Some of the problems associated with assessing the retrofit effectiveness of apartment buildings in urban areas are considered. The retrofit of houses should be followed by the amelioration of their surroundings. The priority order of districts to be renovated depends on the condition of the buildings in a district and on strategic urban development programmes. In order to determine the profitability of investments in housing retrofit, a number of retrofit scenarios should be developed. The authors of this paper offer a new approach to determining the retrofit effectiveness of houses based both on expected energy savings and the increase in market value of renovated buildings. In line with the proposed approach, retrofit scenarios for apartment buildings in Vilnius were developed, i.e. retrofit investment packages for various districts were prepared and arranged in the priority order for their application according to the method of geographical analysis suggested by the authors. (c) 2007 Elsevier B.V. All rights reserved.