Why is it worth to invest in real estate in Lithuania?

Your lawyers for real estate law in Lithuania and Beyond

The Lithuanian real estate have seen quite a hike in investments during last years. The real estate market is one of the most important sectors of Lithuanian economy, with a significant impact on both the financial stability of the population and the country‘s gross domestic product (GDP). Vilnius ranks among the top 10 European capitals with some of the highest rental yields. Real estate investors from abroad benefit from a clear Lithuanian real estate regulatory framework, with no restrictions on purchasing residential or commercial properties.

Investment in real estate in Lithuania remains popular among its citizens as well. For Lithuanians, real estate is the best investment of free funds. The recent Russian invasion in Ukraine has had no impact-whatsoever on the increasing demand in the real estate properties in Lithuania. Moreover, there has been a significant increase in foreigners investing in real estate in Lithuania as there are no restriction for foreign ownerships, except for agricultural lands.

In recent years, population growth, falling interest rates, and improved housing affordability have all shaped rental market trends, driving both an increase in new tenants and heightened investor interest in real estate. According to Gloabl Property Guide, the five major cities’ apartment price index (covering Vilnius, Kaunas, Klaipėda, Šiauliai, and Panevėžys) rose by a modest 3.21% in July 2024 from a year earlier, according to Ober Haus Real Estate Advisors. It was a deceleration from y-o-y price growth of 6.72% in July 2023, 22.3% in July 2022, and 15.31% in July 2021.

Real estate taxes

Lithuania’s real estate tax system is attractive to investors due to its relatively low rates compared to the global context and simplified declaration and payment procedures, which are designed to take into account the size of the investment. 

The rate of property tax cannot exceed 3 per cent of the tax value of property and shall be determined by municipalities taking into account one or more of the following criteria: purpose, use, legal status, technical characteristics of immovable property, condition of maintenance, neglect, categories of taxpayers (size or legal form or social status) or location of immovable property in the territory of a municipality (according to priorities set out in strategic planning and territorial planning documents). 

The maximum rate is usually only applied to property owners who do not fulfil their obligations to maintain the property properly. The standard rate for real restate investors does not exceed 0,5-0,8 per cent, and in some cases investors may be exempted from the tax altogether.

Economic environment

Lithuania is considered to be a safe harbor even despite the ongoing war in its neighboring territory. The Republic of Lithuania has been a member of European Union since 2004. Lithuania’s economic policies focus on sustainable growth and innovation. Investors benefit from stable economic environment, consistent GDP growth and low inflation rates, skilled workforce, strategic location.

According to European Commission, Lithuania’s economy is expected to grow over the forecast horizon, supported by a strong increase in private consumption and buoyant services exports. Real GDP has grown by 2.2% in 2024. In 2025, it is forecast to grow by 3% as investment expansion resumes and consumption remains strong. This is good news for real estate developers as well.

Main economic factors influencing the real estate prices in Lithuania are GDP of the country, inflation rate, interest rate of bank loans and availability of loans from financial institutions. European Commission notes that HICP inflation is expected to be just 1.7% in 2025 and 1.6% in 2026. Declining energy and unprocessed food prices in 2024 and a significant slowdown in price growth for the remaining components of HICP are set to continue to bring down both headline inflation and inflation excluding energy and food.

Lithuania has emerged as a compelling destination for investors, offering a range of investment support mechanisms designed to foster economic growth and innovation. Large-scale investors in Lithuania can benefit significantly from streamlined administrative processes, including prioritized decisions and reduced timelines for project approvals, tax incentives like a 0% corporate tax rate for up to 20 years, simplified land leasing and planning regulations, and expedited migration processes for skilled workers and their families.

The idea of investing in real estate can be daunting for foreigners but if it comes with its perks, it is certainly a well-calculated investment. ECOVIS ProventusLaw provides specialized legal services to guide its clients though every step of purchasing or managing real estate in Lithuania.