. LTL/sq. m (partly underground parking
B
decorated)
UA
15 Lujos namai - H. Finished 2010 01 Free 21 of 24. From 6,000 8 store building,
Manto str. 20 LTL/sq. m (partly underground parking
decorated)
16 Rumpiskes str. 29 Finished 2008 04. Free 28 of 38. Partly decorated 2 houses, 4 stores,
Company bankrupt. underground parking
Auction procedure is
over, bank took over
free apartments.
17 Kauno str. 9A Finished 2008 04. Free 10 of 82. Full decorated 6/18 store building,
Company bankrupt. underground parking
Waiting for auction
procedure.
Total existing supply of apartments is 626.
FEASIBILITY STUDY
We also provide a map and table of apartment projects in Klaipeda which were stopped (green
bubble) in the construction stage or only have permissions for construction (yellow bubble). This
kind of the supply has a secondary importance, because only a part of it can reach the market.
However, we should assume that these projects could be direct competitors, because if developed,
they would enter the market in short time.
ht
rig
py
Co
(c)
na
die
me
ju rio
B Pa
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FEASIBILITY STUDY
29
18
ht
rig
py
30
34 32
Co
(c)
na
20
die
22 28
23
me
24
33
rio
ju
25
Pa
26
B
UA
19
21 27
31
FEASIBILITY STUDY
Objects, which were stopped in a construction stage or which have permission for constructions.
NR. PROJECT - ADRESS STAGE PLANNED ADDITIONAL INFORMATION
APARTMENTS
(2010 07)
18 Sarlotes kvartalas - Dragunu Stopped 120 9 store building,
str. 15 construction underground parking
19 "Metva" LTD - Priegliaus str. 4 Stopped 47 9 store building,
construction underground parking
20 "Baltijos aktima" LTD - Stopped 13 No information
Daukanto str. 13A construction
ht
21 "Baltijos investiciju grupe" Stopped 235 2 houses, 22/25 store
LTD - Taikos str. 141 (BIG2) construction buildings, underground
rig
parking
22 "Invalda nekilnojamojo turto Stopped 18 4 store building, above-
valdymas" LTD - Turgaus str. construction ground parking
py
37 (Jono namai)
23 "Zveju rezidencija" LTD (EDP Stopped 22 2 houses, 5 stores
GROUP) - Zveju str. 10 (Zveju construction
Co
rezidencija)
24 "YIT" AB - Jurginu str. 2C 2007 12 got 47 5 stores, underground
permission for parking
construction.
25 "Stanvara" LTD - Taikos str. 2008 01 got 299
56 permission for
(c) No information
construction.
26 "Hansa Lizingas" LTD - 2008 02 got 244 4 houses, 7/8 stores,
na
Baltijos str. 111 permission for underground parking

construction.
27 "Arkada" LTD - Varpu str. 4B 2008 03 got 88 3 houses, 5/8 stores
die
permission for underground parking

construction.
28 "Verdispar Gluosniai" LTD - 2008 06 got 43 2/3 stores
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Bastionu str. 8 permission for

construction.
29 "Valentino langai" LTD - 2008 07 got 6 2 stores
Palangos str. 10B permission for
construction.
rio
30 "DD Capital" LTD - Vaivos str. 2008 08 got 12 3 store building,

30 permission for underground parking
construction.
ju
31 "Arkada" LTD - Taikos str. 2008 10 got 108 2 houses, 9 stores,

120B, 120C permission for underground parking
Pa
construction.
32 "Bilukas" LTD - Panevezio str. 2009 04 got 126 7 buildings, 5 stores,
25 permission for underground parking
construction.
B
33 "Zanera" LTD - Kauno str. 21 2010 01 got 16 4 stores

UA
permission for
construction.
34 "Trenze" LTD - Vaivos str. 32 2010 01 got 11 3 stores
permission for
construction.
Possible additional supply of apartments in the future is 1,455.
We also provide a map and a table of apartment projects in Klaipeda which have approved detailed
plans or are working on obtaining them. However, the entrance of these projects to the market is
doubtful. Major share of them will probably remain as they are. We also noticed a major possible
competitor (number 51) very close to the analysed territory.
FEASIBILITY STUDY
44 46
ht
rig
py
40
Co
51
(c)
35
na
41
48
die
49
43
42
53 47
me
37
38 36
rio
45
ju
50
Pa
52
B
UA
39
FEASIBILITY STUDY
Objects, which have approved detail plan or just planning future development.
NR. PROJECT - ADRESS STAGE PLANNED ADDITIONAL
APARTMENTS INFORMATION
(2010 07)
35 "Agus Holding SA" - Manto str. 38, Planned detail plan About 80 3/5/7/9 store buildings,
Sauliu str. 25 (Vilhelmo miestas) is approved underground parking
36 "Jaumina" LTD - Taikos str. 22A Planned detail plan About 60 8 store building,
is approved underground parking
37 "Naujasis uostas" LTD - Birutes str. Planned - detail plan is About 65 25 store building,
6 approved underground parking
ht
38 "YIT" AB - Bijunu str. 9, 11 Planned detail plan About 42 4/5 store building,
rig
39 "YIT" AB ir "TXT Invest" LTD - Planned detail plan About 650 4/9 store buildings
Jurininku str., Silutes str., Mogiliovo is approved
str.
py
40 "Bilukas" LTD - Panevezio str. Planned detail plan 42 9 store building,
(Danges vingis) is approved underground parking
41 "Danes sala" LTD - H. Manto str. 19 Planned detail plan 8 5 store building,
Co
42 "Memelio miestas" LTD - Uosto str. Planned detail plan About 700 Has no money for
3 is approved development.
43 "Verdispar Gluosniai" LTD - Gluosniu Planned detail plan About 500 4/5/9/12/18 store
str. 9, 11 (Riversaidas) is approved(c) buildings, underground
parking
44 "Pamario troba" LTD - Dragunu str. Planned detail plan About 300 No information
(Sarlotes kvartalas) is approved
na
45 Plienas LTD Minijos str Planned detail plan About 900 No information
(Gandraliskes) is approved
46 "Metva" LTD - Kretingos g. 100 Planned detail plan About 350 3/9 store buildings,
die
(Lietuvos Kino Studija) is approved underground parking

47 "VIPC Klaipeda" LTD - Bangu str., Planned detail plan About 1,000 9 houses, 4/22 stores
Tilzes str. (Butsargiu gyvenamasis is approved. Company
me
kvartalas) bankrupt.
48 "Dramblio namas" LTD - H. Manto Planned - preparing 25 No information
str. 11 detail plan
49 "Active property" LTD - Joniskes str. Planned - preparing About 100 19 store building
rio
3 detail plan
50 "Voltas" LTD, "Deglas" LTD, Planned conception About 300 2 houses, 30 stores,
"Romada" LTD, "G-logistika" LTD - of project is approved underground and
Dubysos str. 58A, 60 above-ground parking
ju
51 "EDP GROUP" LTD, "Force Palace" Planned project About 1,700 6/8 store building,
LTD, Birute Useliene, Palmira conception is underground and
Pa
Patapiene, Tomas Kesminas, Saulius approved above-ground parking

Stombergas, Valdas Stombergas,
Eurelijus Zukauskas - Teritory
B
between Sauliu property, Danes

river, A13 highway and Liepu str.
UA
52 "Dangorykste" LTD - Taikos pr. 70 Planned - got 77 13 store building,

(Dangorykste) permission to prepare underground parking
network of electricity
53 "Juros vartai" LTD - Zveju str. (Juros Planned About 800 No information
vartai)
Total additional supply in the far future might reach up to 7,700 apartments.
FEASIBILITY STUDY
Individual houses and cottages
The primary market of individual houses and cottages have bankrupted literary. Major share of
developers, which invested in large scale projects have already went bankrupt, changeover or
cancelled their plans because of the economic crisis. It is assumed that most of these objects will be
taken over by banks. The supplementation for such judgement of this market will be provided later
in the analysis, where data provided by Centre of Registers, brokers, valuators, advertisement site
aruodas.lt will reveal that currently there are no larger scale individual houses or cottages projects
ht
under development.
rig
5.2 Competitors of commercial market in Klaipeda
Retail centres
py
Retail market is quite developed in Klaipeda. There are several large retail centres and many smaller
retail objects. We provide a map below, where the following retail objects are shown:
Co
All developed (big blue circles) and future shopping centres (big yellow circles) and all
smaller retail objects (smaller circles) in Klaipeda.
(c)
There are few commercial purpose land lots (orange patterned circles) near our analysed
territory which are owned by Republic of Lithuania;
The first and the second tables provide the data regarding 7 existing and 3 planned shopping
na
centres in Klaipeda respectively.

die
As it can be seen in the map, there are few commercial purpose land lots near analysed territory of
Liepu str. 85A. These land lots are owned by Lithuanian Republic. They were already prepared for
selling in auction in 2009. For some reasons there were no auctions held, but it is assumed that these
me
land lots will be sold to investors in near future. Location of these land lots is better than in analyzed
territory in Liepu str. 85A, because they are situated along the street, are better visible and easy
accessible.
ju rio
B Pa
UA
UA
B
FEASIBILITY STUDY
Pa
5
ju rio
me
die
3
1
4
na
(c)
10
2
Co
7
6
py
rig
ht
9
8
FEASIBILITY STUDY
NR. NAME - ADDRESS NUMBER OF OPENNING USEFULL FREE SPACE (2010 Q2)
TENANTS YEAR AREA
1 Akropolis - Taikos 233 2000/2005 61,000 0% - 0 sq. m. (0 free space)
str. 61
2 BIG - Taikos str. 90 2004 16,600 8% - 1,322 sq. m. (9 free spaces)
139
3 Arena - Taikos str. 26 2005 14,300 6% - 825 sq. m. (4 free spaces)
64, Baltijos str.
24B
4 Grandus - Taikos 27 2005 10,600 2% - 208 sq. m. (2 free spaces)
ht
str. 66A
5 Studlendas - H. 54 2006 8,000 25% - 1,970 sq. m. (8 free spaces)
Manto str. 84
rig
6 Banginis - Silutes 29 2008 27,800 0,3% - 70 sq. m. (1 free space)
str. 35
7 BIG 2 - Taikos str. 66 2008 20,000 6% - 1,145 sq. m. (7 free spaces)
py
141
NR. COMPANY - NAME - ADDRESS STAGE
Co
OPENNING YEAR USEFULL
AREA
8 "EDP Group" LTD - Auksinis 2004 detail plan was Unknown - future 38,000
trikampis - Tilzes str. 145 approved. object.
9 "Baltijos kryptis" LTD - Tilzes str.
90, 92
(c)
Are preparing detail plan. Unknown - future
object.
30,000
10 "GILD real estate" - Silutes str. 2006 08 detail plan was Unknown - future 25,000
28 approved. object.
na
Office centres
die
Comparing to the retail centres, the office centres market is even more overdeveloped in Klaipeda.
There are many projects completed and still some in planning stage. The map below represents the
me
following objects:
All developed (blue circles) and future office centres (yellow circles);
rio
The first table provides additional information regarding 18 business centres in Klaipeda
which are already developed;

ju
The second table provides additional information regarding 4 business centres in Klaipeda,
which are planned to be developed in the future.
B Pa
UA
FEASIBILITY STUDY
ht
22
14
8
rig
17
7
py
16
Co
19 5
21
1
(c)
15
na
11 4
6
12
die
13
20
18
2
me
rio
10 9
ju
B Pa
UA
FEASIBILITY STUDY
Developed business centres
NR. NAME - ADDRESS CLASS OPENNING YEAR USEFULL AREA
1 Vetrunge - Taikos str. 28 B 2001 8,000
2 Business centre - Minijos str. 90 B1 2002 1,750
3 Klaipedos mokslo ir technologiju B1 2004 1,800
parkas - H. Manto str. 84
4 Klaipedos verslo parkas I - Pramones B 2004 1,385
str. 6
5 TELLA - Silutes str. 2 B1 2005 7100
6 Klaipedos verslo parkas II - Pramones B 2005 1.,920
ht
str. 8
7 K-Centras - Naujoji Sodo str. 1A B1 2006 5,770
rig
8 Vite - Naujoji Uosto str. 8 B1 2006 2,300
9 Business centre - Silutes str. 83B B 2007 8,000
10 Statybu business centre - Silutes str. 56 B 2007 2,800
py
11 Gandraliskes - Kuosu str. 16 B 2007 1,500
12 Neapolis - Taikos str. 52C A 2008 10,500
13 Klaipedos verslo parkas III - Pramones B 2008 3,000
Co
str. 8A
14 Herkaus galerija - H. Manto str. 22 B1 2009 1,280
15 Klaipedos bure - Taikos str. 32A B1 2009 2,700
16 Danes vartai - Zveju str. 4 B1 2009 640
17 Vite business centre - Naujoji Uosto str.
9, 11
A(c) 2009 10,000
18 Baltijos business centre - Baltijos str. B 2009 2,032

12A
na
Planned business centres

die
NR. NAME - ADDRESS CLASS OPENNING USEFULL STAGE

YEAR AREA
19 Force palace - Taikos str. 16A - Unknown 2,293 Planned 2008 05 07 got
me
permission for construction.

Object is for sale.
20 Helios City A - Taikos str. 56 - Unknown 25,917 Planned 2008 01 17 - got
permission for construction.
rio
21 B1 - Bijunu str. 1, Minijos str. - Unknown 16,877 Planned are trying to get
13 permission for construction.
Likely to be approved in 2010.
22 Business centre - Artojo str. - Unknown 15,000 Planned detail plan is approved.
ju
2
Pa
Hotels
B
According to Statistics Lithuania, there were 24 hotels in Klaipeda in 2010 Q1. Major part of hotels in
Klaipeda is four-star and three-star. There are only few economy class hotels of two/one stars. In
UA
addition, there are 1,703 rooms in Klaipeda Hotel market. The analysis of planned development in
accommodation market revealed that additional 1,170 hotel rooms might be introduced to the
market in the future.
FEASIBILITY STUDY
23 24 26
Nr. 23 - Hotel Nr. 26 Hotel 2
Pajuris 7 km. km.
14
ht
13
rig
11
py
15
1
2
Co
City Centre
18 19
3 22
4
I Ferry port (for

6
(c)
21
8
17
7 5 27
pedestrians and
Old Town
na
cars) 16
12
die
me
II Ferry port (for 25

rio
cars and busses) Highway to Kaunas,

Vilnius
10
ju
Pa
20
B
9
UA
FEASIBILITY STUDY
Number Hotel - Address Stars Number of rooms
1 Radisson Blu Hotel - Sauliu str. 28 4 74
2 Navalis - H. Manto str. 23 4 28
3 Vecekrug - Juros str. 23 4 23
4 Amberton Klaipeda - Naujojo sodo str. 1 4 307
5 Euterpe - Darzu str. 9, Aukstoji str. 15 4 23
6 Europa Royale Klaipeda - Zveju str. 21, Teatro str. 1 4 50
7 Old Port Hotel - Zveju str. 20 3 46
8 PAULIUS Guest House - Grizgatvio str. 6 3 8
9 Vetra - Taikos pr. 80A 3 17
ht
10 Park Inn - Minijos str. 119 3 84
11 Promenada - Sauliu str. 41 3 22
rig
12 Palva - Smiltynes str. 19 3 17
13 Atlantas - Sportininku str. 46 3 14
14 Morena - Audros str. 8A 3 26
py
15 Magnisima - J. Janonio str. 11 3 17
16 Lugne - Galinio pylimo str. 16 3 47
17 Aribe - Bangu str. 17A 3 15
Co
18 LITiNTERP - Puodziu str. 17 2 19
19 Prusija - Simkaus str. 6 2 11
20 Juragis - Debreceno str. 27 1 17
Future Projects
(c)
Number Hotel - Address Stars Number of Rooms Additional information
na
21 Jono namai - Turgaus str.
Unknown 18 Stopped construction.
37
22
Viktorija - H. Manto str. 1
die
4 About 100 Stopped preparing detail plan.

(Planned)
23 Hotel in Melnrage - Kopu Preparing detail plan concept
Unknown 480
str. 64A (Planned) stage.
me
24 Pajuris - Slaito str. 18A Preparing detail plan finished

Unknown 250
(Planned) public process of considerations.
25 Aurora - Nemuno str. 51 2 258 Construction permit is granted.
26 Liepojos str. 7A Unknown 14 Construction permit is granted.
rio
27 Bangu str. 4 Unknown 50 Construction permit is granted.

ju
Industrial objects
Pa
This market segment will not be analysed, because we reject the possibility of industrial objects to be
developed at the analysed territory. Main reasons are the following:
Low or negative profitability currently development of logistic centres is not profitable

although industrial objects have very low profitability. Moreover, shareholders of Pajurio
UA
mediena, Ltd wants to get maximum profit from territory development or realisation in the
market;
All logistic objects in Klaipeda are located near highways, in free economic zones or
industrial parks. This location is not suitable for warehouse development;
Local government has already accented, that this territory should be transformed from
industrial to commercial or residential territory.
FEASIBILITY STUDY
6. Analysis of Klaipeda Real Estate Market
In this part the analysis of Klaipeda real estate market will be completed in order to estimate, what
purpose buildings could be developed in the territory. The analysis will contain: market price,
turnover, supply and demand. Also economical forecasts for Lithuania will be reviewed and main
economical, business and demographical rates for Klaipeda will be estimated. Banks policy towards
financing the market in both ways financing development of the projects and financing purchase of
ht
land lots will be analysed. The data will be supplemented by analysing information provided by
Centre of Registers as well as valuators and brokers.
rig
6.1 Market analysis prices, turnover, supply, demand
py
Apartment market
Co
Supply in Klaipeda is in high level around 600 apartments are in the primary market (new
construction). There are about 200 apartments in economical class, 320 in middle class and around
100 in prestige class.
There is a shortage of data regarding secondary market supply. Aruodas.lt, main real estate
(c)
advertisement website in Lithuania, shows that there are 2,192 advertisements in Klaipeda, where
na
apartments are for sale. About 30-40% of all advertisements are the same or from primary market
sellers, that means that there might be 1,300-1,600 apartments in secondary market.
die
Supply of apartments in primary market (units)

800
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700
600
500
400
300
rio
200
100
0
ju
2007 07
2008 09
2007 01
2007 05
2006 01
2006 07
2009 01
2009 07
2007 03
2008 01
2008 03
2008 07
2009 05
2010 03
2006 05
2007 11
2006 03
2008 05
2009 03
2009 11
2010 01
2010 07
2006 11
2007 09
2008 11
2009 09
2010 05
2006 09
Pa
Economical Middle Prestige Average supply of 6 months

B
Source: ICA Real Estate

UA
FEASIBILITY STUDY
Supply of apartments according to objects development stage in

Klaipeda 2010 07
0%
Planned objects
46%
Objects under construction
ht
54%
Developed objects
rig
py
Co
Demand is still in low level. Total demand is about 100-200 apartments per month. Average turnover
in primary market is about 20 apartments per month, what means about 10% of total transactions of
apartments in Klaipeda. (c)
Most transactions in primary market were made in objects which are in economy and middle class.
na
Apartments in our analysed territory are assumed to be middle class.
Demand of apartments in primary market (units)

die
100
me
80
60
rio
40
20
ju
0
2007 12
2006 12
2007 02
2008 12
2009 12
2010 02
2007 04
2007 10
2010 04
2010 06
2006 02
2007 06
2008 04
2008 10
2009 02
2009 04
2009 10
2006 04
2006 10
2007 08
2008 02
2008 06
2009 06
2006 06
2006 08
2008 08
2009 08
Pa
-20
B
Economical Middle Prestige Average demand of 6 months

UA

FEASIBILITY STUDY
Transactions of apartments in primary and secondary markets (units)

600
500
400
300
200
100
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0
01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05
rig
2004 2005 2006 2007 2008 2009 2010
py
Source: Centre of Registers
Co
Sales change of new and old construction apartments in Klaipeda (units)
250
200 (c)
150
na
100
die
50
0
me
2009 07
2009 02
2009 03
2009 04
2009 11
2010 01
2009 06
2009 09
2010 05
2009 08
2009 01
2009 12
2010 02
2010 03
2009 05
2010 04
2009 10
2010 06
TOTAL Transactions of more than 2 years old apartments
rio
Transactions of newly constructed apartments

ju
Pa
Prices according to Centre of Registers are still in downturn in Klaipeda. Prices of apartments in
primary market stabilised and are not falling for about four months. Main reason is that almost all of
B
the projects are tightly regulated by banks, which dont allow lower the prices. If there were no
regulations in primary market, prices would probably decrease because of low demand and large
UA
supply.
FEASIBILITY STUDY
Average supply price in Klaipeda by classes (LTL/sq. m.)

13.300
12.300
11.300
10.300
9.300
8.300
7.300
6.300
ht
5.300
4.300
3.300
rig
2007 02
2008 06
2006 08
2007 04
2009 02
2009 04
2007 06
2008 04
2007 08
2008 02
2007 12
2009 06
2006 12
2008 08
2009 08
2008 12
2009 12
2010 02
2007 10
2010 04
2010 06
2006 10
2008 10
2009 10
py
Economical Middle Prestige Average price of 6 months
Co
Price change of partly decorated apartments, LTL/sq.m

(c)
8100
7800
na
7500
7200
6900
6600
6300
die
6000
5700
5400
5100
4800
me
4500
4200
3900
3600
3300
3000
2700
rio
2400
2100
2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
ju
New construction Old Construction

Pa
Individual houses
B
Individual houses market exist mainly in secondary market, because most of the primary market
UA
players went bankrupt or stopped development because of lack of funds.
There is shortage of data regarding secondary market supply. Aruodas.lt, main real estate
advertisement website in Lithuania, shows that there are 214 advertisements in Klaipeda, where
individual houses are for sale.
However, the analysis of the demand reveals that in the first half of the year there were 37
transactions in Klaipeda city a bit more than 6 transactions per month. Main reason there are no
suitable supply for people according to the price. Only of the supply prices are lower than 0.5 mln.
LTL.
FEASIBILITY STUDY
Sales change of new and old constrution houses in Klaipeda (units)
8
7
6
5
4
3
ht
2
1
rig
0
2009 02
2009 03
2009 04
2009 11
2010 01
2009 06
2009 07
2009 08
2009 09
2010 05
2009 01
2009 12
2010 02
2010 03
2009 05
2010 04
2009 10
2010 06
py
Co
TOTAL Transactions of more than 2 years old houses Transactions of newly constructed houses

(c)
Transactions of individual houses in Klaipeda
na
40
die
30
me
20
10
rio
0
ju
01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05
Pa
2004 2005 2006 2007 2008 2009 2010

B
Land market
UA
Land market exists mainly in secondary market also, because most of the primary market players
went bankrupt or stopped development because of lack of money.
There is a shortage of data regarding secondary market supply. Aruodas.lt, main real estate
advertisement website in Lithuania, shows that there are 40 advertisements in Klaipeda, where land
lots for individual houses development are for sale. All advertisements are from secondary market
players. Moreover, analysis of the demand revealed, that in the first half of this year there were 61
transactions in Klaipeda city, mainly in cheaper districts. Demand is also not high as well as the
supply. One reason is that many objects are in some way involved in legal procedures. Also many
FEASIBILITY STUDY
owners dont have enough funds to invest into communications and infrastructure, thats why those
land lots are not attractive to buyers (only of land plots in supply are with all communications).
Land transactions in Klaipeda 2006 01 - 2010 06

100
90
80
ht
70
60
50
rig
40
30
20
py
10
0
Co
01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05 07 09 11 01 03 05
2006 2007 2008 2009 2010
Source: Centre of Registers (c)

Retail market
na
Currently the development of shopping centres in Klaipeda is almost inactive contrariwise to the
economic boom period, when many shopping centres were developed irrespective of too high
die
concentration of retail objects in some areas. This resulted in the stagnation of this market during
the crisis. Currently there are 7 retail objects identified as shopping centres in Klaipeda city. The rest
retail objects: groceries, specialized shopping centres, etc. are not included in the statistics.
me
What is more, the shopping centre market has faced many difficulties after the crisis began. Many
retailers closed some of their shops, which were not profitable. However, it is noticed, that now
rio
retailers are quite actively opening new retail stores in existing or newly built objects, where the
competition is not very high, such as neighbourhood shopping centres. It can be concluded, that
ju
after shrinking period, retail market is recovering with wisely judged expansion.
Pa
Retail centres development in Klaipeda (sq.m.)

180.000
160.000
B
140.000
120.000
UA
100.000
80.000
60.000
40.000
20.000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (F)
Increase (sq.m.) At the beginning of the year (sq.m.)

FEASIBILITY STUDY
Next graph represents the retail space per 1,000 residents in every city. It can be noticed that Siauliai
(the 4th city in Lithuania) has the highest rate, meaning the highest competition for the footfall. The
second place goes to Klaipeda (the 3rd city in Lithuania). Naturally, it means that the retail market in
Klaipeda is also oversupplied. As a result, some of the market participants have changed or are
planning to change the concepts of their retail objects, for example, converting from retail to
outlets.
Retail space per 1,000 residents in Lithuania (sq.m.), 2010 Q2
ht
1000 1400
rig
1200
800
1000
600 800
py
400 600
400
200
Co
200
0 0
Vilnius Kaunas Klaipeda Siauliai Panevezys
Space in retail centres for 1000 residents

(c) Commercial space for 1000 residents

na
As Lithuanian economy is recovering, so does the retail sector. It was noticed, that vacancy rates
have started decreasing since Q1 2010. The most significant decrease was recorded during Q2 2010,
die
when new lease agreements were established. Firstly, financially stronger retailers realising the
potential when lease prices are lowered try to expand their chains. Secondly, there are new players
me
coming to the market, especially, specialized food and drink shops, cafes, fast food restaurants, etc.
rio
Vacancy rate of shopping centres in Klaipeda (%)

7,0%
ju
6,0%
5,7% 5,8% 5,7%
5,0%
Pa
4,0%
3,0% 3,5%
B
2,0%
UA
1,0%
0,0%
2009 Q3 2009 Q4 2010 Q1 2010 Q2
It was also noticed that the decrease of rental prices has stopped. The prices are now stable. In some
cases they can be lowered if there are agreements for large areas.
FEASIBILITY STUDY
Rent prices of retail space in Klaipeda (LTL/sq.m. + VAT), 2010 Q2
220
80
38 120
20
28 50
ht
15
Anchor tenants (>1000 sq. Medium tenants (300- Small tenants (50 -300 sq. Single retail areas (max
rig
m) 1000 sq. m) m) 20 sq. m)
py
The results of Q2 2010 of retail segment turn optimistically. Major share of shopping centres, which
adapted to market situation, managed to attract new tenants and stabilized income. However,
Co
unemployment, salaries and consumption do not turn that optimistically. Firstly, these indices
directly influence the footfall as well as the turnover of shopping centres, but unfortunately, the
unemployment in Klaipeda is the highest in 10 years and salaries are lowered. As a result, the
(c)
consumption is also very low. What is more, Lithuanian economists forecast, that internal
consumption will recover slowly. Therefore, we could conclude, that current expansion of retailers is
na
their strategic move orientated to future benefit.
Analysing our territory, we would not suggest developing a shopping centre, because:
die
There is one shopping centre Studlendas close to the land lot. Its vacancy rate is around
25%;
me
Residents tend to buy food or first necessity items, visit cafes or restaurants. Other retail
stores are not that attractive.
rio
Another alternative could be development of smaller retail object. However, the territory has main
disadvantage for such development limited visibility and accessibility. The territory does not have
accessibility with Siaures av., which is the most important stream of possible clients. Its importance is
ju
explained below:
Pa
There are only 2 main ways in Klaipeda in order to get to the Northern part of it: a) H. Manto
str., and b) Siaures av. Part of residents choose Siaures av. to reach their homes;
B
There are no suitably located retail stores on the northern direction via Siaures av.
Therefore, it is very likely that significant part of residents would prefer to come there after
UA
work;
There is also prestigious district of individual houses close to the object. Although there are
several retail objects in that area, but residents going to this district via Siaures ave. miss
them. Therefore, such retail object could also attract some visitors of latter mentioned
district.
However, there are several land lots where commercial objects might appear in the future. They
would most likely outrival a grocery, because these land lots are much better located. Therefore, we
FEASIBILITY STUDY
think that the best alternative for retail development in the analysed area would be retail premises
located on the ground floor and clearly visible and accessible from Pievu str.
Office market
There are 18 office buildings in Klaipeda. All office supply estimates 72,500 sq. m useful area.
Development of business centres in Klaipeda (sq. m)
ht
80.000
rig
70.000
60.000
py
50.000
Co
40.000
30.000
20.000
10.000
(c)
0
na
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (F)
die
Increase (sq.m.) At the beginning of the year (sq.m.)

me
As vacancy rate shows, there are 23.2% or 16,800 sq. m free space in Klaipedas office market. Its the
highest rate in biggest cities in Lithuania.
Vacancy rates in Klaipeda business centres

rio
Vacancy rates in Klaipeda business

in Q2 2010 (%) centres
TOTAL A B1 B 0,5
ju
0,4
44,3%
Pa
0,3
0,2
23,2% 0,1
B
17,7%
0
12,6%
2005 2006 2007 2008 2009 2010 Q2
UA
A Class B1 Class B Class
Source: ICA Real Estate Source: ICA Real Estate
Because of high vacancy rate, rent prices are still going down and so far no stabilisation is recorded
in this segment.
FEASIBILITY STUDY
Office rental prices in Lithuania by classes
(LTL/sq.m + VAT)
50
45
40
35
30
25
20
ht
15
2005 2006 2007 2008 2009 2010 Q2
rig
A Class B1 Class B Class
py
We dont see any possibility to develop office buildings in analysed territory because market is
Co
oversupplied. If economy grows steadily, as local economists expect, than vacancy rates should
decrease to suitable development level after 2-3 years. Secondly, there are already 4 big future
objects in Klaipeda, which are in better location, than our analysed and probably will be developed as
(c)
soon as economy recovers.
na
Hotels
die
Statistics show that number of hotels is decreasing in Klaipeda. Competition in this market is rather
intense, operators turnover has decreased and the Government has increased taxes. Most of the
hotels are operating without profit, which indicates that smaller local players are likely to go out of
me
business and the number of future competitors is likely to be smaller.
Number of hotels, rooms and beds in Klaipeda

rio
30
2000 29
28
27
ju
26 26
1500 26
25 25
Pa
24 24
1000 23
22
B
500 20
2003 2004 2005 2006 2007 2008 2009 2010 Q1
UA
Number of rooms Number of beds Number of Hotels
Source: Department of statistics
Occupancy rate decreased in 2009 and went back to 2003-2004 level. Statistics indicate the same
about number of visitors and the number of days they stayed in hotels. Future tendencies depend on
how fast Lithuanian and global economies will recover.
FEASIBILITY STUDY
Occupancy, number of visitors and visitings days in hotels of Klaipeda

300.000 60%
250.000 51% 50%
48% 48% 45%
200.000 40% 38% 38% 40% 40%
37% 34%
150.000 32% 31% 30%
25% 25%
100.000 20%
50.000 10%
ht
0 0%
rig
2003 2004 2005 2006 2007 2008 2009
Number of visitors Number of visiting days
py
Room occupancy Beds occupancy
Co
Number of visitors decreased in 2009: Lithuanian visitors 37.8% decrease, foreigners 8.6%
decrease. Tendencies are still in downturn. Firstly, local demand is not increasing - companies cut
(c)
unnecessary expenses. Foreigners are travelling less. Because of the global economy crisis foreign
companies cut their expenses in Lithuanian market as well. The recovery in hotel market should
begin when world economy shows more positive signs.
na
Number of visitors and duration of stay

die
80.000 180.000
167.539
70.000 160.000
154.555
me
144.892 140.000
60.000
120.839 138.233 125.912 120.000
50.000 111.576
102.844 100.000
rio
40.000 86.155
84.177 82.667 80.000
30.000 63.594 60.000
51.741 62.590
ju
20.000 40.000
10.000 20.000
Pa
0 0
2003 2004 2005 2006 2007 2008 2009
B
Number of visitors from Lithuania

UA
Number of foreigner visitors

Number of visiting days by lihuanians (scale on the right)
Number of visiting days by foreigners (scale on the right)
In 2009 Klaipeda seaport welcomed 50 cruise-ships 4 cruise-ships more than in 2008 despite
global economy crisis. Number of passengers was 3% higher than in 2008. Klaipeda State Seaport
Authority plans to welcome 48 cruise-ships in 2010 which is 2 cruise-ships less than in 2009. Despite
FEASIBILITY STUDY
that the authority representatives believe that cruise-ships will be bigger and bring more passengers
on board. The increase of number of passengers is projected at 7.4%.
Cruise ships visited Klaipeda port

40.000 65 48 70
59 46 50
35.000 60
30.000 48 48
50
25.000
ht
40
20.000 28
24 30
rig
15.000 22
15 15 20
10.000
5.000 10
py
0 0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (F)
Co
Passengers Ships
Source: SE Klaipeda State Seaport Authority

(c)
Tourist accommodation expenses in Lithuania decreased by 44% in 2009. But in Q1 of 2010 the results
were already quite optimistic: Q1 of 2010 expenses made 15.9 million LTL when in Q1 of 2009 it was
na
12.5 million LTL, which means that there was an increase of 28%. Government is considering reducing
the VAT in 2011, which would allow attract more clients by offering to the customers lower prices.
die
Future expectations are positive.
Tourist accommodation expenses (mln. LTL)

me
70
60
63,1
rio
50
49,2
40
42,2
ju
39
30
32,4 32,9
27,3 29,2 27,8
20
Pa
23,8 22 21,1
16,4 16,6
10
11,7 9,5
15,2 15,4
12
15,8
12,5 13,5 15,9
8,5 10,7
0
B
UA
The numbers show that purpose of stay of local guests of Lithuanian hotels is mostly business and
vacation, the rest are visiting relatives or staying at a hotel for different purposes. Due to the
downturn of the economy number of guests staying at hotels for business purpose decreased, since
companies began cutting their expenses. The number of business travellers is expected to
increase during the next two years, as the economy recovers.
FEASIBILITY STUDY
Purpose of Lithuanian hotel Purpose of Lithuanian hotel

guests, 2008 guests, 2009
Vacation, holidays Business Vacation, holidays Business
Visiting relatives Unknown Visiting relatives Unknown
Other Other
1% 1% 1% 1%
ht
12% 14%
39% 42%
rig
47% 42%
py
Source: Department of statistics Source: Department of statistics
Co
Distribution of foreign guests at Lithuanian hotels by purpose is quite the same as local visitors in
2009. But we didnt notice any change from 2008 to 2009 and purposes for business and holidays
(c)
stayed in the same level. We know from previous information that number of guests from abroad
decreased, it means, that both purposes decreased in the same speed.
na
Purpose of foreign hotel guests, Purpose of foreign hotel guests,

2008 2009
die
Vacation, holidays Business Vacation, holidays Business

Visiting relatives Unknown Visiting relatives Unknown
me
Other Other
1% 2%
1% 1%
10% 9%
rio
46% 46%
42% 42%
ju
Pa
Source: Department of statistics Source: Department of statistics

B
According to Statistics Lithuania, there were 24 hotels in Klaipeda in 2010 Q1. Such statistics could
UA
mean that there is big competition in the city, but in reality there is lack of economy-class hotels.
Major part of competitors in Klaipeda is four-star and three-star hotels. There are only few cheap
hotels of two-one stars economy class.
FEASIBILITY STUDY
Hotels market by stars and room number in Klaipeda

17; 2% 30; 4%
1
2
313; 36%
ht
3
505; 58%
4
rig
py
Co
To generalize the hotels market in Klaipeda, most of them are higher class (3-4 stars). There are
potential in the market to develop two stars hotels, because there is lack of them. But our analysed
(c)
territorys location is not suitable for hotels, because of the following reasons:
Most visitors come for two purposes vacation or business. Business people stay mostly
na
somewhere in the centre of the city or in hotels which are near the main roads to the city
centre. Tourists are staying also in the centre of Klaipeda or near the sea;
die
There are few two-star hotel projects which have construction permissions or approved
detail plans. Developers are planning to launch them in three years period if economy
recovers;
me
Hotels business is quite complicated in Lithuania, because government doesnt show any
support to this segment;
Hotels are mainly developed in those places, where are visible from the streets. Pajurio
rio
mediena, Ltd territorys visibility is moderate from the main streets.

ju
6.2 Future development and identification of main competitors

Pa
It is a hard task to identify main competitors, because development in our analysed territory could
start in around 1-2 years. Therefore, it is very likely that some of the existing projects will be sold,
some might be stopped or cancelled. Some competitors has developed high-rise block of flats, which
B
are not attractive to the buyers. As a result, they will not be tough competitors. Major share of the
UA
projects in Klaipeda are planned in central part of the city and orientated to higher class. The prices
of those objects are higher therefore, competition to our analysed territory would also be minimal.
However, there are some direct competitors, which are shown in the map and described below:
UA
B
FEASIBILITY STUDY
Pa
ju
2
rio
7
1
me
4
6
die
5
na
(c)
8
Co
py
rig
ht
3
FEASIBILITY STUDY
The main direct competitors are excluded and described by priority:
Bilukas, Ltd Danges Vingis Panevezio str. 25 two nine-floor block-of-flats are nearly
sold out. There are plans to construct one more 9-floor high and 7-floor high buildings,
totalling up to 168 apartments.
Pamario troba, Ltd Salotes kvartalas Dragunu str. two block-of-flats are being sold.
One of them is still under construction. The construction of the third building (120
apartments) is stopped and company is trying to obtain construction permits for the rest
ht
block-of-flats, which total up to 300 apartments.
"YIT" and "TXT Invest", Ltd - Jurininku str., Silutes str., Mogiliovo str. currently there is only
rig
detailed plan approved. They do not intend to obtain construction permit at the moment.
The object will be economy class. The developing company YIT is one of the few companies
py
in Lithuania that is able to invest into new constructions. Therefore, the development of the
object in the near future is rather probable. They are planning to construct around 650 flats.
Co
Plienas, Ltd Gandraliskes Taikos str., Minijos str. currently there are 110 unsold
apartments where more than a half is in the 34-floor high building. There are plans to
construct additional 900 apartments. However, the project depends on banks policy,
(c)
therefore, its development in near future is doubtful.
"Hansa Lizingas", Ltd - Baltijos str. 111 the project is overtaken by the bank. There is a
na
construction permit allowing 244 flats to be constructed. The project could be targeted to
economy-middle class.
die
"VIPC Klaipeda", Ltd - Bangu str., Tilzes str. (Butsargiu residential district) the detailed plan
is approved. However, the company went bankrupt. It is likely that the bank will take over
the project. It has 1,000 flats planned for construction.
me
"Metva", Ltd - Kretingos str. 100 (Lietuvos Kino Studija) the detailed plan is approved. 350
apartments were planed, but because of the crisis and tough financial situation of the
company, the projects development within 3 years is very doubtful.
rio
"EDP GROUP", Ltd - Teritory between Sauliu ave, Danes river, A13 highway and Liepu str.
detailed plan is not approved yet. 1,700 flats are planned to be developed. However, in the
ju
upcoming years the constructions will not start. Still, the project is very close to our analysed
Pa
territory therefore, we assume it to be one of main competitors.
6.3 Analysis of main competitors estimation of liquidity

B
In this part the most successful projects will be analysed. Each of existing residential projects in
UA
Klaipeda was analysed, and their performance during last 6 month was recorded. After the analysis,
it can be concluded, that the most successful projects were number 4, 5, 8, 10, 11, 14, 15, which are
marked on the map and described in the table together with the less successful ones below.
FEASIBILITY STUDY
14 11
ht
rig
py
7
Co
(c)
na
5
13
6
die
me
rio
12 4
1 2
9
ju
B Pa
UA
8 10
15
FEASIBILITY STUDY
Prices of
Amount of
apartments
Company Project - apartments in
Nr. (LTL/sq. m.) in Comments
Address 2010 01 and
2010 01 and 2010
2010 07
07
1 "Plienas" LTD 32 30 (303 in 5.274 4.200 Project is still under construction. Location
Gandraliskes - Taikos project) (partly is not very attractive. Buildings are 7 floors.
str., Minijos str. decorated) Company is selling leftovers.
(Southern part)
ht
2 "Plienas" LTD 60 60 (164 6.520 3.800 Location is not very attractive. Project is
Gandraliskes in project) (partly high-rise 34 floors. Most attractive
rig
Kuosu str. (Pilsotas) decorated) apartments are already sold.
3 "Metva" LTD - 77 75 (117 in 4.200 3.800 Project is still under construction. Project is
Aukstoji smelte - project) (partly high-rise 20 floors.
Minijos str. 159 decorated)
py
4 "Zaliasis tiltas" LTD - 57 41 (110 in 4.800 4.150 Project is already built. Location is not very
Klaipedos bure - project) (partly attractive. Project is high-rise 21 floors.
Co
Taikos str. 32A decorated) Most attractive apartments are already
sold. Company making bigger discount
than official prices show.
5 "Privatus bustas" 10 7 (29 in 6.717 6.534 Project is already built. Building is 6 floors.
LTD - Pievu tako str.
8
project) (c)
(fully decorated) Location is very good city centre.
Company making bigger discount than
official prices show. Lowest prices in new
construction objects in city centre.
na
6 "Vetruna" LTD - 51 50 (67 in 6.000 6.365 Project is already built. Building is 6/7 floors.
Manto namai - H. project) (partly Location is very good city centre.
Manto str. 7 decorated) Company doesnt offer any discounts.
die
7 "Bilukas" LTD - 14 13 (84 in 4.500 4.300 Project is already built. Buildings are 9
Danges vingis - project) (partly floors. Location is very good. Company is
Panevezio str. 25 decorated) selling leftovers. Company doesnt offer any
me
discounts.
8 "Arkada" LTD - 14 4 (60 in 4.050 3.700 Project is already built. Building is 9 floors.
Taikos str. 120 project) (fully decorated) Location is not attractive. Company is
selling leftovers.
9 "Plienas" LTD 20 - 20 (143 in 5.265 4.400 Project is still under construction. Location
rio
Gandraliskes - Taikos project) (partly is not very attractive. Buildings are 7 floors.
str., Minijos str. decorated) Company is selling leftovers.
(Central part A)
ju
10 "Baltijos investiciju 77 59 (120 in 3.750 2.900 Project is already built. Project is high-rise
grupe" BIG2 - LTD - project) (partly 22 floors. Location is not attractive. Prices
Pa
Taikos str. 141 decorated) are lowest in the market.

11 "Pamario troba" 77 42 (114 in 4.250 3.750 Project is already built. Building is 4/19
LTD Sarlotes project) (partly floors. Location is good. Company making
kvartalas Dragunu decorated) bigger discount than official prices show.
B
str. 1
UA
12 "Boritila" LTD - Lujos 16 21 (24 in 6.000 6.000 Project is already built. Building is 8 floors.
namai - Ligonines project) (partly Location is good city centre. Company
str. 13 decorated) doesnt do any discounts. Company
depends 100% from the bank.
13 "Ilgalaikiu investiciju 12 12 (18 in 4.875 4.875 Project is already built. Building is 5 floors.
kompanija" LTD project) (partly Company doesnt do any discounts.
Lelija - Birutes str. 20 decorated)
14 Pamario troba" LTD 114 100 (114 4.450 4.475 Project is still under construction. Building
Sarlotes kvartalas in project) (partly is 9 floors. Location is good. Company
Dragunu str. 13 decorated) offers bigger discount than official prices
show.
15 "Arkada" LTD - 62 - 30 (62 in 3.700 3.700 Project is still under construction. Building
Taikos str. 120A project) (fully decorated) is 9 floors. Location is not attractive.
FEASIBILITY STUDY
After the analysis of the residential projects in Klaipeda, following conclusions can be made:
The most important aspects for the clients is the price, than the location. Projects with the
lowest pricing attracts the biggest attention from the demand in the primary market;
High-rise projects (more than 9-floor high) are not attractive for potential buyers. Therefore,
developers now offer considerable discounts in order to sell the product (project number 4,
10);
The most attractive housing costs up to 4,000 LTL/sq. m with full finish. In some cases
ht
official prices are 20-30 percent higher than the transaction prices;
Residents prefer buying already constructed apartments. Exceptions are made than the
rig
developers are well-known and trustworthy companies (project number 8, 11, 14, 15). For
example, Arkada, Ltd develops the projects mostly from their own funds, therefore, it is
py
unlikely that the project might be stopped unexpectedly. As a result, it receives more trust
from the clients.
Co
6.4 Analysis of transactions data of Centre of Registers (Period 2010 01-06)
(c)
Transactions were analysed only in Klaipeda city because analysed territory is in the city;
Transactions were analysed only in period 2010 01-2010 06 because it is up-to-date
information about the market and preferences of people;
na
Prices of houses and apartments are analysed only of new construction, because analyses of
this segment provides the trustworthy results. Firstly, most of the transactions were
die
completed with credits from banks, therefore, Centre of Registers provides approximately
right prices. Whereas, old construction apartments are usually bought using cash money,
me
not loans, therefore in many cases official prices are shown lower than it was in reality.
Individual houses and cottages

rio
Cottages are not separated from all transactions of individual houses thats why we cannot
analyse this segment separately.
ju
B Pa
UA
FEASIBILITY STUDY
3
9 1
10
ht
4
rig
py
6
Co
5
(c)
na
8
die
2
me
7
rio
ju
B Pa
Space interval Construction Construction year Construction year SUM

year <2000 2000-2007 >2008
UA
Less than 100 sq. m. 1 0 1 2

101-140 sq. m. 3 1 2 6
141-180 sq. m. 1 7 2 10
181-220 sq. m. 0 0 2 2
221-260 sq. m. 8 2 1 11
261-300 sq. m. 0 1 1 2
301-340 sq. m. 0 2 1 3
341-380 sq. m. 0 1 0 1
More than 380 sq. m. 0 0 0 0
SUM 13 14 10 37
FEASIBILITY STUDY
Transactions of houses and cottages were made in these districts (only those objects which were
built from year 2000):
NR. DISTRICT TRANSACTIONS PRICE (LTL/sq. m.)

1 Danes 4 2.000 - 2.100
2 Joniskes 1 -
3 Labrenciskes 2 2.600
4 Liepojos 1 -
ht
5 Luizes 1 -
6 Melnrages 1 3.000
rig
7 City centre 2 -
8 Paupiai 1 -
9 Plytine 1 -
py
10 Tauralaukis 10 1.600 - 2.400
Co
The new construction market was analysed. Statistics reveals that the most attractive
houses were 100-220 sq. m. space;
According to the statistics, transactions of houses were made by paying 1,600-3,000 LTL/sq.
m.; (c)
We think that attractive price of individual house would be in interval of 2,000-2,500 LTL/sq.
m., plus land price.
na
Land lots
die
Territory near Siaures av. is suited for commercial, high-rise and low-rise residential projects
development;
me
There were only 2 transactions of commercial purpose and high-rise residential purpose land
lots that is why we cannot analyse these segments;
Mainly there were transactions of land lots suited for developing individual house projects.
ju rio
B Pa
UA
FEASIBILITY STUDY
2
7
ht
3
rig
py
5
Co
4
(c)
na
6
die
1
me
ju rio
B Pa
Analysis district, number of transactions, land area, land price

UA
NR. DISTRICT TRANSACTIONS LAND AREA (are) PRICE (LTL/are)

1 Joniskes 3 6-11 20.000 - 25.000
2 Labrenciskes 5 9-51 24.000 - 44.000
3 Liepojos 3 8-17 32.000
4 Luizes 3 6 39.000 - 83.000
5 Melnrage 2 8-10 28.000 - 44.000
6 Paupiai 4 9-33 10.000 - 20.000
7 Plytine 3 5-49 9.000 - 16.000
8 Tauralaukis 18 8-48 9.000 - 16.000
FEASIBILITY STUDY
Size of most of land lots were 8-11 are;
Main district which land prices should be similar or a little bit smaller than our analysed is
Luizes district (Nr. 4);
Prices of land lots could be 40,000-70,000 LTL/are in our analysed territory.
Apartments
We analyzed transactions according to year of construction, room space, number of rooms;

ht
We made deeper analysis of new construction transactions, which were made in todays
new constructed projects, which are in the market;
rig
From gathered information it is clear, that not all transactions were made with mortgages.
The ones with cash money were recorded to have a lower price, than it was in the market.
py
Co
(c)
na
die
me
ju rio
B Pa
UA
UA
B
FEASIBILITY STUDY
Pa
5
ju
6
4
rio
7
3
8
me
9
die
2
na
(c)
1
Co
py
rig
ht
FEASIBILITY STUDY
Analysis by year of construction and number of rooms
ROOMS <2000 2000-2007 >2008 SUM
1 room 285 6 10 301
2 rooms 314 16 72 402
3 rooms 170 16 52 238
4 rooms 34 7 7 48
5 rooms 2 0 6 8
6 rooms 1 0 0 1
ht
7 rooms 0 0 0 0
8 rooms 0 1 1 2
rig
SUM 806 46 148 1000
Analysis by year of construction, number of rooms and room space
py
ROOMS <2000 2000-2007 >2008 GENERAL
1 room 9-51 34-108 40-113 9-113
Co
2 rooms 22-71 46-70 43-143 22-143
3 rooms 42-82 50-110 57-107 42-111
4 rooms 72-142 70-201 79-149 70-201
5 rooms 129-151 (c) - 79-182 79-182
6 rooms 245 - - 245
7 rooms - - - -
na
8 rooms - 248 228 228-248

die
Analysis by year of construction and room space

ROOM SPACE <2000 2000-2007 >2008 SUM
<30 sq. m. 159 0 0 159
me
31-35 sq. m. 105 1 0 106

36-40 sq. m. 36 2 0 38
41-45 sq. m. 77 0 16 93
rio
46-50 sq. m. 108 2 13 123

51-55 sq. m. 73 3 14 90
56-60 sq. m. 48 8 19 75
ju
61-65 sq. m. 70 9 15 94
Pa
66-70 sq. m. 33 5 15 53
71-75 sq. m. 8 2 14 24
76-80 sq. m. 59 0 15 74
B
81-85 sq. m. 10 4 5 19
86-90 sq. m. 6 0 4 10
UA
91-95 sq. m. 4 1 2 7
96-100 sq. m. 1 0 1 2
<100 sq. m. 9 9 15 33
SUM 806 46 148 1000
FEASIBILITY STUDY
GENERAL
PRICE AVERAGE SPACE AVERAGE AVERAGE
PRICE
NR. PROJECT TRANSACTIONS INTERVAL PRICE INTERVAL SPACE (sq. GENERAL
INTERVAL
(LTL/sq. m.) (LTL/sq. m.) (sq. m.) m.) PRICE (LTL)
(LTL)
LTD Arkada 165,000 -

1 34 3,495 - 5,246 3,994 43-89 58 243,950
Taikos str. 481,000
LTD Metva -
2 Aukstoji smelte 1 3,901 3,901 53 53 224,174 224,174
Minijos str.
ht
LTD Plienas
Informatio
Gandraliskes Information Information Information
3 2 63 63 n
rig
(Pilsotas) unreliable unreliable unreliable
unreliable
Kuosu str.
LTD Pamario
py
troba 178,000
4 28 2,962 - 3,678 3,348 49-75 69 252,569
Dragunai 313,749
Dragunu str.
Co
LTD Privatus
bustas - Pievu 427,902
5 6 4,071-4,545 4,385 88-107 102 505,989
tako 8 Pievu 566,051
tako str.
6
LTD Boritila -
Lujos namai 1 6,994 6,994
(c) 97 97 675,378 675,378
Ligonines str.
LTD Ilgalaikiu
na
investiciju
7 kompanija 1 5,176 5,176 52 52 268,999 268,999
Lelija Birutes
die
str.
LTD Bilukas
3,878 - 166,000
8 Danges Vingis 10 4,251 40-64 57 245,876
4,880 310,000
me
Panevezio str.
Zaliasis tiltas
192,360 -
9 Klaipedos bure 12 3,311 - 4,266 3,934 48-81 61 247,824
310,000
taikos str.
rio
Most of the apartments, which were sold in the market of new constructed projects were 2-
3 rooms;
ju
Most of the apartments, which were sold in the market of new constructed projects were
40-70 sq. m. space;
Pa
Most of the apartments, which were sold in the market of new constructed projects were
sold in range of 3,000-4,500 LTL/sq. m. Nearest competitors to our analysed territory (Nr. 4
B
and 7) are selling in range of 3,000-4,800 LTL/sq. m.;

UA
We think that price range of fully finished apartments should be 4,000-4,500 LTL/sq. m. if it
is low rise buildings (less than 5 floors), 3,500-4,000 LTL/sq. m. if it is high-rise buildings
(more than 4 floors).
FEASIBILITY STUDY
6.5 Summary of real estate valuators survey
Valuators represented different point of view regarding development of the analysed territory. We
sum up their opinions:
Object has a great disadvantage because it is surrounded by industrial territories. Their

dispossession is still not very clear. If other territories join the conversion, the value of the
district would increase;
ht
Because of the previously mentioned fact some valuators suggested industrial
development, others residential;
rig
Purpose for the residential development was the most frequent. However, opinions differed
when they were asked to specify their suggestions. Some preferred development of
py
individual or blocked houses, others named low-rise residential development;
None of the surveyors suggested large scale commercial development, such as business
Co
centre, shopping centre or hotel. However, they suggested commercial premises located on
the ground;
According to the valuators currently the liquid price of high-rise apartments is around 3,200
(c)
LTL/sq. m. of fully finished apartments as well as 4,000 LTL/sq. m of low-rise apartments.;
Some valuators noticed that there is a shortage of good-priced 2-3 room flats. Current flats
na
are not attractive because of bad concept, location or high price.
6.6 Summary of real estate brokers survey

die
The opinion of brokers was more or less the same. These are the conclusions:
me
The location is valuated positively, but lands value is decreased by the surrounding
territories;
They suggest residential development up to 9-floors high;
rio
The price of fully finished apartments should be up to 4,000 LTL/sq. m;

They also noticed that the most liquid are 2-3 room flats, which is rather absent in todays
ju
market.
Pa
6.7 Forecasted market liquidity
The liquidity of the market depends on what kind of projects will be developed (height, flat size,
B
concepts, etc.) and what will be the asking price.

UA
We suggest different prices for different types of residential development:
Low-rise residential projects should offer average price of fully finished apartments around
4,000 LTL/sq. m. Major share of flats should have 2-3 rooms of 40-70 sq. m. Forecasted
volume of transactions could be around 10 flats per month;
High-rise residential development should offer average price of fully finished apartments up
to 3,200 LTL/sq. m Major share of flats should have 2-3 rooms of 40-70 sq. m. Forecasted
volume of transactions could be 5-10 flats per month;
FEASIBILITY STUDY
Land lots for individual houses should be divided into 8-11 are lots, which price should be
40,000-70,000 LTL/are depending on the location. The total amount for the land lot should
be in the interval of 300,000-500,000 LTL. Forecasted liquidity of such land lots would be
low 1 per month, because of relatively high price. Lower price would increase the liquidity,
but in that case there would be a need for additional calculations in order to see if
profitability rates satisfy the developer;
Average price of fully finished individual houses should be around 2,000-2,500 LTL/sq. m. The
ht
price for the land lot should be 30,000-50,000 LTL/are, because total price of the object
should not exceed 750,000 LTL. Forecasted volume of transactions could be around 1 per
rig
month. Lower price would increase the liquidity, but in that case there would be a need for
additional calculations in order to see if profitability rates satisfy the developer.
py
6.8 Economical forecasts for Lithuania
Co
Macroeconomic situation in Lithuania and Klaipeda is the key factor in analysing and forecasting the
real estate market. As every real estate segment has some indicators, which are directly dependent
on macroeconomic situation, it becomes possible to forecast them, when there are macroeconomic (c)
forecasts completed by economists.
In 2009 Lithuanian economy has slipped into the bottom-side of business cycle with registering one
na
of the deepest GDP declines in the EU. According to the second estimate, the value added (at
constant prices) created in the economy last year was almost 15% smaller than a previous year.
die
According to the Treasury department, Lithuanian GDP development will remain positive (1.6%) in
2010, however, the first signs of recovery are seen in the second half of a year. Positive change of
me
GDP is also forecasted in 2011 (2.8%) and 2012 (1.2%).
But it should not be forgotten that all the forecasts dependent on worlds economic performance.
Now there are three biggest threats, which could change the previous forecasts:
rio
Slowdown of US economy recovery;

Financial crisis of Southern Europe countries;
ju
Slowdown of China economy with real estate market bubble explosion.

Pa
GDP
10.000 15,00%
B
10,00%
8.000
5,00%
UA
6.000 0,00%
-5,00%
4.000 -10,00%
-15,00%
2.000
-20,00%
0 -25,00%
2004 Q3
2007 Q1
2000 Q1
2006 Q3
2010 (F)
2002 Q3
2003 Q3
2001 Q3
2005 Q3
2009 Q1
2012 (F)
1999 Q1
2006 Q1
2007 Q3
2008 Q1
2002 Q1
2003 Q1
2004 Q1
2000 Q3
2005 Q1
2008 Q3
2009 Q3
1999 Q3
2001 Q1
2010 Q1
GDP for resident (LTL) GDP

FEASIBILITY STUDY
Lithuanian foreign trade and current account balances in 2009 improved significantly, unfortunately
not because of spurt in exports, but due to imports decelerating at a higher rate than exports. The
volume of visible exports generated in 2009 declined by 26.6% y-o-y, while imports slumped by 38.2%.
Looking ahead, export is expected to recover modestly already in 2010 due to the anticipated
rebound of the key Lithuanian export markets (i.e. Russia and Germany). This will reenergise
externally oriented economic activities and gradually translate into positive stimulus to domestic
ht
demand. Almost all economists agree that main reason of Lithuanian economy recovery will be
increase of exports.
rig
Export and import in Lithuania
20.000.000
py
15.000.000
Co
10.000.000
5.000.000
-
(c)
2005 Q1
2001 Q3
2002 Q3
2003 Q3
2004 Q3
2005 Q3
2007 Q1
2009 Q1
2000 Q1
2006 Q1
2008 Q1
1999 Q1
2002 Q1
2003 Q1
2004 Q1
2007 Q3
2000 Q3
2008 Q3
2009 Q3
1999 Q3
2001 Q1
2006 Q3
2010 Q1
na
Export (thous. LTL) Import (thous. LTL)

die

me
The analysis of retail and consumer confidence indices reveals that consumer confidence index
recovers slower despite the first signs of economic recovery. Firstly, the main risks should be
eliminated for this index to increase faster.
rio
Retail trade and consumer confidence indicators

ju
40 10.000
Pa
20 8.000
0 6.000
B
-20 4.000
UA
2009 Q1
2007 Q4
2008 Q3
2008 Q2
2009 Q2
2009 Q3
2008 Q4
2009 Q4
2010 Q1
2010 Q2
2008 Q1
-40 2.000
-60 0
Retail sales (mln. LTL) (scale on the right) Consumer confidence indicator
Retail trade confidence indicator

FEASIBILITY STUDY
Currently, main risks involve uncertainty in labour market and taxes. Salaries stopped decreasing
together with unemployment only in the end of a year. Therefore, it is still hard for residents to plan
their expenses.
Ministry of Finance forecasted the decrease of unemployment and increase of disposable income at
the end of a year, therefore, retail confidence should further increase as well as consumer
confidence index. As a result, we could also expect the additional increase of GDP.
ht
Trends and Forecasts of Unemployment and Salaries
30,0% 2.000
rig
25,0% 1.800
1.600
20,0%
1.400
py
15,0% 1.200
10,0% 1.000
Co
5,0% 800
600
0,0%
400
-5,0% (c) 200
2005 Q1
2002 Q1
2003 Q1
2004 Q1
2007 Q3
2011 (F)
2008 Q3
2009 Q3
2006 Q3
2010 Q1
2002 Q3
2003 Q3
2004 Q3
2007 Q1
2005 Q3
2009 Q1
2006 Q1
2008 Q1
-10,0% 0
na
Unemployment (%) Increase of salaries (%)

Average NET salary, LTL (scale on the right)
die

me
Confidence index of service providing companies started increasing after the income was stabilized.
Since Q2 2009 number of service enterprises has started decreasing, because more and more
bankrupt procedures were finished. Service enterprises sector fought the crisis by rapidly cutting the
rio
costs including decreasing salaries, layoffs.
As a result business centres market was affected respectively vacancy increased, rent prices
ju
decreased. However, it seems, that service enterprise market has touched the bottom, therefore, it
is very likely that rental prices should not decrease as well as vacancy rates should not increase
Pa
anymore. Although these forecasts are applicable for business centres market in general, it cannot
be applicable for Klaipeda, because it is still oversupplied.
B
UA
FEASIBILITY STUDY
Change of number of service enterprises and income

11.000 21.000
10.000 20.000
9.000 19.000
8.000
18.000
7.000
6.000 17.000
5.000 16.000
ht
4.000 15.000
2008 Q1
2007 Q2
2007 Q3
2007 Q4
2009 Q2
2006 Q2
2008 Q2
2009 Q3
2009 Q4
2005 Q1
2006 Q3
2006 Q4
2008 Q3
2008 Q4
2005 Q2
2007 Q1
2010 Q1
2005 Q3
2005 Q4
2009 Q1
2006 Q1
rig
py
Income of sales (mln. LTL) Number of enterprises (scale on the right)
Co
Confidence index of services sector
50
40
(c)
30
na
20
10
die
0
-10
me
-20
2007 Q2
2007 Q3
2003 Q1
2004 Q1
2007 Q4
2009 Q4
2005 Q1
2006 Q2
2006 Q3
2004 Q2
2006 Q4
2008 Q2
2008 Q3
2009 Q2
2009 Q3
2003 Q4
2004 Q3
2004 Q4
2007 Q1
2008 Q4
2010 Q1
2003 Q2
2003 Q3
2005 Q2
2005 Q3
2009 Q1
2010 Q2
2005 Q4
2006 Q1
2008 Q1
-30
-40
rio
Long term Lithuanian housing perspectives were also valuated by analysing portfolio of bank loans
ju
and its composition. According to the information provided by Bank of Lithuania, total housing
Pa
portfolio is shrinking 5 quarters in a row. Since its peak, the portfolio has shrunk by 1%, because banks
tightened loan issue, especially for the secondary market. The banks are directly interested that
transactions would be completed in the primary market where they have issued major share of loans
B
for development. As a result, banks require large proportion of own funds if residents decide to buy
UA
housing in secondary market. As around 90% of all transactions were completed in secondary
market, therefore, financing limitations are clearly visible in statistics.
FEASIBILITY STUDY
Structure of given loans

80.000 100%
80%
60.000
60%
40.000 40%
20%
20.000
0%
- -20%
ht
2005 Q4
2007 Q4
2004 Q4
2007 Q1
2012 (F)
2005 Q2
2005 Q3
2008 Q1
2009 Q1
2006 Q1
2007 Q2
2007 Q3
2009 Q2
2006 Q2
2009 Q3
2006 Q3
2005 Q1
2006 Q4
2008 Q2
2008 Q3
2009 Q4
2008 Q4
2010 Q1
rig
Total loan portfolio (mln. LTL)
Loans for housing (mln. LTL)
py
Annual change of residential loan portfolio (scale on the right)
Source: Central Bank of Lithuania
Co
The decreasing borrowing is a result of rising unemployment and decreasing salaries. Desire for new
housing usually depends on positive expectations of residents. Moreover, during the economic
boom in 2004-2007 many transactions were speculative. Currently these expectations are negative. (c)
Moreover, number of residents which can acquire loans is very low, therefore, most of the
transactions that are completed at the moment are usually financed from savings.
na
In addition, it can be seen from the graph below, that there are around 6 times less loans issued in
die
national currency than in Euros.
Total loans portfolio by currencies

me
25.000
20.000
15.000
rio
10.000
ju
5.000
-
Pa 2005 Q4
2007 Q4
2004 Q4
2007 Q1
2005 Q2
2005 Q3
2006 Q1
2009 Q1
2012 (F)
2007 Q2
2007 Q3
2008 Q1
2009 Q2
2009 Q3
2005 Q1
2006 Q2
2006 Q3
2009 Q4
2006 Q4
2008 Q2
2008 Q3
2008 Q4
2010 Q1
B
Loans in LTL, mln. LTL Loans in EUR, mln. LTL

UA
Loans in Euros were more attractive because of lower interest rates. Moreover, after the crisis
began, borrowing in LTL was almost impossible VILIBOR increased to around 10% and banks margin
increased to 4-5%. Currently the interest rates are more or less the same for loans in both currencies.
FEASIBILITY STUDY
Interest rates on housing loans

12,00%
10,00%
8,00%
6,00%
4,00%
2,00%
ht
0,00%
2004 Q4
2007 Q1
2005 Q2
2005 Q3
2009 Q1
2010 Q2
2005 Q4
2006 Q1
2007 Q2
2007 Q3
2008 Q1
2007 Q4
2005 Q1
2006 Q4
2008 Q2
2008 Q3
2009 Q2
2009 Q3
2006 Q2
2006 Q3
2008 Q4
2009 Q4
2010 Q1
rig
py
Interest rate, LTL Interest rate, EUR
Co
After completion of macroeconomic analysis it can be concluded, that:
Retail market market is stable. Companies that successfully fought the crisis are slowly expanding
and taking over the strategic points in shopping centres. As a result rent prices are stabilized. In
(c)
some cities vacancy rates started even decreasing. However, it is too soon for further development
na
of large scale shopping centres, because consumption is still very low. Currently there is more
potential for the development of smaller retail objects close to residential districts where
die
competition is not very tough.
Office market the market seems to be stable. Vacancy rates are stable and rent prices increased
me
slightly only in Vilnius, while in Kaunas prices are stable and in Klaipeda still decreasing. However,
market in general is recovering, because business is recovering, especially exporting companies.
Increased ordering and income should stimulate the employment. However, it is expected to be a
rio
slow process, because companies are not sure about the future economic situation.
Hotel market many expectations are directed to foreign markets, tourists and business. Local
ju
companies cut the expenses for hotels and many citizens also seek for cheaper accommodation.
Currently higher demand is recorded for economy-class hotels.
Pa
Residential market main indices do not turn optimistically. Unemployment is in very high level,
salaries are still decreasing. However, a slight increase of salaries is forecasted next year. These are
B
the main limitations for the demand in residential market. The greater recovery of residential market
UA
is possible if salaries increase and unemployment decreases.

FEASIBILITY STUDY
6.9 Description of economical, business and demographical situation in
Klaipeda
The statistics is not very optimistic. Every year the number of residents in Klaipeda is decreasing.
However, during the crisis Klaipeda is one of the key cities to fight the crisis through exports and
Klaipeda seaport. Therefore, Klaipeda receives more attention from the Government. As a result,
more companies turn attention to this city. So, if the Governments attention remains, it is likely that
demographical situation will improve.
ht
rig
Population in Klaipeda
103.000
py
98.000
Co
93.000
88.000
83.000
2001 2002 2003 2004
(c)
2005 2006 2007 2008 2009 2010
Men Women
na

die
It can be seen from the graph below that foreign direct investment in Klaipeda didnt decrease
during the crisis, but also increased every year. Results show that the sea port successfully fights the
competitors and sustains investors interest. Foreign direct investments influence new work places
me
and more orders for local companies.
Foreign direct investments (FDI) in Klaipeda

rio
14.000 2.500
12.000
2.000
ju
10.000
8.000 1.500
Pa
6.000 1.000
4.000
500
2.000
B
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
UA
FDI per capita, LTL FDI, mln. LTL (scale on the right)
During the crisis the salaries decreased considerably, because companies were forced to cut costs.
However, there are also positive aspects of this labour force is cheaper now and foreign companies
are more interested in settling up their business here.
FEASIBILITY STUDY
Average monthly gross earnings
2.900
2.400
1.900
1.400
ht
900
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
rig
Vilnius Kaunas Klaipeda
py
The graph below represents negative tendencies. As unemployment is increasing, more citizens
Co
choose to leave the city.
Population, unemployed, employed

100
(c) 194.000
192.000
80
190.000
na
60 188.000
186.000
40 184.000
die
182.000
20
180.000
0 178.000
me
2001 2002 2003 2004 2005 2006 2007 2008 2009
Employed (thous.) Unemployed (thous.) Population (scale on the right)

rio
During the crisis many companies didnt manage to survive and closed their business. However, it is
ju
expected, that because of the economic recovery the statistic should change into positive trend in 1-
2 years.
Pa
Small and medium size enterprises and workers

55.000 5.400
B
5.200
50.000
UA
5.000
45.000 4.800
40.000 4.600
4.400
35.000
4.200
30.000 4.000
2002 2003 2004 2005 2006 2007 2008 2009 2010
Number of employess Number of small and medium size enterprises in operation

FEASIBILITY STUDY
Despite the recession in real estate market, the construction of individual houses was increasing. The
main reason is the decrease of construction costs. As a result, many citizens initiated constructions.
However, the volume of construction permits decreased. It can be explained by the fact that many
private companies faced financial difficulties and stopped future projects. This and last year market
was mainly stimulated by individual participants.
One or two dweling buildings (units)

200
ht
150
rig
100
50
py
0
2001
2002
2003
2004
2000
2006
2008
2007
2009
2005
Co
Number of residential buildings whose construction was authorized
Dwellings completed

(c)
The graph below shows the activity of developers. When the crisis started many developers stopped
na
or cancelled their projects. In many cases construction of block-of-flats was continued due to inertia.
It is calculated that results of 2010 will be even worse, because there will be only few finished
die
projects in Klaipeda.
me
Apartments (units)
2.000
1.500
rio
1.000
500
ju
0
2000
2007
2002
2003
2004
2006
2008
2009
2001
2005
Pa
Number of residential buildings whose construction was authorized

B
Dwellings completed
UA
Construction of administrative buildings also decreased significantly. Main reasons are the economic
downturn and oversupply in this market.
FEASIBILITY STUDY
Office buildings completed (thous. sq.m)
120
100
80
60
40
20
ht
0
2000 Q3
2001 Q1
2010 Q1
2002 Q3
2003 Q3
2004 Q3
2007 Q1
2000 Q1
2001 Q3
2005 Q3
2006 Q1
2007 Q3
2008 Q1
2009 Q1
2002 Q1
2003 Q1
2004 Q1
2009 Q3
2006 Q3
2005 Q1
2008 Q3
rig
py
Construction of trade, hotels and catering enterprise buildings is also stopped. The volumes are back
Co
to year 2000. Main reasons are the same crisis and oversupply.
Trade, hotels and catering enterprises biuldings completed (thous. sq.m)

250
(c)
200
na
150
100
die
50
0
me
2004 Q3
2000 Q1
2007 Q3
2002 Q1
2003 Q1
2004 Q1
2000 Q3
2005 Q1
2006 Q3
2008 Q3
2009 Q3
2001 Q1
2010 Q1
2002 Q3
2003 Q3
2007 Q1
2001 Q3
2005 Q3
2009 Q1
2006 Q1
2008 Q1
rio
More or less the same is in the industrial segment: oversupply in the market. Therefore, new projects
ju
are postponed.
Pa
Industrial buildings and warehouses completed (thous. sq.m)

250
B
200
UA
150
100
50
0
2007 Q3
2002 Q1
2003 Q1
2004 Q1
2009 Q3
2000 Q3
2005 Q1
2006 Q3
2008 Q3
2004 Q3
2001 Q1
2007 Q1
2010 Q1
2002 Q3
2003 Q3
2000 Q1
2001 Q3
2005 Q3
2009 Q1
2006 Q1
2008 Q1

FEASIBILITY STUDY
6.10 Policy of banks towards financing real estate sector
According to gathered information around 60-70% of current supply developed in Klaipeda is

financed by SEB bank. Moreover, residential projects are not desired by banks for financing. Most
likely because banks try to control the supply and sell out their financed projects.
Following is the summary of all banks policy at the moment:
SEB has finance 4 projects in Vilnius in H1 2010. Three of them are residential projects and a
ht
shopping centre. The bank has a list of financeable projects to control the supply. However,
all of these projects are planned in Vilnius. The bank will not give credits to the projects that
rig
were not financed by the bank as well as if the land lots were acquired using borrowed
money;
py
DnB Nord will not finance acquisition of land lots as well as new projects. In some cases
the banks issue loans to the projects that already have main creditor;
Co
Danske bank will not finance anything;
Swedbank the bank is currently working on promoting its daughter enterprise Ektornet,
which administrates taken over real estate. The aim of the company is to develop the
(c)
projects which are taken over, therefore, Swedbank will finance the projects developed by
Ektornet and will skip the rest. There are 4 judicial quarrels regarding take over procedures.
na
Moreover, Swedbank leasing is seen as very aggressive in the market trying to take over the
properties as soon as possible;
die
Nordea the bank issues housing mortgages actively. However, it does not finance new
projects at the moment;
Snoras currently tries to take over commercial properties and to develop by their selves. In
me
addition, the bank does not finance new projects;

Unicredit will finance new perspective real estate projects. However, unofficially they do
not finance real estate, only perspective business.
rio
To sum up the banks policy, it can be stated that new projects in Klaipeda will not be financed
ju
because of oversupply in the market in all segments. Previously, many projects planned in Klaipeda
were large scale, therefore, there are many detailed plans approved and many construction permits
Pa
issued. New projects could be financed if the supply starts shrinking significantly. However, large
projects will not be financed at once loans would be issued gradually.
B
We have also interviewed banks representatives. In general Klaipedas residential market is not
UA
preferable, not only because of oversupply, but because a lot of land lots are already prepared for
development, meaning that oversupply period will probably protract.
It is calculated that land lots in Klaipeda for development of block-of-flats are relatively very cheap.
Banks calculate that they are worth 40 EUR (140 LTL) per net area of a flat. Therefore, it could be
concluded, that the project could only be developed in stages and by using own funds or together
with other foreign or local investors.
FEASIBILITY STUDY
6.11 Conclusions of real estate market analysis
1. Macroeconomic indices do not turn optimistically. The considerable recovery is forecasted in 3-4
yours. Weak economy, high unemployment, low salaries will not allow real estate market to
recover rapidly to the pre-crisis level.
2. Demographical statistics also is not satisfying. Number of residents decreases. Therefore,
potential demand is also shrinking.
3. There are many land lots prepared for construction: with approved detailed planning or issued
ht
construction permits. As a result, the market is oversupplied and there is a pressure for prices.
rig
The only thing that stops the prices from further decrease is the banks policy.
4. Foreign direct investments per resident in Klaipeda turn optimistically as it sustains an upward
trend. In addition, seaport also demonstrated impressive results. It could be assumed that
py
labour market should recover.
5. Competition in all real estate segments is very tough. However, some of them have specific
Co
niches, which could be used:
Retail market there is a niche for a retail object of around 3,000 sq. m in Siaures av. At least
(c)
half of it should be leased to grocery store. However, the land lot does not have direct
access to Siaures av. therefore there is a risk that this retail unit might be outrivaled in the
future by the projects developed next to the road. In addition, we would suggest
na
development of retail premises on the ground floor along Pievu str. However, its proportion
in the project should be very small. Moreover, it would be possible to open a sport club,
die
because such is missing in close proximity.

Office market a lot of empty premises are available in the market. It is possible to lease
me
them out in only 2-3 years. Moreover, there are even 4 large scale business centres prepared
for development, therefore, the demand will be satisfied for a long time. In addition, the
territory is not in the central part of the city nor visible from the main road. As a result, we
rio
suggest developing only a small area of administrative premises on the ground floor of the
buildings;
Real estate segment of individual houses and residential land lots statistics supplemented
ju
with opinions of brokers and valuators indicate that there is low supply in the market. There
Pa
is no new large scale projects of individual houses planned in the city. In many cases
developers face a shortage of funds and do not even invest into infrastructure and
communications in order to raise the value of the land lot. What is more, buyers are sceptical
B
regarding such land lots. However, the demand is also limited because of relatively high land
UA
price. The latter is among the highest in Klaipeda in our analysed district in general,
therefore, before developing individual houses or residential land lots, we should analyse
the exact market more detailed in order to see if the product is liquid.
Low-rise block-of-flats (up to 4 floors) and cottages the analysis revealed that such
products are attractive to buyers and are the most liquid in the market. Currently such
projects are absent in the market only remainders left. Moreover, because of tough
financial situation its unlikely to attain new supply shortly. The main competitor in low-rise
residential development is Bilukas, Ltd - Danges Vingis (Panevezio str 25). Other low-rise
projects of Metva, Ltd - Kretingos str. 100 and EDP Group, Ltd Liepu str. will probably
FEASIBILITY STUDY
develop their projects later than in 3 years, because currently they face financial problems
and development plans are postponed. In addition, investment into cottages should be
considered more carefully, because cottages are not very popular development in Klaipeda,
except, the sea coast areas. Cottages could be developed next to the individual houses,
postponing this phase to later periods, when the market is recovered.
High-rise (5-9 floors) residential development such projects are also quite liquid in the
market, but not because of the projects itself, but because low-rise residential supply is very
ht
limited, therefore buyers choose flats in a high-rise buildings. However, in general, high-rise
block-of-flats are not preferred by residents and, as a result, the prices are lower by 20-30% in
rig
comparison to low-rise projects. Moreover, the project would then have more competitors
and would fit a different market, were liquidity is lower. However, more detailed
py
calculations are required in order to find out which scenario is more profitable to the
developer.
Co
6.12 Proposed alternatives for territory development
The in-depth market analysis revealed that there are specific niches in Klaipeda real estate market
(c)
therefore we can distinguish several possible development alternatives:
1. Dividing the territory into land lots for individual houses, investing into infrastructure and
na
communications. The land lots would be then sold offering the clients construction services
choosing one of prepared projects;
die
Dividing the territory into 10-12 ares land lots would supply the market with around
150 units;

me
Considering current land lot realisation rate and land price in the market (around 2
land lots sold in the surrounding area per month) the project would last at least 100
months and wouldnt be profitable;
rio
This alternative is rejected as not suitable for our analysed land lot because the time
for realization is most likely too long in respect to expected profit.
2. Dividing the territory into land lots for individual houses, investing into infrastructure and
ju
communications. Individual and blocked houses are built and sold;

Pa
This alternative would also provide around 150 additional units to the supply;
This alternative should increase the profitability of the project as well as the risk
related to construction works, change of price of materials, liquidity, etc.
B
However, considering current realization rate in the market (around 2 new

UA
construction individual houses are sold in the surrounding area per month) the
project would last at least 100 months;
This alternative is rejected as not suitable for our analysed land lot because the time
for realization is most likely too long in respect to expected profit.
3. Development of low-rise residential block-of-flats together with cottages. The latter would
be constructed next to the existing individual houses. Commercial premises would be
located on the ground floor along Pievu str.;
233,600 sq. m of residential, commercial, and social area would be constructed;
FEASIBILITY STUDY
Most of the area is set for residential (low-rise) development;
Commercial area would be located only on the ground floor along Pievu str.;
A kindergarten is planned to be constructed in one of a latter phases;
Considering current realization rate in the market, the project should be staged and it
would be finished in less than 20 years;
This alternative is not rejected as financial evaluation is needed.
4. Development of high-rise block-of-flats together with cottages or/and low-rise block-of-flats
ht
next to the existing individual houses. High-rise buildings should be located close to Liepu str.
rig
with commercial premises on the ground floor.
233,600 sq. m of residential, commercial, and social area would be constructed;
py
Most of the area is set for residential (high-rise and low-rise) development;
Commercial area would be located only on the ground floor along Pievu str.;
Co
A kindergarten is planned to be constructed in one of a latter phases;
Considering current realization rate in the market, the project should be staged and it
would be finished in around 20 years;

(c)
This alternative is not rejected as financial evaluation is needed.
The project is large scale therefore, it would be split into stages. The preliminary concept for the
na
development is needed to sustain the harmony and integrity of the project. However, some room for
changes and updates should be left in case there is a change in demand or some limitations of the
die
projects are revealed later. In that way developer could offer the most demanded product in all
stages, choosing what to construct before every next stage. To sum everything up, it is necessary to
me
mention that a feasibility study will show the best scenario to develop the project.
ju rio
B Pa
UA
FEASIBILITY STUDY
7. Financial Analysis of the Alternatives
In this part we are going to forecast the future market conditions that are most probable and that
will influence the project in general as well as financial outcomes of it. Forecasted change of
macroeconomic indices in Lithuania is provided in the table below. The forecasts are based on the
data provided by Ministry of Finance and insights of ICA Real Estate.
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
ht
GDP 2.8% 1.2% 2.4% 3.0% 3.5% 4.0% 4.0% 4.0% 4.0% 4.0%
CPI 1.8% 2.5% 2.5% 3.0% 3.0% 3.0% 3.5% 3.5% 3.5% 3.5%
rig
Unemployment 16,2% 14,4% 12,3% 11.0% 10.0% 9.0% 7.0% 6.0% 5.0% 5.0%
Average salary
2003.3 2053.7 2146.5 2250 2350 2500 2650 2800 2950 3100
(LTL)
py
Source: Ministry of Finance and ICA Real Estate
Macroeconomic data to 2013 is forecasted by Ministry of Finance. Other indices and later periods are
Co
forecasted by ICA Real Estate based on the experience of Western countries as well as permanent
growth theory, which assumes annual GDP growth to be around 3-4 percent, inflation rate around 2-
(c)
3 percent and unemployment rate around 5 percent. Average salary was calculated considering the
constant GDP and inflation growth.
This type of forecasts provides average annual figures disregarding the potential booming or
na
depression periods. In respect to this, it was assumed that 2 potential development alternatives will
be financially evaluated further in this feasibility study:
die
1. Development of low-rise residential block-of-flats together with cottages. The latter would
be constructed next to the existing individual houses. Commercial premises would be
me
located on the ground floor along Pievu str.;

2. Development of high-rise block-of-flats together with cottages or/and low-rise block-of-
flats next to the existing individual houses (the original concept provided by the client).
rio
High-rise buildings should be located close to Liepu str. with commercial premises on the ground
floor.
ju
7.1 Assumptions on development costs

Pa
Development cost is one of the key elements in calculating profitability, return on investments, etc.
of the project. Therefore, it is important to determine the possible costs of constructions, planning,
B
architectural works and other related works as accurate as possible. As all alternatives will be
evaluated in general, without detailed analysis of materials used or construction technology applied
UA
in the process, we are going to use average construction costs per non-decorated building.
Several construction companies provided data regarding average construction costs of non-
decorated buildings. The prices are provided in the table. They do not include decoration as well as
parking.
FEASIBILITY STUDY
Company name Price (LTL/sq. m) (VAT excl.) Type of building
Date
Turis, LTD. 1,900 9-storey
2010 02
Mabilta, LTD. 1,750 7-storey
2010 03
Bustuva, LTD. 1,700 12-storey
2010 03
Molesta, LTD. 1,600-1,900 Block-of-flats
ht
2010 06
Eika, LTD. 2,100 Block-of-flats
rig
2010 10
py
Other construction costs include:
infrastructure and communications;
Co
architecture;
project management;
other costs.
(c)
It is assumed, based on the experience, that infrastructure and communications of the land lot
should cost around 5% from total expenses of the project. Architecture should cost around 60
na
LTL/sq. m. Lastly, project management and other costs should cost respectively 4% and 3% from total
expenses of the project.
die
7.2 Assumptions on developments income

me
This is one of the most important parts of financials analysis. There are several essential indices that
significantly influence the outcomes of the financial evaluation of alternatives. Because the project is
very large it is important to make correct assumptions not only on planning the project, but also on
rio
pricing, liquidity and demand. The pricing was completed in previous parts by analysing the
competitors. Therefore, the approximate price level for each alternative has already been
ju
determined. The same method can also be applied to liquidity and demand. We get reliable figures
regarding the liquidity and demand by analysing current market and the amount of sold properties.
Pa
Moreover, demand is also represented by analysing the most attractive properties, which was also
completed in the competition analysis.
B
However, the competition analysis represents only current and past market conditions, which is not
UA
that important as the future market conditions. Unfortunately, there are no means to forecast real
estate market in Lithuania precisely only assumptions can be made. Therefore, we provide some
assumptions that should influence real estate market in Lithuania as well as in Klaipeda.
Demand and liquidity projections
the recovery from economic crisis has already begun it is expected to regain lost value in
the coming years;
volume of transactions contracted in 2009, however, as the prices went down, the volume
of transactions bounced to the level of 2008;
FEASIBILITY STUDY
it is expected that volume of transactions will remain stable in short-run and start increasing
in the medium-run;
it is expected that unemployment rates will keep falling as well as salaries increasing;
the outflow of citizens will be partly compensated by the inflow of foreigners;
boost to the recovery of Lithuanias economy should be provided by European Basketball
Championship in 2011;
the trend of Lithuanias image as attractive country for tourism in the Eastern Europe should
ht
persist and induce further tourism inflows stimulating the economy;
The changes in new construction real estate pricing should be determined by:
rig
inflationary pressures;

py
struggle for demand/ supply equilibrium;
additional induced demand caused by unsuccessful massive renovation program;
Co
2007 2008 2009 2010 2011* 2012* 2013* 2014* 2015* 2016*
GDP 8.7% 2.8% -14.8% 1.6% 2.8% 1.2% 2.4% 3.0% 3.5% 4.0%
Inflation 5.7% 11.1% 4.2% 1.1% 1.8% 2.5% 2.5% 3.0% 3.0% 3.0%
Change of
housing prices 48.1% -23.4% -28.7% -19.0%
(c)
0% 5.0% 5.0% 5.0% 5.0% 5.0%
in Klaipeda
na
Housing prices
in Klaipeda 8,741 6,693 4,772 3,865 3,865 4,050 4,250 4,460 4,680 4,920
LTL/sq. m
die
Transactions
of new
649 215 153 190 200 210 230 260 300 350
apartments in
Klaipeda
me
Supply of new
apartments in
1,219 815 707 600 500 700 800 800 850 850
Klaipeda
(total)
rio
Source: Ministry of Finance, ICA Real Estate

* Forecast
ju
The forecasts such as inflation or GDP, is provided by Ministry of Finance until 2013. ICA Real Estate
extends the forecasts and assumes that after 2012 the GDP growth will exceed the growth of the
Pa
inflation by around 1%. We also assume that the growth of GDP and inflation will stabilize and sustain
the similar level after 2012.
B
Change of housing prices as well as commercial property prices are provided by analysing data base
UA
of ICA Real Estate.
7.3 Analysis of alternatives
In this part chosen alternatives will be analysed and explained in details. Firstly, data regarding the
first development alternative (low-rise development) is provided below:
FEASIBILITY STUDY
Alternative No. 1 - low-rise development

Volume, Built-up,
Built-up Intensity Size, sq. m
sq. m sq. m
Land lot 45% 150% 155.733 233.600 70.080
social area 1.635 1.635
commercial area 8.000
68.445
residential area 223.965
ht
built-up area 70.080
left area 85.653
rig
area for social interest 8% 12.459
green area 10% 15.573
available parking area outside sq. m 57.621
additional parking area inside sq. m 62.080
py
available parking places unit 3.990
required parking places unit 3.226
Co
Gros area Net area
Alternative No. 1
(sq. m) Net area % (sq. m)
Total area to be constructed, sq.m 233.600 80,4% 187.843
commercial
1st stage
(c)
sq.m
sq.m
8.000
1.500
90%
90%
7.200
1.350
2nd stage sq.m 2.500 90% 2.250
na
3rd stage sq.m 2.000 90% 1.800
4th stage sq.m 2.000 90% 1.800
social sq.m 1.635 90% 1.472
die
5th stage sq.m 1.635 90% 1.472

residential sq.m 223.965 80% 179.172
1st stage sq.m 26.876 80% 21.501
2nd stage sq.m 42.553 80% 34.043
me
3rd stage sq.m 31.355 80% 25.084

4th stage sq.m 29.115 80% 23.292
6th stage sq.m 8.959 80% 7.167
7th stage sq.m 31.355 80% 25.084
rio
8th stage sq.m 26.876 80% 21.501

9th stage sq.m 11.198 80% 8.959
10th stage sq.m 6.719 80% 5.375
ju
11th stage sq.m 8.959 80% 7.167

number of flats 60 sq.m/flat 2.986
B Pa
UA
FEASIBILITY STUDY
Alternative No. 1
Volume, Total, EUR
Costs
Construction sq.m (VAT excl.)
1st stage
flats, EUR/sq.m 550 26.876 14.781.657
commercial premises, EUR/sq.m 650 1.500 975.000
parking (underground) 260 6.719 1.746.923
parking outside 1,5% 8.219 236.350
infrastructure and communications 5% 787.833
architecture, % of total project 3% 472.700
ht
project management, % of total project 4% 630.266
other, % of total project 3% 472.700
rig
Total construction cost (1st stage), EUR 20.103.429
2st stage
flats, EUR/sq.m 550 42.553 23.404.290
py
commercial premises, EUR/sq.m 650 2.500 1.625.000
Co
infrastructure and communications 5% 1.251.465
project management, % of total project 4% 1.001.172
Total construction cost (2nd stage), EUR
(c) 31.925.085
3rd stage
flats, EUR/sq.m 550 31.355 17.245.267
na

die

me

Total construction cost (3rd stage), EUR 23.643.312
4th stage
flats, EUR/sq.m 550 29.115 16.013.462
rio

ju

Pa

Total construction cost (4th stage), EUR 22.062.683
B
UA
FEASIBILITY STUDY
5th stage
kindergarten, EUR/sq.m 650 1.635 1.062.750
parking outside 1% 273 10.628
architecture, % of total project 2,5% 26.569
6th stage
flats, EUR/sq.m 550 8.959 4.927.219
ht
parking (underground) 260 2.240 582.308
rig
py
7th stage
Co
flats, EUR/sq.m 550 31.355 17.245.267
architecture, % of total project
project management, % of total project
(c)
3%
4%
517.358
689.811
na
die
me
ju rio
B Pa
UA
FEASIBILITY STUDY
8th stage
flats, EUR/sq.m 550 26.876 14.781.657
9th stage
ht
flats, EUR/sq.m 550 11.198 6.159.024
rig
py
Co
10th stage
flats, EUR/sq.m 550 6.719 3.695.414
infrastructure and communications
(c)
5%
3%
184.771
110.862
na
11th stage
die
flats, EUR/sq.m 550 8.959 4.927.219

me

rio
TOTAL cost of ALL constructions, EUR 165.337.795

Land value, EUR 7.513.724
ju
EUR/sq.m Volume,
Sales (Alternative No. 1) (VAT excl.) sq.m Total, EUR
Pa
flats 1.200 179.172 215.005.920

commercial 1.200 7.200 8.640.000
TOTAL from sales, EUR 223.645.920
B
UA
Furthermore, detailed information regarding the second development alternative (high-rise) is

provided below:
FEASIBILITY STUDY
Alternative No. 2 - high-rise development

Volume, Built-up,
Built-up Intensity Size, sq. m
sq. m sq. m
Land lot 35% 150% 155.733 233.600 54.507
social area 1.635 1.635
commercial area 8.000
52.872
residential area 223.965
ht
built-up area 54.507
left area 101.226
rig
area for social interest 10% 15.573
green area 10% 15.573
available parking area outside sq. m 70.080
py
additional parking area inside sq. m 46.507
available parking places unit 3.886
required parking places unit 3.226
Co
Gros area Net area
Alternative No. 2
(sq. m) Net area % (sq. m)
Total area able to be constructed, sq.m 233.600 80,4% 187.843
commercial
1st stage
(c)
sq.m
sq.m
8.000
1.500
90%
90%
7.200
1.350
2nd stage sq.m 2.500 90% 2.250
na
3rd stage sq.m 2.000 90% 1.800
4th stage sq.m 2.000 90% 1.800
social sq.m 1.635 90% 1.472
die
5th stage sq.m 1.635 90% 1.472

residential sq.m 223.965 80% 179.172
1st stage sq.m 26.876 80% 21.501
2nd stage sq.m 42.553 80% 34.043
me
3rd stage sq.m 31.355 80% 25.084

4th stage sq.m 29.115 80% 23.292
6th stage sq.m 8.959 80% 7.167
7th stage sq.m 31.355 80% 25.084
rio
8th stage sq.m 26.876 80% 21.501

9th stage sq.m 11.198 80% 8.959
10th stage sq.m 6.719 80% 5.375
ju
11th stage sq.m 8.959 80% 7.167

number of flats 60 sq.m/flat 2.986
B Pa
UA
FEASIBILITY STUDY
Alternative No. 2
Volume, Total, EUR
Costs
Construction sq.m (VAT excl.)
1st stage
flats, EUR/sq.m 600 26.876 16.125.444
commercial premises, EUR/sq.m 650 1.500 975.000
ht
rig
Total construction cost (1st stage), EUR 21.668.940
2st stage
flats, EUR/sq.m 600 42.553 25.531.953
py
Co
project management, % of total project 4% 1.086.278
Total construction cost (2nd stage), EUR
(c) 34.403.812
3rd stage
flats, EUR/sq.m 600 31.355 18.813.018
na

die

me

Total construction cost (3rd stage), EUR 25.469.743
ju rio
B Pa
UA
FEASIBILITY STUDY
4th stage
flats, EUR/sq.m 600 29.115 17.469.231
ht
5th stage
kindergarten, EUR/sq.m 650 1.635 1.062.750
rig
parking outside 1% 273 10.628
architecture, % of total project 2,5% 26.569
py
Co
6th stage
flats, EUR/sq.m 550 8.959 4.927.219
(c)
5%
3%
246.361
147.817
na
7th stage
die
flats, EUR/sq.m 600 31.355 18.813.018

me

ju rio
B Pa
UA
FEASIBILITY STUDY
8th stage
flats, EUR/sq.m 600 26.876 16.125.444
9th stage
ht
flats, EUR/sq.m 600 11.198 6.718.935
rig
py
Co
10th stage
flats, EUR/sq.m 600 6.719 4.031.361
(c)
5%
3%
201.568
120.941
na
11th stage
die
flats, EUR/sq.m 600 8.959 5.375.148

me

rio
TOTAL cost of construction, EUR 177.861.889

Land value, EUR 7.513.724
ju
EUR/sq.m Volume,
Sales (Alternative No. 2) (VAT excl.) sq.m
Pa
flats 1.200 179.172 215.005.920

commercial 1.200 7.200 8.640.000
B
UA
FEASIBILITY STUDY
7.4 Outcomes of alternatives
OUTCOMES OF THE PROJECT - Alternative No. 1

Total area to be constructed, sq.m 233.600
Total Net area to be constructed, sq.m 187.843
TOTAL cost of ALL constructions, EUR 165.337.795
Average construction cost EUR/net sq.m 880
Net present value of the project, EUR 5.671.216
ht
Internal rate of return of the project (IRR), % 11,43%
Net profit of the project, EUR 47.216.067
rig
Return on investment (ROI), % 486,62%
Annual return on investment (ROI), % 27,03%
Net present value of invested equity, EUR 4.319.677
py
Internal rate of return invested equity (IRR), % 13,15%
Net profit of invested equity, EUR 40.349.299
Return on equity (ROE), % 219,28%
Co
Annual return on equity (ROE), % 12,18%
OUTCOMES OF THE PROJECT - Alternative No. 2

Total area able to be constructed, sq.m
Total Net area to be constructed, sq.m
233.600
187.843
(c)
TOTAL cost of construction, EUR 177.861.889
Average construction cost EUR/net sq.m 947
na

Net present value of the project, EUR -4.064.410
die
Internal rate of return of the project (IRR), % 7,10%

Net profit of the project, EUR 34.691.972
Return on investment (ROI), % 355,81%
Annual return on investment (ROI), % 17,79%
me
Net present value of invested equity, EUR -4.364.619

Internal rate of return invested equity (IRR), % 6,92%
Net profit of invested equity, EUR 24.042.839
Return on equity (ROE), % 106,87%
rio
Annual return on equity (ROE), % 5,34%
7.5 Sensitivity analysis

ju
Pa
In this part both alternatives will be tested in order to see, how sensitive the financial outcomes are
when income and/or costs change unplanned.
B
Sensitivity of Alternative No. 1

UA
-15% -10% -5% 0% 5% 10% 15%

Change of sale price
NPV -10.195.729 -4.906.748 382.234 5.671.216 10.960.197 16.249.179 21.538.160
ROI 8,42% 14,77% 20,97% 27,03% 32,96% 38,76% 44,43%
ROE 2,22% 5,54% 8,86% 12,18% 15,50% 18,83% 22,15%
Change of construction cost
NPV 18.346.704 14.121.541 9.767.462 5.671.216 1.446.053 -2.779.110 -7.004.273
ROI 39,98% 35,67% 31,19% 27,03% 22,72% 18,40% 14,08%
ROE 21,00% 17,89% 14,87% 12,18% 9,55% 7,06% 4,69%
FEASIBILITY STUDY
It can be concluded from the table above, that this alternative is sensitive to the changes of sales
income and construction costs in a way that decrease of sale price or increase of construction costs
by 10% makes the project not profitable. However, decrease of sale price is very unlikely as we
assumed bottom prices in this financial analysis, therefore, increase of sale prices is more likely and
provides the possibility of an upturn. However, construction costs are also assumed at the bottom
level, therefore, it might increase in the future. Sensitivity analysis revealed that 5% increase of
construction costs is acceptable, further increase makes the project not profitable. Therefore, it is
ht
advisable to negotiate stable constructions prices before each stage and to recalculate financial
outcomes.
rig
Sensitivity of Alternative No. 2
-15% -10% -5% 0% 5% 10% 15%
py
Change of sale price
NPV -18.603.657 -13.757.242 -8.910.826 -4.064.410 782.005 5.628.421 10.474.836
ROI 0,89% 6,66% 12,29% 17,79% 23,17% 28,42% 33,56%
Co
ROE -1,99% 0,45% 2,90% 5,34% 7,79% 10,23% 12,68%
Change of construction cost
NPV 10.067.810 5.846.477 1.625.143 -4.064.410 -6.817.524 -11.038.858 -15.260.192
ROI 32,51% 28,45% 24,39% 17,79% 16,27% 12,21% 8,15%
ROE 13,27% 10,85% 8,58% (c)5,34% 4,44% 2,55% 0,77%
It can be concluded from the table above, that this alternative is highly sensitive to the changes of
sales income and construction costs. The project becomes profitable only if the sales prices increase
na
or construction costs decrease by 5%. However, it is most likely that these indices will have the same
tendency upward or downturn, i.e. the increase of sale prices will be followed by increase of
die
construction costs and vice versa. Therefore, this alternative will most likely stay unprofitable.
me
7.6 Comparison of alternatives
In this part we are going to compare the alternatives and decide which one is the best. The table of
key indices will be used:
rio
Index Scenario No. 1 Scenario No. 2

Type of construction Low-rise and cottages High-rise and low-rise
ju
Area constructed 233,600 sq. m 233,600 sq. m

Built-up area 45% 35%
Pa
Average construction cost 880 EUR/sq. m 947 EUR/sq. m

Development time 18 years 20 years
Net present value of the project, EUR 5.671.216 -4.064.410
B
Internal rate of return of the project (IRR), % 11,43% 7,10%

UA
Net profit of the project, EUR 47.216.067 34.691.972

Return on investment (ROI), % 486,62% 355,81%
Annual return on investment (ROI), % 27,03% 17,79%
Return on equity (ROE), % 219,28% 106,87%
Annual return on equity (ROE), % 12,18% 5,34%
Development Should be developed Should not be developed
The table of comparison reveals that Alternative No. 2 (high-rise development) is less attractive in
many aspects. Firstly, the construction works will most like be more expensive as high-rise buildings
require stronger foundations and other construction elements. Moreover, elevators will be
FEASIBILITY STUDY
necessary, which also cost additional money and consume NET area in the building. Secondly,
development of this alternative will most likely take longer in comparison to Alternative No. 1 (low
rise development), because apartments in high-rise buildings are less demanded in Klaipedas
residential market. As a result, volume of transactions would also be lower. Lastly, outcomes of
financial analysis state that Alternative No. 2 should not be preferred as it does not generate positive
Net Present Value (NPV) and Internal Rate of Return is lower than a discount rate meaning that in
this case it is better to invest funds elsewhere. For example, into a low-rise development alternative,
ht
which seem to be attractive on many aspects such as positive NPV, higher ROI and ROE rates.
rig
7.7 SWOT analysis
py
Scenario No. 1 Low-rise development
STRENGHT WEAKNESSES
Co
o Larger built-up area
o Higher liquidity
o Requirement for more underground
o Relatively cheaper constructions
parking
o Integrity of the project
o
o
Relatively higher sale price
More resistant to risks
(c)
OPPORTUNITIES THREATHS
Sale prices could increase in later Decrease of the demand
na
o o
stages o Decline of Lithuanian economy
o Recover of the demand would o Tightening competition
die
increase the liquidity o Change of tastes of buyers

o Adjacent industrial territories will
start the conversion increasing the
me
attractiveness of the site
Scenario No. 2 High-rise development

rio
STRENGHT WEAKNESSES
o Smaller built-up area o Relatively lower liquidity
o Possibility to form more green areas o Higher cost of constructions
ju
o Minimal need for underground o Development would take longer

parking o Less resistant to risks
Pa
OPPORTUNITIES THREATHS
o Sale prices could increase in later o Further decline of Lithuanian
stages economy
B
o Recover of the demand would o Further decline of demand

UA
increase the liquidity o Tightening competition

o Adjacent industrial territories will o Creation of non-demanded product
start the conversion increasing the
attractiveness of the site
FEASIBILITY STUDY
8. Summary, Conclusions and Recommendations
The sole purpose of the Feasibility Study was to suggest and financially justify the best alternative to
develop the project considering the location, situation in the real estate market, development costs,
liquidity of the object and other aspects. Analysis of the site revealed that the preferred intensity of
1.5 would allow constructing 233,600 sq. m. The site is the most favourable for residential
development, so such development could supply the market with around 3,000 new apartments. It
is around 5-6 times more than supply in the market at the moment and considering current
ht
realization rates it would take around 20 years to sell out the whole Project. Therefore, it must be
rig
split into stages.
Location analysis emphasizes that object is in a good location, next to the main roads and within 10
py
minutes drive from the city centre and the Old town. Moreover, the site is close to the river, where
after the conversion of the territory is over, recreational zones will most likely be established. In
Co
addition, it is expected that citys municipality will also pay more attention to this zone, creating
better conditions for commercial and residential activities.
Real estate market and competitors analyses enabled to identify a niche in residential market.
(c)
Currently there is a shortage of low-rise apartments when the market is full of illiquid apartments in
high-rise projects. Moreover, it is expected that there will not be any new low-rise residential
na
developments at least in the coming 3 years. It was also noticed, that apartments in low-rise block-
of-flats are more demanded and has around 20% higher price in comparison to apartments in high-
die
rise buildings. Lastly, many years of Klaipeda residential market monitoring also enables to conclude
that apartments in low-rise projects are better investment, because the prices tend to increase more
when the market goes up and to decrease less than the market goes down.
me
We performed financial valuation of two alternatives: a) residential low-rise development, and b)

residential high-rise development. We assumed that in both cases the same area would be
rio
constructed (233,600 sq. m) just the height of buildings and built-up area would differ. Moreover, we
assumed the same net area and sale prices for both alternatives in order to make more convincing
comparison of alternatives despite the fact that in practise apartments in high-rise projects are
ju
around 20% cheaper and has less net area. However, we assumed different realization time
Pa
development of high-rise objects, considering current market realization rates, would take around 20
years in comparison to 18 years of low-rise development. However, it is likely that actual realization
rate would be shorter in recovered economy. The outcomes of financial valuation is significantly
B
better for low-rise development, because it has a positive Net Present Value (NPV) and creates
UA
additional value to the investor, while development of high rise objects creates negative NPV.
Despite the fact that the latter alternative is also profitable it does not provide enough profit to the
investor considering the risk taken. Therefore, we suggest low-rise residential development.
Finally, we think it would be the best to try cooperating with Viremidos Investicijos, Ltd. and SEB
Lizing owners of several neighbouring land lots. They posses smaller land lots and in a good
location to ignite the territorys conversion process. Their territories are better for commercial
development and our analysed site for residential. Cooperation of these 3 owners would help
creating a solid and well developed district instead of chaotic misunderstanding otherwise.

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CLIENT: PAJURIO MEDIENA, LITHUANIA CANADA LTD.

12/27/2010 ICA partners

5.2 Competitors of commercial market in Klaipeda ...................................................................................... 31

6.1 Market analysis prices, turnover, supply, demand ...............................................................................38

6.5 Summary of real estate valuators survey .............................................................................................. 64

6.7 Forecasted market liquidity ..................................................................................................................... 64

6.9 Description of economical, business and demographical situation in Klaipeda .................................... 71

6.12 Proposed alternatives for territory development ................................................................................... 77

7. Financial Analysis of the Alternatives ...............................................................................................................79

a better understanding of perspectives of the country and Klaipeda.

2.2 Location analysis

the communication with the central part of the city.

2.3 Analysis of market competitors

2.4 Analysis of Klaipeda real estate market

which scenario is more profitable to the developer.

2.5 Financial analysis of alternatives

3.2 Analysis of the Detailed plan of the territory

Actual information regarding the development of the territory:

Area of the territory 155,733 sq. m;

1st stage 3rd stage

5th stage 6th stage

3.3 Analysis of communications

3.4 Municipalitys position regarding the territory

4.1 Area surrounding the site

1 Prestigious residential district, 2 Conversion territories, 3 City centre, 4 Old town

No. Land plot Unique No. Owner Purpose

2 12,175 4400-1600- Lithuania Republic Other Residential high

3 17,036 4400-1611- Lithuania Republic, rent agreement Other Public area

10 8,958 4400-0436- Lithuania Republic, rent agreement Other Commercial

19 28,180 4400-0313- Statemos Investicijos LTD Agricultural

21 27,980 4400-0329- Physical person Agricultural

23 25,500 4400-0311- Statemos Investicijos LTD Agricultural

25 13,400 2101-0039- Statemos Investicijos LTD Agricultural

0289 rise territories

4411 with Klaipeda national college rise territories

No. Object Picture

1 Lithuania Christian College (LCC) the nationally and

5 Klaipeda rail station.

6 Klaipeda bus station.

7 Shopping mall Mega Plaza. Opened in 2003. Space

11 Mixed use commercial-residential project Manto

12 Mixed use commercial-residential project K-centras.

room hotel Amberton and apartments, which are

Projects under development (A, B and C in the map)

No. Developer - Object Picture

A Pamario troba Residential project. There will be

LTD - Dragunu around 700 apartments in the future.

kvartalas) sold in this project. Project is under

development. Projects end is

No. Location Object Picture

(Lietuvos Kino buildings, underground parking.

project opening year unknown.

II "EDP GROUP" Residential project. Project

LTD and other conception is approved. There will

property, Danes above-ground parking. Future

and Liepu str.

III Business centre - Office centre. 15,000 sq. m. Detail

IV "Verdispar Residential project. There will be

International Ferry Port

Bus station 1 km/5 min

Railway station 1 km/5 min

City centre 2 km/10 min

The 1st ferry 3.5 km/15 min