Real Estate Market in Latvia: 2014-2015

“Visa Gold” rose sharply. Rising prices for business-class housing has slowed. Russians remain the main foreign buyers. Prian.ru provides an overview of residential real estate market in Latvia.
History
In recent years, the real estate market in Latvia is firmly entrenched epithet of “growing.” Opportunities for development are – because of the crisis, the local square meters depreciated by 50-60%. If in December 2007 per sq.m. in the city center requested an average of € 3000, then in 2009 – only € 1400.
Since 2011, the Latvia regularly featured in the rankings of European leaders on the dynamics of growth in housing prices. Every year, real estate in the country rose in price by 10% or more. Moreover, the fastest growing in the cost of a relatively expensive proposition. By the end of 2014 “square” in the center of Riga was worth € 2200. Increases not only the prices, but also other indicators of the sector: increased the number of transactions with foreigners, construction of new projects, to expand lending.
At the end of the third quarter of 2014, Eurostat also recorded price increase of 11.7% year on year. However, members of the Latvian real estate market believe that the positive results were provided mainly by the first half, while in the second no one sector has shown a significant increase.
The reasons for slowing market – complex. One of the main factors – changes in the law “On Immigration” , which entered into force on 1 September 2014. The minimum value of the property, the purchase of which allows to apply for a residence permit has been increased to € 250,000, as well, a number of additional conditions. His role was played by the political tensions in the world, and the fall of the ruble, which is why the solvency of the Russians, who supported the demand for business-class housing decreased.
As a result, at the end of 2014 there has been a clear decline in property prices in the price range of € 150 000 – 220 000. Previously, these objects were the most popular among foreigners, but after the rise in price of “gold visas’ demand is reduced. In the sector of real estate economy class also saw a gradual decline in prices – about 0.5% per month.
Trends: 2014-2015
• Latvian real estate market is bifurcated. Local demand is concentrated around the real estate worth up to € 150 000, while the more expensive items acquired mostly foreigners.
• Transition to the euro in Latvia in early 2014, contrary to some expectations, did not lead to a jump in demand for local real estate by citizens of other countries in the Eurozone. Key foreign buyers in 2014 were Russians. Also, realtors have noted a surge of interest on the part of the Ukrainians. In recent years, the local market came from Chinese customers, who acquired property in order to obtain a residence permit.
• About 90% of foreign demand accounts for real estate in Riga, as well as close to the four central districts of Jurmala – Lielupe, Bulduri, Majori and Dzintari. In the regions are isolated transactions.
• Since the beginning of the program “golden visa” in 2010 and until September 2014, it was granted 13,843 residence permit in Latvia, citizens of 44 countries. Including, 9659 from Russia (2,798 in 2014), China – 1059 (478), Ukraine – 1027 (353), Uzbekistan – 567 (144), Kazakhstan – 515 (58) and Belarus – 310 (81).
• In recent months, before the rise of the minimum value of the property, the purchase of which allows to apply for a residence permit, there was excessive interest. Monthly transactions passed 250-350 with an eye on the “golden visa”. After the first of September demand fell dozens of times – until the end of 2014, investors bought a residence permit for at least 60 houses.
Prospects
The best prospects for the real estate economy class, which is interested mostly locals. Moreover, due to the tightening of credit conditions demand may shift to more expensive offerings, worth up to € 50 000. In this class, in 2015 is expected to relative stability, possible slight increase in prices.
Because of changes in the law “On Immigration” – and he has long been an engine of the upper segments of the market – it is possible to expect the further falling of number of transactions and, consequently, the price of the average property class (€ 150,000 – 220,000). Sellers’ elitki “will try to keep the cost of their facilities, but they will likely have to make concessions.
Chinese investors, aimed at “cheap” residence permit (apartments in the province of € 71 150) will leave the market. Reduce the number of foreign buyers from the CIS countries, which usually do not have a high budget.
The demand for a residence permit under the new rules will be formed mainly by immigrants from Russia. The number of transactions with the Russians in the summer of 2015 may rise, but only in comparison with the results of the fall 2014 year. A record number of sales to foreigners who were registered in 2013-2014, Latvia will not be soon.

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