Агентство недвижимости RD Global

Real estate in Latvia: up the stairs leading down?

The economic crisis on the Baltic coast caused serious damage to these markets, especially in Latvia.

Baltic countries, particularly Latvia, among the first to have felt the influence of the global crisis - said Natalia Zavalishin, director Miel Distant Property Management. - Especially strongly it affected the real estate market where prices have fallen nearly in half, and in some cases and more. "

"Indeed, the Baltic States show the greatest decrease in cost per square meter for the entire European continent - continues Skomorovsky Eugene, Managing Director of CENTURY 21 West. - Overheating of the market, which said two years ago, appeared in full in the last year in an unprecedented decline in sales volumes. Similar dynamics can also be seen on the results of I quarter of this year. "

Falling prices for nedvizhimostv Latvia, Lithuania and Estonia began over a year before the crisis. It (the crisis) only made matters worse.

"The fact that things in the real estate market in Latvia is bad, I knew back in 2007 - says Igor Indriksons, director of overseas property investment company IntermarkSavills. - I warned its investors of this and advised them to lock in profits. What guided me to warn about the danger? If you look at then the country's GDP, we can see that about half of it came from the construction industry. Such a large dependence of the economy from one industry necessarily mean high risks. In addition, in early 2007, the well-known agency S & P 500, rankings of countries, said that Latvia's position may be significantly falter. In the event of downgrading of the country in so much of the financial institutions do not have the right to buy government bonds. Consequently, the state does not receive the money in full.

It became clear that Latvia faces economic crisis and especially the housing market will suffer. "

After the accession of the Baltic states into the European Union in 2004, mortgages have become more affordable. Price for 1 sq. km. m increased, the market peaked, and demand exceeded the demand. Restrictions on lending have saved the situation - the crisis in the fall was inevitable and rapid.

Different destinies

So, the real estate markets of Latvia, Lithuania and Estonia have suffered more than any other in recent months, and the reasons for the fall they are similar. Here are just at the time of crisis they have evolved in different ways. Actively was under construction in Latvia, particularly in the capital and resort towns. In Lithuania, the increased demand for apartments and houses were reported.

In Estonia, the square footage at all were required only in one city - Tallinn. Despite the fact that the country has access to the Baltic Sea resort real estate market here is developed rather poorly. Buyers, some of whom are foreigners buy apartments and houses in Pärnu. But even before the crisis, the number of transactions was small, but now they can be counted on the fingers. Today, to increase sales, realtors have to invent Pärnu various marketing actions, such as arrange nightly shows.

In Tallinn, there is a steady demand for property, not only among locals but also among foreigners. True, we are talking mainly about the old part of town - the crisis has affected the area, to a lesser extent. And if the price of 1 square Pärnu. m fell by 50%, in old Tallinn reduce practically not observed. In all other areas of the city housing market is noticeably subsided. On an annualized basis, from March 2008 to March 2009, the correction amounted to about 25%.

The economy of another Baltic country, Lithuania has always been stronger than its two neighbors.

"In Lithuania, there is no such fall in prices, both in Estonia and Latvia, - said Igor Indriksons. - Reduction of consumer activity is already felt, but so far only in larger cities. Most likely, the real estate will fall in price was in Vilnius and Kaunas, and then only slightly. At the resorts situation will remain stable. In Lithuania, the market has never been overheated. " In addition, the positive dynamics of the world experience supports the effective management of real estate, which actively take over local players. For example, the administration of the resort of Druskininkai, which during the Soviet years was famous for its mud and mineral waters, learned to work with the structural funds and, as is common in Scandinavia. For example, in a hospital or an infrastructure facility in need of renovation. Administration refers to the collection and invites him to object free of charge and even a certain amount pays extra to bring the building in order. As a result, in Druskininkai operates Europe's largest water park and the hotels just do not get. Real estate markets in Palanga and the Curonian Spit in the resorts may have passed the position, but only slightly.

Reducing the cost of housing in Latvia, Lithuania and Estonia continued, but rather locally. Prices for new projects is almost liquid reached the bottom, and selling real estate can not be even cheaper - the developer is easier to pass it to the bank in payment of debts.

Investors Council

Does it make sense today to invest in the Baltics? Nedvizhimostkakoy country is better for investment?

Experts say that you can take advantage of the crisis and when the price bottom, promising to buy for investment object. In this case, we must consider not only the magnitude of incidence and magnitude of discounts, but the growth potential: Does it make sense to buy property, which now fell to 80%, and 20 years will rise in price by 1%?

"In Latvia, the costs to purchase the old apartments in the heart of Riga and Jurmala in housing - the Council Indriksons II. - For example in the Latvian coast is now possible to buy a property not to 10 thousand euro / sq. m, and by 3.5-4 thousand euros. That holiday properties and apartments in the capital, first of all and will grow in value. By the way, if an investor requires to take the object out, then it will be useful to know that the stakes in Riga today are quite high for Europe, the profitability of rental business sometimes exceeds 12%.

I do not recommend investing in major Lithuanian cities, such as Kaunas and Vilnius - there still is a slight drop. But the resort property of the country feels fine. "

"Currently, the Latvian market come across some interesting suggestions, - said N. Zavalishin. - For example, projects that until recently were only private sales, and if the object and appeared on the market, the ticket cost about 200 thousand euros. Now the same property can be purchased at a price of 90-100 thousand euros. "

Before you willing to invest in the square footage of the Baltic countries are now opening up good prospects. Many developers are experiencing difficulties in implementing projects, forcing them to make substantial discounts in negotiations with customers. As a result, the private investor has a chance to find a really worthwhile object at an affordable tsene.{linkr: bookmarks; size: small; text: nn; separator: +; badges: * }