The volume of investment in real estate in Latvia will increase by a third
On the 1st of July the amendments to the immigration law of Latvia came into effect, which allows foreign investors to obtain a residence permit in Latvia. According to NAI Baltics, these positive changes facilitate the development of country’s economy, but also increase the volume of investments in Latvian real estate by at least 10% annually.
"Annual gross income in Latvia is estimated at 18 billion Euro, - the head of NAI Baltics (representative of international commercial real estate network NAI Global in the Baltic countries) Valdis Ligers commented. - It is believed that changes in the Immigration Act will increase this rate by a further 1 billion euros. This prognosis, of course, is not indisputable, however, we will get at least 10% increase of investments in the Latvian real estate, I’m sure.”
Currently the top ten country-investors in Latvian real estate are Estonia, Sweden, United Kingdom, Netherlands, Norway, Denmark, Lithuania, Cyprus, Russia, and America. Experts also note the increase of interest from investors from the entire East.
- "These recent legislative changes in Latvia are very positive first of all for investors from previous CIS countries – comments the head of NAI Pickard (the representative of NAI Global in Ukraine) Terry Pickard. – Firstly, it opens for them the window to Europe, and secondly, it gives an opportunity to have a close look into the Latvian market at the right time: the prices for all types of real estate as a result of the crisis have fallen by 50-80%.”
- Currently the investment into residential and commercial property in the Latvian market is roughly equal: 50/50%. According to the analysts of NAI Becar (NAI Global representative in Russia), the yield from rentals in Jurmala are now estimated at about 6% despite the fact, that according to Latvian experts, residential real estate is not popular in Latvia and doesn’t take first place in profitability. Also, according to a new law in the case of re-sale of the property within 5 years, the foreign investors will lose their residence permit. This makes commercial property more attractive.
- However, the supply of liquid real estate in the Latvian market is limited. NAI experts believe only 30% of the proposals (based on m²) are interesting, the majority of which are bought out by the subsidiaries of Scandinavian banks. Consequently, no more than 10% of liquid real estate is available to other foreign investors. They cite as an example Club House de Lux in the historic centre of Riga: the property with a total area of 9.6 what generates an income of more than € 16 million on apartment sales and about € 3 million - on sales of offices and € 9, 5 million of investments for construction. This is a prestigious place and profitable business, but there are very few such proposals, which are able to attract foreign investors in Latvia."
- "We are prepared to offer CIS investors the best options on the market” - says Valdis Ligers. – “We believe that the collective investment model is the most promising one. We are forming investment packages (a Boutique Investment Shop) individually to the taste of each client or group of investors. These packages include not only residential properties, but also commercial real estate plus also services on immigration issues. For example, a package, say, for € 1 million may be tailored for 5-7 investors. We also have packages for € 3-5-10mln etc. In this case each of the co-investors receives a share in a potentially growing business, a residense permit in Latvia and the possibility of visa free travel in the Schengen countries.” According to Valdis Ligers this investment model is one of the most popular in Norway and Sweden, where often 10 or more people set up a company and develop it.
Issued by NAI Pickard www.NAIPickard.com . Published to the Site www.naibaltics.com by NAI Baltics – commercial real estate services in Latvia, Lithuania, Estonia. Your trustworthy partner, advisor and consultant in the Baltics and Worldwide. http://www.naibaltics.com