Real estate developer Arco Vara’s sales revenue increased by 16% in 2021, and the company wrapped up the year with a net profit of nearly 700,000 euros. This year, Arco will continue with projects in Estonia and Bulgaria, and plans to complete at least 100 new homes.
Arco Vara, which is developing residential real estate, increased its sales revenue to 13.5 million euros (+16%) during the 12 months of 2021. According to the company’s CEO Miko Niinemäe, the high level of liquidity and the low increase of loan interest can be considered as a positive sign, facilitated by earlier loan contracts with a fixed interest rate which will keep the interest expenses of Arco Vara under control in future periods as well.
“Looking at last year’s result, we must not forget the 4.1 million euros being released from the Madrid BLVD project in Bulgaria, which we will invest into residential real estate developments,” he added. The sale of this commercial building will be finalized in the second quarter of this year, and the necessary steps of the transaction have been completed according to the expected schedule.
According to the CEO, despite the sale of a commercial building in Bulgaria, this market still continues to play an important role besides Estonia, but in the future, the focus there will only be on building homes. “Construction has begun in the Bulgarian residential development Botanica Lozen Residences, where the foundation and digging works are currently undergoing,” said Niinemäe, and according to him, a booking contract has been concluded on one building out of the 16 homes to be built in the first stage. “It should be noted that Bulgaria is not tied to the increase of base interest rates of the European Central Bank and the local base interest rate has increased to 1.3%, maintaining the spark in the real estate sales market of the country,” he added.
Looking at the financial indicators of the last quarter of 2022, the sales revenue of the last three months of the year remained the same as the year before, reaching 327,000 euros. The net loss for the same quarter was 858,000 euros, a significant part of which is related to the resolution of the board to sell the building Madrid BLVD in Sofia, the capital of Bulgaria, after 10 years of efforts to generate stable rental income.
Looking back at the real estate market in the fourth quarter of 2022, Niinemäe sums it up with the word “expectation”. “Buyers seem to expect for sales prices of real estate to drop and sellers for the increase of interest rates to settle down,” he added. For the Kodulahe quarter, being built by the company’s subsidiary Arco Tarc, the real estate developer has set itself up for the sales period in the second half of 2023, where the company foresees an increase in demand for apartments with optimal utility costs and stabilizing interest rates.
According to the CEO, Arco Vara’s goals will remain the same this year, and the foundation of the company will continue to be strengthened, to be able to sell at least 200 homes per year to customers. “The primary goal for 2023 is to increase the number of units under development, but we must focus more on innovation in existing developments to create Arco Vara on the next level.”