Vilnius has been nominated the European Capital of Culture 2009, following Liverpool in 2008. Since the programs inauguration in 1985 a city nominated as the Capital of European Culture, for one year, is provided with an opportunity to promote its own culture among nationals of other European Union countries. Moreover, Lithuania is the first among the new European Union member states to have its capital given the honourable title of the European Capital of Culture.

The climate in Lithuania is moderate with distinct seasons. The summers are warm with Autumn and Spring being relatively mild and rainy. The weather in the Winter is cold and fluctuates a great deal, with some years being snowier and colder than others.

Lithuanian is the official language of the Republic of Lithuania, Russian is widely known by the elder generations but seldom spoken. While increasingly English is spoken as the business/tourist language and in particular by the younger generations (so is German to some degree).

Political info and history
Not much more than a decade after it regained its independence following the collapse of the USSR, Lithuania was welcomed as a Nato member in late March 2004.

A few weeks later came a second historic shift for the country in establishing its place in the Western family of nations as it joined the EU in May 2004. These developments would have been extremely hard to imagine in not-so-distant Soviet times.

The history of Lithuania has close ties with that of Poland, its neighbour to the southwest. By the end of the 18th century most of the country came under the Russian empire. German occupation in the first world war was followed by two decades of independence, although Vilnius was occupied by Poland for most of that time.

Following a pact between Stalin and Hitler, Soviet troops arrived in 1940. They were pushed out by the Nazis the following year but returned in 1944.

For the subsequent half century of Soviet rule, Lithuanians relied on Catholic tradition and memories of independence to preserve their national identity, largely through folk songs, a skill mastered through centuries of foreign domination. Pagan traditions with roots stretching back centuries have been kept alive too.

Lithuania has embraced market reform since independence. In the run up to and period following EU entry the republic has seen strong growth and very low inflation.

Economic info
Lithuania, along with her Baltic Neighboring countries, has a booming emerging economy with well structured and modern system of finance. The Lithuanian economy is growing at a rate of between 6-9% with low inflation and stabile interest rates. GDP is predicted at 6.5% for 2006 (in 2004 it was 9.6%), growth far outstrips Western Europe.

There is strong real wage growth in the region of over 7% per year, with a stable currency. Introduction of the Euro will bring exchange rate stability for foreign investors, boosting inward foreign direct investment. (Lithuania’s currency is already tied to the euro and joined the Exchange Rate Mechanism II (ERM II) in June 2004, accordingly the EURO is set to replace litas in 2007.

Real Estate Market
A real estate market began to develop in Lithuania as early as 1991, when the national parliament passed the Apartment Privatization Bill, allowing citizens to buy their state-owned apartments. At the beginning of 90s the class of small entrepreneurs started to form and soon became one of the main players at the real estate market. During the last decade the prices for residential properties in the country rose from $100 per sq.meter to their actual levels 5 to 10 times higher. Since 1991 the prices have risen steadily, with some exceptions such as in 1993 when the Soviet army left Lithuania, flooding the market with their privatized apartments.

In 1997 the larger commercial banks began to offer residential properties buyers 10-year mortgages on apartments, with interest rates at 12 percent per year (the inflation in 1998 and 1999 has fallen to 2 percent annually). The added liquidity began to push prices up, particularly in the capital of Vilnius (600,000) and the second biggest city of Kaunas (410,000).

In the Vilnius downtown the new apartments and houses cost around $1000-$1100 per sq.meter (1 sq.meter=10 sq.feet). The old but renovated residential properties can be found for $900 per sq.meter and the unrenovated reach as low as $500-$600 per sq.meter. In the prestigious suburbs the prices are $700-$750, $500-$650 and $350-500 respectively. In the other residential areas the prices are one-third below the levels in the prestigious areas and in the ordinary suburbs you can need as low as $250 per sq.meter to buy a condo. In the second biggest town in Lithuania - Kaunas, the downtown apartments hardly can reach $500 per sq.meter, but some houses are sold for as high as $800 per sq.meter. In the suburbs the apartments are bought for just $150 per sq.meter and the houses between $250 and $450 per sq.meter.

If you want to rent an apartment in Vilnius for residential purposes, it will cost you between $200-$300 per month for 1BR and $1300 for 4BR in the city center. The house rents vary between $1000 a month in the suburbs and $4000 in the downtown. In the other big cities in the country the apartments for renting depending on location may be found for as low as $150 per month and the houses as high as $3000 a month.

In the commercial real estate market the leading position is also taken by the capital city. In its center the office space can be rented between $10 and $20/sq.meter a month. The retail spaces can reach as high as $40/sq.meter per month. In the capital suburbs the rents for offices and retail businesses diminish to $2-5/sq.meter a month. Approximately the same are rent levels for the warehouses. In Kaunas the commercial rents are twice lower than those in Vilnius. For sale per sq.meter the offices in the capital city center vary between $600 and $1800 depending on exact location. The retail businesses can be bought as high as $3500 per sq.meter. In the city suburbs the prices are 2-3 times lower. In Kaunas the commercial real estates are sold at the prices equal to those in the capital of Vilnius but this concerns only the properties on the ground floor. In the higher floors in Kaunas the prices diminish 2-3 times.

Three years is the most common length of a lease in Lithuania, although it is often possible to negotiate a somewhat longer or shorter period. Consent of both sides is required to extend a lease. Termination clauses of the contracts generally require 30 days notice.

After the sharp falling of land prices in 1998 which was due to the Russian financial crises, in 2000 they became more expensive by 25 percent. In some luxurious areas of the capital the prices has reached $100/sq.meter. In the other regions the land for residential development can be bought for between $10 and $50/sq.meter.

Law & Taxes
The good news is that foreigners rarely get fleeced when buying properties in Lithuania, a member of the European Union. The procedure of Lithuania property purchase isn't as rigid as in the older countries, it is relatively straightforward. Unlike other countries where an asking price can be a starting figure in Lithuania the asking price is usually very close to the selling price if not the actual price itself.
There is a building boom in Lithuania with estimates of some 3000 properties per year needed to keep up with demand; with so much real estate growth going on there isn't much room to haggle.

Restrictions
If you purchase in a city that property may be under a Lithuanian National Heritage protection which limits what improvements can be made.I f purchasing a home in the countryside beware:
There are laws which prohibit construction on riverbanks and lakeshores. If not aware of any of these, the property purchase price will only be the beginning of your investment.
The need to know the condition of an older property is obvious.
And with new builds, your expert will confirm that everything has been constructed as it should be and as per the plans. By law in Lithuania new property is guaranteed for 5 years with 10 years for pipe work etc.

Purchase costs

-    Stamp duty: Land Register tax is measured on a sliding scale but is nominal and should not exceed 100 Euro

-    Legal fees: Notary fees: Approx. 250Euro

-    Annual taxes: a real estate tax of no more than 1% value of property

-    Income tax (private/ corporate): corporate/ income tax rate is 15%

-    Capital gains tax (private/ corporate) capital gains tax, if property sold within three years is 15%. There is no capital gains if a property is sold after 3 years.

Vit Klima