Published on 08 November 2005 at 03:20 pm
Filed under: Europe:- Latvia Property Guides » Latvia Property Investment Guide
Riga, the capital city of Latvia is the centre for the majority of all property investment in Latvia at the moment; however many indicators exist to highlight the fact that there’s room for growth and development in the residential and commercial real estate sectors countrywide.
Basically Latvia has an incredibly robust and impressive economy that is growing fast and in a sustainable way creating good long term prospects for intrinsic wealth growth for the entire population which is already beginning to fuel domestic demand for property.
As Riga is the capital city of Latvia it is where the majority of business is conducted, where the majority of foreign direct investment is being made and therefore it is also where wages are increasing the most and domestic demand is strengthening in the property sector the fastest.
Local Latvians living in Riga want good quality accommodation to rent and they want apartments and town houses to buy. They have a strongly developed western taste for quality and the brand new, modern apartment developments beginning to spring up in Riga are proving particularly attractive to local buyers and international property investors alike.
Real estate investors have been able to make consistent double digit returns in Riga particularly from Riga’s apartment sector for the past three years with gains in excess of 30 - 40% achieved by some in the most desirable areas of the city in the space of twelve months alone which proves that this emerging property market can give impressive capital growth appreciation percentages.
It’s essential that anyone considering property investment in Latvia understands the fundamental key to the success of any investment made in Latvia - whether in Riga or along the Baltic Sea coast in towns like Liepaja or Ventspils for example - and the key is appealing to and targeting local demand.
Sure, there are expatriate professionals living in Riga who want apartments to let and there are some tourists and second homers seeking accommodation elsewhere in Latvia to rent or buy - but the core of a property investor’s target audience in Latvia at the moment is the local population because the country does not have mass tourism appeal, it does not have huge employment prospects large enough to attract overseas workers. Rather it has an economy that is consistently growing and affording the local Latvians greater personal financial wealth and freedom.
Property investors have a range of opportunities available to them - they can purchase off plan property and flip it upon completion and enjoy sharp potential gains. Alternatively they can purchase accommodation to renovate and sell on, accommodation to let out for an income or they can buy into a growing number of commercial real estate ventures that are beginning to open up to the international investment marketplace. The majority of the commercial opportunities exist in retail and office space in Riga or Valmiera and Liepaja for example.
Another indicator that suggests property investment in Latvia will continue to make sound economic sense is the fact that interest rates in Latvia are at their lowest ever rate and the mortgage sector is just beginning to emerge and grow. Outstanding mortgage loan figures in Latvia are currently around 40% lower than average for the European Union and local Latvian lenders are aware of this fact and are quickly targeting a potentially huge and lucrative market. As mortgages become more widely available and intrinsically cheaper, so local Latvians will be able to borrow more to push up their purchasing power.
As every real estate investor knows, where local buying power is strong property prices have plenty of room for growth - it is only when first time buyers are priced out of a property market that the cycle begins to turn towards negative growth rates - this is not something that is likely to happen in Latvia for some time to come!
Those seeking the next big property investment hotspot in Latvia could consider examining the residential property market in the coastal city of Liepaja. This city offers an exciting blend of sophistication, elegance and excitement. It has a Blue Flag beach (pictured), art galleries, museums and music venues in abundance, an incredible nightlife and a range of stunningly designed and decorated boutique hotels that appeal to many tourists in search of a city break with a difference. From culture and sophistication to excitement and fun Liepaja offers it all and this is beginning to show as the numbers of Latvians and expatriates moving to the city is increasing. Since 1997 Liepaja’s port and surrounding areas have been a special economic free zone which adds an added layer of interest in the city where tax breaks and tax holidays are available as are preferential landowner terms.
All in all Latvia is an exciting country for property investors seeking a stable economy on which to base their investment decisions. The room for growth in local purchasing power is perhaps unrivalled anywhere else in Europe and the real estate market outside the capital city of Riga is just beginning to heat up offering property investors seeking a truly emerging market the chance to tap into one built on solid foundations.
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