Latvian property market
Latvian property market is considered to be a stable, reliable market with slow, yet consistent and predictable growth. Both international and domestic experts indicate vast residential real estate possibilities and accessible mortgage as the main selling points of the market. It is also worth mentioning that Latvia, being a part of the EU, is a gateway to Europe, which is further enhanced by the fact that it offers Temporary Residence Permits in exchange for real estate investments.
Real estate experts from all around the world indicate the following advantages of the Latvian market:
- pro-landlord laws that promote investors' interests and create less restrictions for any kinds of investments or rents
- low effective rental income tax rates
- low government fees and general property transactions costs
- stable GDP growth
- round trip transactions costs (6.11%) - lower than in 30 other European countries (including non-EU countries of Europe)
The following drawbacks are also indicated:
- not the highest possible rental yields
- some restrictions on land ownership
Local experts say that in the recent years the main driver of investment activities was the retail property sector, i.e. it was the area that attracted the most funding overall. The total number of investments is above EUR 3.5 million/year, and the majority of them were related to the biggest shopping centres of the country. In case you wish to conduct your own invistegation and analysis on the best region to invest into, please look into our section concerning property deals in various Latvian municipalities.
Residential estate in Latvia
Currently, the Latvian residential real estate market is in its growing phase. This partly due to the overall growth of economy, and party due to mortgage becoming a lot more accessible, especially for young parents, who, starting from 2015, can apply for a government-backed mortgage programme.
Prices for Latvian residential real estate can vary significantly, depending on the location. Naturally, Riga, the capital, is most expensive, while cities on the periphery are cheaper. This, however, does not mean that the outlying regions are worse - Latvia has a peculiar administrative geography, where all of the major cities (Daugavpils, Liepāja, Ventspils etc.) are located on the periphery of the country, making the whole division more balanced. Below, you will find a summary for some of the major cities and for the whole country on average.
| Latvia | 1 bedroom apartment | City centre | 341 EUR |
|---|---|---|---|
| Outside the city centre | 249 EUR | ||
| 3 bedroom apartment | City centre | 597 EUR | |
| Outside the city centre | 417 EUR | ||
| Riga | 1 bedroom apartment | City centre | 382 EUR |
| Outside the city centre | 273 EUR | ||
| 3 bedroom apartment | City centre | 674 EUR | |
| Outside the city centre | 458 EUR | ||
| Daugavpils | 1 bedroom apartment | City centre | 115 EUR |
| Outside the city centre | 100 EUR | ||
| 3 bedroom apartment | City centre | 200 EUR | |
| Outside the city centre | 166 EUR | ||
| Liepaja | 1 bedroom apartment | City centre | 190 EUR |
| Outside the city centre | 140 EUR | ||
| 3 bedroom apartment | City centre | 324 EUR | |
| Outside the city centre | 216 EUR | ||
| Valmiera | 1 bedroom apartment | City centre | 200 EUR |
| Outside the city centre | 163 EUR | ||
| 3 bedroom apartment | City centre | 300 EUR | |
| Outside the city centre | 225 EUR | ||
| Jelgava | 1 bedroom apartment | City centre | 285 EUR |
| Outside the city centre | 190 EUR | ||
| 3 bedroom apartment | City centre | 350 EUR | |
| Outside the city centre | 270 EUR |
| Latvia | Apartment in the city centre | 1 636 EUR |
|---|---|---|
| Apartment outside the city centre | 1 015 EUR | |
| Riga | Apartment in the city centre | 1 804 EUR |
| Apartment outside the city centre | 1 109 EUR | |
| Daugavpils | Apartment in the city centre | 666 EUR |
| Apartment outside the city centre | 476 EUR | |
| Liepaja | Apartment in the city centre | 1 000 EUR |
| Apartment outside the city centre | 550 EUR | |
| Valmiera | Apartment in the city centre | 500 EUR |
| Apartment outside the city centre | 588 EUR |
Immigration via real estate
As it was already mentioned, Latvian real estate plays an important role in attracting foreign residents into the country. In 2010 an immigration programme has been launched, and it allows foreign nationals to purchase real estate in Latvia and receive a temporary residence permit on this basis. Property purchased for this purpose must cost no less than 250 000 EUR with a cadastral value of no less than 80 000 EUR. This purchase can be divided into two properties, both costing 250 000 in total,with the cadastral value of each no less than 40 000 EUR.
Commercial property in Latvia
As of 2017, the commercial property market in Latvia is in its stable phase, both in terms of prices and vacancy. Prices for Latvian offices and retail estate are considered to be one of the lowest in the EU. At the same time, the presence of major international businesses indicates that these prices do not mean the lack of quality. On the contrary - good quality of Latvian commercial real estate and low prices are two major factors that draw international enterprises to this country. Here you can see the summary of the rent rates:
| Offices | Class A | 14 EUR |
|---|---|---|
| Class B+ | 10 EUR | |
| Class B- | 7 EUR | |
| Retail estate | less than 75 m2 | 38 EUR |
| 75 m2 to 150 m2 | 27 EUR | |
| more than 150 m2 | 26 EUR |
Industrial property in Latvia
The industrial property market in Latvia is now in its growing phase, with the total industrial area increasing each year. Moreover, this development is not only quantitative, but also qualitative - recent years saw the differentiation of industrial property rent rates in Riga (the capital) and Riga Region, effectively creating two new sub-markets.
Rent and vacancy rate
Rents for Latvian industrial real estate are generally stable, but there is a possibility of them decreasing somewhat. This is due to the shift to tailor-made and built-to-suit solutions in new industrial properties, which make it more appealing than older property (especially storage space), which is not so flexible. Accordingly, older warehouse owners, in order to remain competitive, may decrease their prices in the nearest future, if the trend continues developing. In general, however, rents for both Class A and Class B industrial estate have remained almost the same for the last three years. These rates are:
- 3.5 EUR to 4.5 EUR per m2 per month for Class A premises
- 3 EUR to 3.6 EUR per m2 per month for Class B premises
As for vacancy rates, the situation is different for different industrial estate segments. While the overall vacancy has increased by 6% in the last year, there is a notable shortage of spaces for smaller premises (1 000 m2 to 2 000 m2). Considering the number of new projects in planning, vacancy rates are projected to increase.