Arco Vara raises profit forecast by EUR 2 million

Residential real estate developer Arco Vara has released an upgraded revenue and profit forecast to the stock exchange along with its latest quarterly results. The company expects to end the year with EUR 2 million more in profit than previously forecast, as the Kodulahe Rannakalda development will be completed earlier than planned, which means that sales of new homes can be formalised earlier.

Miko Niinemäe, Head of Arco Vara, said that the thrombosis in the real estate market has eased in the first quarter of the year, as evidenced by the increased number of enquiries and transactions compared to the end of last year. “We can’t yet speak of an active market, but the signs are undoubtedly positive, consumer confidence is growing and banks are flexible on new home loan terms.”

After the first quarter, Niinemäe is optimistic. “Time and time again, I would reiterate the peculiarity of our real estate sector – it is cyclical, which means that the economic results also need to be monitored over a longer period. Arco made a loss in the first quarter, and since there were no developments in the second and third quarters, there is not expected to be a profit in this period either. By the end of the year, on the other hand, the picture will be very different and we will end the year with a bigger surplus than we could have predicted at the beginning of the year. Our subsidiary Arco Tarc, the general contractor, will complete the Kodulahe Rannakalda development earlier than planned, which means that we will be able to start formalising sales in the fourth quarter.”

According to Niinemäe, Arco Vara updated its sales revenue and profit forecasts for both 2023 and 2024 based on the efficiency of the construction company. “This year’s expected profit has increased by approximately EUR 2 million, or will remain at EUR 3.5 million, according to the new forecast. Tracking the sales revenue forecast, 13.1 million euros worth of homes are currently covered by pre-sales contracts.”

The Kodulahe Rannakalda development consists of a pavilion, 4 service areas and 108 apartments in a total of three separate apartment buildings. The apartment buildings will be completed in the fourth quarter of 2023. At the date of publication of the quarterly report, 45 of the 113 plots have been pre-sold.

In addition to the Kodulahe quarter development near Stroomi beach, work is ongoing in Pirita. “In the first quarter of this year, we started construction activities at Lehiku tee 11, where the Kuldlehe boutique building is being built in cooperation with the general contractor Combicon OÜ. Five premium-The completion of the class 2 home is scheduled within 12 months and the public sale started on 21 April,” Niinemäe said.

In 2024, Arco Vara plans to start a major residential development on a plot at Paldiski mnt 124b on the shore of Lake Harku. The development, to be named Arcojärve, will include more than 35 000 m2 of residential and commercial real estate.

In Arco Vara’s second market, Bulgaria, the construction of the first phase of the Botanica Lozen private housing estate is underway, with 16 homes. At the date of publication of the quarterly report, 1 of the 16 houses had been pre-sold. In total, Botanica Lozen will have a capacity of 56 large private houses with gardens.

According to Miko Niinemäe, in the first quarter of 2023, Arco Vara reached a new high, where the total assets of the group exceeded 40 million euros, and growth is expected in the following quarters. “Arco Vara’s goal is to reach 200 home deliveries every year, and our team and financials support this target,” Niinemäe said.