What is happening today, in January 2016, with apartment prices in Riga, what changes have occurred over the last year and a half, and what segment of apartments is in demand?
KOM-INVEST will help you understand the current situation so you can make a decision about the profitability of investing in real estate in Latvia.
For comparison, see our price review of apartments in Riga in July 2014.
1) If you are looking for an apartment in central Riga, then over the past year a whole wave of new projects has appeared, which are already completed or under construction. Most luxury class objects with finished full interior finishes. The price per sq.m. in such projects remains high and ranges between 3,500 - 5,000 EUR/sq.m. Demand for such apartments is extremely low, but prices have remained virtually unchanged over the past year and a half.
Several fully reconstructed historic buildings have also appeared, which in quality are equivalent to new construction, with a lower selling price per sq.m., ranging from 2,500 - 3,000 EUR/sq.m.
There are currently no new projects or reconstructed buildings in central Riga where the price drops below 2,000 EUR/sq.m. Occasionally such offers are found in the secondary sales segment, when apartment owners cannot meet their credit obligations and put apartments on the market at the remaining loan amounts.
If you consider apartments in Riga in historic unreconstructed buildings (no facade and roof repair, utilities unchanged for the last 20 years, no elevator), etc., then the price per sq.m. can range from 1,000 - 3,000 EUR/sq.m. The price depends heavily on the location of the building, repairs, condition of the entrance, facade, etc.
Thus, if you have a sum of 250,000 - 300,000 euros, you can buy a good 3-bedroom apartment in a new project or renovated building. Such a purchase allows you to obtain a in Latvia. If you have a larger amount, you can look for exclusive options.
In central Riga there is still a major problem with parking availability, as there are very few buildings with parking spaces. In new construction buildings in central Riga, a parking space can cost an additional 15,000 - 30,000 euros.
2) If you are looking for an apartment in new construction in the residential areas of Riga, the most popular areas are Teika, Purvciems, Agenskalns, Zolitude, as they are closest to the center. However, in general, there are no residential areas in Riga that would be considered "bad," as the entire city has very well-developed infrastructure and transportation. Therefore, if you are considering buying an apartment to rent it out, you can well consider new construction in residential areas, where the price per sq.m. will be significantly lower, and rental demand is high. The return on rental income from an apartment in a residential area will be higher than from buying an apartment in the center due to the lower purchase price.
Today, if you have a sum of approximately 70,000 - 100,000 euros, you can buy a good 2-bedroom apartment with repairs (approximately 50 - 70 sq.m.) in a good new project. A good 3-bedroom apartment can be bought for 100,000 - 150,000 euros. Underground parking will cost an additional 7,000 - 15,000 euros, depending on the project.
Over the past year and a half, there has been steady demand on the local market for such apartments in residential areas, and according to 2015 statistics, in new construction completed in late 2014, approximately 70% of offered apartments were sold within the year.
3) There is strong demand on the local market for affordable 1-2 bedroom quality apartments with repairs ranging from 20 to 50 sq.m. in the price range from 25,000 euros to 70,000 euros. Such apartments are in demand because many young families can obtain a loan and afford to purchase such an apartment (Latvia currently has a government assistance program for young families when buying their first home). These apartments are also in great demand from renters (especially smaller apartments of 20 - 30 sq.m.), and local and foreign investors happily buy such apartments because the rental return on such apartments can be around 10%.
There are very few offers in this segment because they are bought very quickly, and some investors buy several apartments even during the building reconstruction stage. In new construction, apartments typically have large areas, starting from 50 sq.m., so good apartments with smaller areas are rare. Such apartments exist only in fully renovated buildings, for example, a historic building or former Soviet Khrushchyovka dormitory is taken, reconstructed and divided into small apartments, on the principle of one window in the building - one apartment.
Therefore, in this segment for the coming years there is great investment potential if you consider buying an entire building (property) at a very low price, with the goal of subsequent building reconstruction, dividing it into small apartments, and subsequently selling the apartments or renting them out.
If you, as investors, are interested in this offer, then our KOM-INVEST company will find profitable offers for you to purchase properties, conduct financial and legal analysis of the investment proposal, and attract technical experts. We are also ready to oversee the reconstruction project and further management of the purchased building, its sale by apartment, or rental.
We will also offer you profitable investment options in projects in the center where the selling price per sq.m. will be below 2,000 EUR/sq.m., which will provide the opportunity for quick sales and return on investment, as well as maximum profit and tax optimization.
If you want to purchase any real estate in Latvia - from a small apartment to an entire building, fill out the contact form to the right of this article, or write and call me right now.
Phone number: +371 29774775
Email: info@kominvest.com
Skype: KOM-INVEST