Arco Vara: The market has bottomed out and is showing signs of recovery

The recently published 2024 financial results of real estate developer Arco Vara indicate that despite challenging market conditions last year, the final quarter brought signs of stabilization and increasing activity into real estate sector.

“The worst of the down cycle has passed,” said Kristina Mustonen, CEO of Arco Vara. “In 2024, the real estate market showed signs of recovery, with transaction volumes gradually increasing, especially in the fourth quarter, driven by declining interest rates and improved activity in new developments.”

In the fourth quarter of 2024, the real estate developer saw signs of improvement in the market, contributing to a more positive outlook. The growing activity was also reflected in a successful final quarter for the company, which generated revenue of 3.39 million euros and a net profit of 220,000 euros. For the full year, revenue stood at 7.5 million euros, while the net loss amounted to 624,000 euros. The decrease in figures compared to the year before was primarily due to the completion and sale of Kodulahe Rannakalda apartments at the end of 2023, which significantly boosted revenues that year.

In the Kodulahe residential area near Stroomi Beach, the company focused on selling completed apartments in Rannakalda and presales for the Soodi 6 development. By the end of the year, 87 of the 113 Rannakalda apartments had been sold, while 10 of the 66 units in Soodi 6 were under presale agreements. The construction permit for Soodi 6 is pending, with construction set to begin upon its approval. Additionally, work continues on the detailed planning of the final phase of Kodulahe at Lammi 6, which is set to feature 175 apartments.

Arco Vara also continued preparations its next major project, Arcojärve, including design aspects and added value, as well as registering potential customers. “So far, we have seen strong interest in this development, and we are putting our full effort into securing confirmation for the detailed planning of the project in the next couple of months,” said Mustonen.

Among the company’s positive achievements at the end of the year was the sale of two boutique apartments in the luxurious Kuldlehe project, generating 1.2 million euros in revenue.
In Bulgaria, 85% project readiness has been reached for Botanica Lozen, putting the team on track to complete construction by the end of the first half of 2025. “Interest in the Botanica Lozen project has grown significantly over the past few months, and we expect even greater interest in the coming months as the houses are completed with full landscaping,” noted Mustonen.

Arco Vara’s primary goal for the first half of this year is the sale of completed properties in both Estonia and Bulgaria. “We are focusing on the sales of completed apartments at Kodulahe and Kuldlehe, with a market value of around 14 million euros. The focus until the end of this year and the beginning of 2026 is on selling the remaining houses at Botanica Lozen, with a market value of around 8.4 million euros,” shared Mustonen.

The real estate developer believes that the market is expected to remain stable but cautious in 2025. “Factors such as tax increases could put pressure on housing supply and influence market dynamics. Despite these challenges, the gradual easing of interest rates and stabilizing economic conditions are expected to support a slow but steady recovery,” said Mustonen. “Broader market growth is expected to gain momentum by the end of 2025, supported by improving buyer sentiment, increased construction activity, and a more favorable financing environment,” she concluded.