Why are investments in Riga's real estate becoming increasingly attractive?

Current changes in the real estate market of Latvia

In recent years, the real estate market in Latvia, especially in the capital Riga, has undergone significant changes; however, by the beginning of 2016, experts emphasize its stability. Since the introduction of new amendments to immigration legislation, which came into effect on September 1, 2014, the minimum investment amount required to obtain a residence permit through the purchase of Latvian real estate has increased to 250,000 euros.

This phenomenon has led to a nearly 90% decrease in the number of Russians wishing to purchase property to obtain residency status.

The attractiveness of Latvia for investors

Nevertheless, Latvia continues to be attractive to wealthy investors from Russia. One of the main advantages of obtaining Latvian residency is the opportunity to work in a country that is part of the Eurozone. Many investors view purchasing real estate in Latvia as an appealing investment opportunity.

Commercial and residential real estate in Riga

In Riga, there is a wide range of commercial real estate suitable for investors with varying financial capabilities. Residential properties located in the historic city center are in high demand among both buyers and renters.

Moreover, in recent years, there has been a steady increase in prices for properties valued at less than 250,000 euros, which is projected to continue at this level.3%per year.

Activity in the real estate market

The real estate market in Riga is actively developing, and in 2015, the number of real estate transactions among local citizens was steadily increasing. Latvians remain the main buyers. Russians also continue to show interest in Riga as a vacation destination.

According to preliminary data, during the New Year holidays, about half of all tourists who visited the Latvian capital were Russians, which is an increase of10%more than in 2014.

Why do investors choose Riga?

What attracts investors to Riga? The city is not only a business hub but also a cultural center for both Latvia and the entire Baltic region. Riga is appealing to tourists and businesspeople alike due to its multicultural atmosphere and strategically advantageous location at the crossroads of major trade routes in Europe.

Liquidity of real estate

It should also be noted that real estate in Riga has high liquidity, which provides the opportunity for renting or selling with a good profit in the secondary market. Investors can choose from a wide range of options:

• residential apartments
• small and large stores
• beauty salons
• mini-hotels
• fitness centers
• office buildings

Simplification of transactions and mental similarities

Moreover, the absence of a language barrier and the similarity in mentality between the locals and Russian citizens significantly simplify the process of making deals. As of January 1, 2014, the population of Riga was701 977a person, among whom are Russians —39%Latvia offers transparent conditions for legislative regulation in the real estate sector, which is another important factor for attracting investors.

Availability of information in Latvian and Russian languages

In Latvia, where the Latvian language holds official status, information about legislative aspects and everyday life can also be found in Russian. This is especially important for those who own property and face tasks such as paying taxes and maintaining residential properties.

Conditions for obtaining a residence permit

The country offers very attractive conditions for obtaining a residence permit through real estate investments starting from an amount of€250,000This makes the process quite simple and accessible compared to other countries in the European Union.

Mortgage lending

For the convenience of residents and investors, mortgage loans are available in Latvia from both local financial institutions and branches of Scandinavian banks, offering favorable terms.

Geographical advantages of Riga

Riga's convenient geographical location provides easy access by both land and air. The short distances between key points, along with the absence of serious traffic jams, create a comfortable living environment. For example, a trip from the city center to the international airport takes only 15 minutes, while reaching the coast takes about 25 minutes.

European lifestyle

Moreover, Riga offers its residents a unique European lifestyle, rich in cultural events and various amenities.

• A multitude of boutiques and modern shopping centers that make the city attractive for shopping enthusiasts.
• A variety of restaurants and cafes offering both local and international dishes.
• Interesting real estate objects in the "Jugend" style that give the city a unique character.

State of the real estate market

The level of immigration in Latvia tends to remain low, which in turn contributes to a stable environment in the housing market. The real estate market in Riga offers a variety of options — from historic apartments to modern lofts, from luxury properties to affordable housing. Many developers are actively operating in the city, and each new building features unique design.

Popular queries among buyers

Real estate market experts note that buyers are increasingly interested in two-bedroom apartments, the cost of which does not exceed€350,000Most clients prefer:

• Historical houses
• New buildings in prestigious areas with the necessary infrastructure.

Although the budget may sometimes be limited, the variety of options available in the Riga market allows for finding the optimal accommodation choice.

Commercial real estate

Representatives of real estate agencies report a noticeable interest among Russians in commercial real estate in the Latvian capital. In Riga, properties are available with yields ranging from6 to 8%In a year, this is comparable to investments in Germany. Although mortgage interest rates in Latvia are higher than those in German banks, the conditions for obtaining financing remain more attractive compared to Russia.

Conclusion

Doing business within the Eurozone provides confidence and stability that are not always present in the current entrepreneurial environment of our country.

The growth of the commercial real estate market in Latvia

In 2015, Latvia saw a significant jump in the commercial real estate market, increasing by almost 20% compared to 2014. This growth is linked to the rising interest of investors in properties that can provide stable financial returns.

Promising areas for investment

The most attractive areas for investment are the well-known districts of Riga. These include the Old Town and its surroundings, including the Quiet Center, which is also referred to as the Embassy District. These locations offer excellent options for both personal residence and rental properties.

There is a high interest in local real estate from foreign buyers and local residents, which supports its liquidity, especially among those coming from Western European countries.

The value of historical apartments

Although some neighborhoods in Riga are less popular, there are still good offers to be found here. Apartments located in restored historical buildings are particularly valuable, as they offer a unique combination of convenient location, cultural significance, and modern amenities.

Along the ancient streets of the city, new buildings are actively being constructed, utilizing advanced construction technologies that create all the conditions for comfortable living.

Real estate in the Embassy District

In the Embassy District, especially along Albert, Antonijas, and Elizabetes streets, the real estate market stands out with examples of the "Jugend" architectural style. Experts note that apartments here are in constant demand and rent very well.

They are rented not only by local residents who can afford to rent housing, but also by foreign specialists coming to Riga for an extended period.

Old Town of Riga

The old town of Riga captivates with its unique atmosphere; however, life in the center can be too noisy and active, which is not always comfortable for residents. Nevertheless, this area is perfect for short-term rentals.

To ensure a stable income, it makes sense to turn to management companies or to engage in business in this field independently.

Many foreign buyers with families prefer quieter areas, such as the Quiet Center, where there is peace and no parking issues, which significantly improves the quality of life.

Prestigious areas on the banks of the Daugava River

On the other side of the Daugava River, there are also prestigious areas such as Kipsala and Kliversala, where villas and elite homes are actively being built. Just a 10-15 minute leisurely walk across the stone bridge leads to the Town Hall Square.

Nevertheless, life in these areas is characterized by a greater sense of calm, and you can still find apartments with magnificent views of the Old Town, which only adds to the appeal of such offerings.

Popular neighborhoods for renters

These areas are highly popular among renters. Mežaparks stands out as one of the most prestigious and cozy residential neighborhoods in Riga. This area features Lake Kisezers, which attracts enthusiasts of various water sports. Additionally, there is a forest park here, making it an ideal place for those who enjoy both peaceful and active outdoor recreation.

Various cultural events and entertainment shows are held in this area. Mezhapark features a golf club, and there are shops nearby, with convenient transport routes connecting to the city center. This neighborhood is known for its many renovated private houses that have cultural and historical significance, as well as new villas and mansions.

Buying apartments in panel buildings

As for the panel houses located in the more remote parts of Riga, apartments in them are usually purchased by local residents. Until September 1, 2015, there was a mechanism in Latvia that allowed the purchase of small apartments for the purpose of obtaining a residence permit, which provided an opportunity to rent them out profitably.

When buying in series-built houses constructed during the Soviet period, it is important to pay attention to:

• utilities expenses;
• building service quality;
• the technical condition of the apartment and the entire building.

It is also important to consider whether the land under the house is owned, as otherwise the owners will have to pay significantly higher rent instead of property tax.

Utility payments and investments

Utility costs for serial houses can sometimes exceed those in new buildings. Therefore, specialists advise investing in apartments in modern buildings, taking into account the new conditions for obtaining residency permits. Additionally, real estate market experts recommend paying attention to housing in such "sleeping" areas as:

• Teika;
• Purvciems;
• Plyavnieki;
• Zolitude;
• Imanta;
• Agency

Statistics and trends in the real estate market

According to an analysis conducted by the European service Eurostat, in 2015, the average property price in Latvia showed a decrease of4%Compared to the data from 2014, Latvia was among four European Union countries where a decline in housing prices was observed, along with Italy, France, and Finland. The only segment characterized by a decrease in prices was the luxury housing market in Latvia.

However, a study by Balsts reports that since the beginning of 2015, prices for standard apartments in Riga have increased by1.72%The highest price per square meter in November was recorded in the Teika area and amounted to792 euroswhile the minimum cost was observed in Vecmilgravis —536 eurosper square meter.

Decline in interest in the real estate market

The decrease in activity in the real estate market is largely explained by changes in consumer preferences, which are mainly focused on local residents. The price of new apartments in different areas of Riga ranges from €1000 to €2000 per square meter.

Prices for apartments in different neighborhoods

In central, quiet areas and in the older parts of the city, the prices for apartments without renovation in buildings that have not been renovated range from €800 to €2400 per square meter. If we consider options with completed renovations, the cost per square meter rises to a range of €1200 to €3300.

When it comes to apartments in renovated buildings, the price per square meter can range from €2500 to €5000. Exceptional real estate properties with unique features can even be valued at €7000 per square meter in rare cases.

Rental activity in Riga

According to experts, the rental market in Riga is currently showing much more activity than the apartment sales market. Housing is particularly in demand in the central areas of the city by employees of diplomatic missions, international organizations, and foreign students.

Every year, the number of international students increases, which is related to the popularity of educational institutions such as the P. Stradins Medical University, the Stockholm School of Economics, and the University of Latvia.

In-demand types of apartments

One- and two-bedroom apartments continue to be the most in demand. For example:

• If the price of the apartment is €250,000, the monthly rental income can range from €600 to €800.
• Two-bedroom apartments can bring in up to €900 a month.
• In exclusive projects where the area of one-bedroom apartments is around €300,000, the rental price can range from €1,000 to €1,100.

The more advantages an apartment has, the higher its rent will be.Equipment with high-quality finishes, modern smart home systems, and picturesque views of the river or city will be additional factors for which tenants are willing to pay more.

Challenges in the rental market

Experts note that apartments with larger areas are rented out with great difficulty, while there is stable interest in penthouses. In the central part of Riga and in the historic center, owners of "exclusive" category housing offer:

• One-bedroom apartments for €600-€800 per month;
• Two-bedroom apartments range from €700 to €1500;
• Three-bedroom apartments range from €800 to €2000.

When it comes to apartments in less expensive buildings, tenants will need to allocate:

• About €350-€600 for one-bedroom apartments;
• €450-€700 for two-bedroom apartments;
• €600-€1000 for three-room apartments.

Standard-type apartments

In the rental market in Riga, apartments of a serial type continue to be particularly popular. Their demand is actively shaped by local residents and those moving from other regions of Latvia.

Requests from specialists and citizens from other regions of the country are not excessive, and therefore the most suitable option for them is renting housing in serial houses from the Soviet era.

One-bedroom apartments in satisfactory condition located in the residential areas of the city rent out quite quickly and can cost around €180 per month.

The cost of residential real estate in Riga ranges from €20,000 to €25,000, making it a very attractive option for investors looking for a return of over 7% per year. To date, this is one of the highest yields in the Latvian real estate market.

Apartment rentals in Riga

If we consider rentals, particularly two-bedroom apartments in areas such as Purvciems, Plavnieki, Ziepniekkalns, Zolitūde, and Imanta, rental prices range from €240 to €350 per month. For three-bedroom apartments, depending on their condition and location, the cost varies from €270 to €400.

On average, rental yields in Riga are around 4-6% per year, howeverforeign investorsThey can expect a profit in the range of 7 to 8%. However, such offers are quite rare, as local investors quickly seize them, according to experts.

Yield of premium properties

When discussing the yield of premium properties, it ranges from 4.5% to 5% per year. It should be noted that the demand for such apartments is not high enough to significantly increase rental prices. In the center of Riga, it is difficult to find two or three-bedroom apartments unless their owners plan to rent them out to students.

Diplomats and employees of foreign companies looking for housing make up a small part of the rental market.

Reasons to invest in real estate in Latvia

• Inaccessibility: Latvia is known for its accessibility for different categories of the population.
• Safety: The country offers a high level of security and stability.
• Comfort: Latvia is creating comfortable conditions for permanent residence.

Unlike resorts, where properties can be used for personal vacations or seasonal rentals, the demand for real estate in Riga remains stable throughout the year. Thus, the choice of property type depends solely on the goals and preferences of the investor.

Yield for obtaining a residence permit

The yield on housing in Riga for foreign investors looking to obtain residency is usually no more than 6% per year. Investors typically buy apartments first and then obtain residency documents by renting out their properties to cover expenses. Sometimes they plan to move to Latvia in a few years.

Owners who prefer to renovate according to their tastes often refuse to rent out their apartments. The costs of maintaining real estate in Riga are low, so wealthy owners can leave their apartments unused and only visit them occasionally.

Choice for stable income

If an investor is not interested in obtaining a residence permit and is looking for stable passive income, experts recommend focusing on the commercial real estate segment in Riga. Latvia is also suitable for people who value a high standard of living, are passionate about historical architecture, care about their health, and wish to live in a Russian-speaking community.

The country offers numerous opportunities for those seeking quality housing and stable price ranges in the real estate market that can meet the needs of various categories of buyers.

Introduction

In modern society, many people feel exhausted by life in large cities and the constant stress that comes with it. For those seeking a more peaceful environment, this message is particularly relevant.

A safe childhood for children

Families strive to provide their children with a safe and comfortable childhood in picturesque corners of the country, where the ecology is top-notch and access to quality education is available. If you value fresh, natural products and various culinary delights, as well as adore ocean views and diverse landscapes, then Riga offers you a multitude of opportunities.

Cultural leisure activities for retirees

Retirees who have finished their working days often look for a place for a calm and peaceful life, where they can enjoy cultural events such as:

• Theaters
• Concerts
• Exhibitions

Here in Riga, everyone will find something interesting for themselves.

Convenience of transportation for travelers

Travel enthusiasts in Europe will also appreciate the convenience of getting around—both by road and through air travel, as Riga Airport offers excellent connections to many major cities.

Opportunities for entrepreneurs

For businessmen, Riga opens doors to new horizons. The airport offers convenient routes for business trips, allowing for time savings when visiting cities like Moscow or Stockholm. This convenient transport hub supports a wide range of investment options — from purchasing a small apartment to implementing a large commercial project or starting your own production.

Taxation in the residential real estate sector

Since the beginning of 2016, important changes in taxation regarding residential real estate have occurred in Latvia. If citizens or non-citizens who have been in the country for more than seven years are not registered in an apartment, an increased tax will apply to this property.1.5%from its cadastral value. In other cases, the tax rates remain within the range of0.2%to0.6%depending on the appraised value of the property.

Families with children can take advantage of tax benefits: a discount on50%with one child and70%With several in place. This innovation will undoubtedly affect those considering purchasing real estate in Riga as a potential investment — they will face new increased taxation.

Control over real estate rental

In addition, over the past six months, the Latvian State Revenue Service has been actively monitoring real estate rentals, identifying violations among property owners who evade paying taxes on rental income. They have made every effort to identify potential offenders and ensure compliance with the law.

Cultural heritage of Riga

When it comes to cultural heritage, most historical monuments are concentrated in the center of Riga. A walk through the ancient streets of the capital is a must-do for all visitors to the city. It is recommended to check out:

• The Dome Cathedral, famous for having one of the largest organs on the continent.
• St. Peter's Church, which holds a special place in the architecture of Latvia

The church creates a uniqueness in the overall urban landscape with its spire topped by a golden rooster — a symbol of Riga.

Architectural masterpieces of Jugendstil

Riga is also renowned as one of the world capitals of Jugendstil, also known as Art Nouveau, thanks to the numerous magnificent historical buildings in the city center. Be sure to visit Albert and Elizabeth streets, where you can find true architectural masterpieces that reflect a harmonious blend of tradition and modernity, filling the city with a unique charm.

Conclusion

In conclusion, it should be noted that the real estate market in Riga represents a dynamic and promising area for investment. Despite changes in legislation and trends driven by the economic situation, the Latvian capital maintains its appeal for both local and foreign buyers.

An important aspect ishigh liquidity of assetsThis allows us to confidently view investments not only as a way to acquire housing but also as a promising financial instrument. In recent years, we have observed that Russians continue to be interested in real estate in Riga, especially in light of the availability and variety of offerings.

Advantages of Riga

• Cultural and business status- Riga stands out among other European cities.
• Favorable geographical location- this makes the city attractive for business and comfortable for living.
• Diversity of real estate properties- various price categories and the possibility of obtaining a residence permit.

One of the notable trends remainsincrease in the number of commercial real estate transactionsThe high returns from such investments and the opportunity to collaborate with reliable local and international banks all indicate that the real estate market in Riga continues to develop and offers interesting opportunities.

The future of the Riga market

Thus, when considering the future, one can confidently say that Riga will attract investors due to its unique qualities and high growth potential. I believe that anyone who decides to invest in the real estate of this beautiful capital will not only discover financial benefits but also feel the spirit of this diverse and dynamic city.