Currently, the projects at Arco Vara, a real estate developer, are either in the construction or preparation phase, with higher sales revenues planned for the end of the year. During the second quarter of this year, no apartment buildings were completed, resulting in a group turnover of 254,000 euros.
According to Miko Niinemäe, the CEO of Arco Vara, the cyclical nature of the workflow is illustrated by a comparison with the second quarter of last year, when completed homes were handed over to buyers, resulting in sales revenue of 7.6 million euros. “As our apartment buildings had not yet reached the stage of completion, the group’s sales revenue for the quarter was 97% lower compared to the same period last year,” he explains.
Arco’s net loss for the second quarter was 347,000 euros and for the first half of the year 638,000 euros. During the second quarter, the company made another installment payment of 1.6 million euros for the land purchase of the Arcojärve project. “It is a residential and commercial property located on the shores of Lake Harku, with an expected development period of six years. By the end of the second quarter, we have made advance payments totaling nearly 5 million euros, and the construction of the first phase of the project is scheduled to begin next year,” said Niinemäe.
The main activity in Estonian developments of Arco Vara is seen in Kodulahe Kvartal, the Rannakalda stage, which will be completed as early as in the last quarter of this year. Currently, 51 well-planned apartments with low maintenance costs and three commercial premises have been pre-sold, with a preliminary contract volume of nearly 14.4 million euros. “Based on the interest of customers in Kodulahe Kvartal, we also launched the architectural contest for the next stage and aim to already reach the establishment of the detailed plan this year. The plot at Soodi 6, which begins next year, involves around 68 homes and 250 square meters of commercial premises,” said the CEO.
Arco Vara is also actively engaged in construction and development activities in Botanica Lozen in Bulgaria, where two of the 16 homes in the first phase have been sold. The Bulgarian team is currently in the process of designing the next project, which includes 24 detached houses and is scheduled for construction next year.
According to Miko Niinemäe, the real estate market experienced some relief during the second quarter. “The resolutions of the European Central Bank regarding baseline interest rates continue to be the primary influencer of the real estate and construction sectors. The slowing inflation rate is also slowly injecting a sense of certainty in homebuyers, illustrated by the threefold increase in inquiries over the quarter,” he said.
“During these changing times, we have been successful at the sales processes of Kodulahe Kvartal and Madrid BLVD, significantly alleviating the financing risks of the company during the current “cash is king” period where involving capital is expensive. With the released capital, we plan to increase the development volumes of Arco Vara with new plots in the second half of the year and deliver about 65 new homes at Kodulahe in the fourth quarter,” he added.