Thriving Economy Driving Latvia Property Market

The economy in Latvia is thriving – some might say it’s booming, others might suggest that it’s overheating – but no one can deny the figures and they point to the fact that over the past five quarters the economy in Latvia has grown by double digits and there is nothing to suggest that the pace of growth is going to slow anytime soon - and it’s this thriving economy that’s driving Latvia’s property market.

Property prices have doubled in the past two years according to a recent Bloomberg report, and the prices have largely been driven by the local market which is benefiting from greater buying power but also lower interest rates and access to property based finance.

According to the New York Times Latvia is helping to drive the Nordic region’s overall thriving real estate market and it is gaining ground in the popularity stakes as a nation in which to do business and invest as it works hard to smooth out its unfair taxation practices in a bid to encourage more businesses to operate legally in Latvia.  The reintroduction of many locally established businesses into the legal fold of taxation and operation in Latvia will ultimately create an even stronger economic situation for the government which will attract even greater levels of sustained and sustaining foreign direct investment.

The Latvian government’s taxation improvements and developments to date have resulted in corporate taxation being lowered by 10% for example, which has persuaded a surprisingly high number of local companies to come back into the taxation fold and begin legal operations again. 

This unprecedented success was subsequently responsible for encouraging the government to go even further during its tax amnesty period and it is predicted that through offering further incentives to legalise a surprising economic advantage could be enjoyed by Latvia according to the chief economist at SEB Unibanka.

Meanwhile companies from the Baltic States are heading for Latvia in increasing numbers to take advantage of a local population with increasing spending power; clothing retailer Apranga Group is just one example of a growing brand committing significantly to Latvia.  Apranga Group has plans to open two brand new mega outlets in Riga in the Galerija Centrs shopping mall which is already home to an increasing number of local and international brands.  It is also this local purchasing power that’s still driving the property market in Latvia as there is an almost insatiable hunger for property ownership among the newly wealthier Latvians.

The fact that this local interest in real estate has resulted in house prices doubling in two short years in the most popular parts of Riga and in certain other key areas in Latvia means that property in Latvia has also made it onto the international investor radar and Latvia’s real estate market is now seeing record amounts of inward direct investment.

This foreign direct investment into Latvian property is a significant contributing factor to the fact that FDI has risen from USD 311,000,000 in 2003 to over USD 814,000,000 for the first half of 2006 with experts already predicting that FDI will top USD 1,100,000,000 for the whole of 2006 and possibly go even further in 2007 as Latvia becomes an exciting location for small to medium sized companies looking for an affordable, secure base within a strategically important location where infrastructure is superior, accessibility is impressive and potential market reach is inspiring.  All of these factors also mean that the Latvia commercial property market is worth investigating for short term gains and long term income producing activity.

Special Reports: Property News for Latvia

Latvia Property Buying Guide
Overseas real estate investors buying investment property in Latvia find the entire purchase process straightforward and related expenses low

Latvia Guide for Property Buyers
Incredible opportunity exists in Latvia for property buyers as the Latvian economy booms and horizontal foreign direct investment surges.

Latvia Property Investment Guide
Local demand and purchasing power in Latvia is at an all time high affording property investors in Latvia massive opportunity