Latvia » Market Report

Latvia marked the beginning of 2005 with strong economic growth, an inflation spike nearing 10 percent, and a budget surplus due to higher tax inflows. The republic's rapidly expanding banking sector has propelled its main industries: construction, wholesale trade, retail, transport, and telecommunications.

Exports of machinery, wood, and chemicals to Estonia, Lithuania, and Russia have also grown. However, economists are wary of the increased government spending, credit expansion, and consumer imports that contribute to the widening account deficit. Latvia's plans to adopt the Euro in 2008 can proceed only if the country adopts a number of important reforms specifically, administrative and legal reforms, as well as a revival of the privatisation agenda, which has been sluggish in recent years. Latvian Russian diplomatic relations have become tense due to the absence of a post World War II peace treaty, lack of recognition and demarcation of the Latvian Russian border, and differences in perceptions of the post-war Soviet occupation.

Latvia is one of the more advanced, fast growing 'transition' economies and has well-developed services, transportation network and logistics. There is a well-developed banking system, stable political and monetary conditions, and a favourable taxation regime.

The legislation of Latvia provides foreign investors an opportunity to purchase or rent real estate property with virtually no limitations. All real estate is entered in the central land register the Land Book, protecting ownership rights for the property and land. Mortgages are available for foreigners willing to finance their real estate purchases in Latvia.

In central Riga the new apartments and houses cost around $1100-$1600 per sq. meter. The old but renovated residential properties can be found for $700-$1300 per sq. meter and properties that have not been renovated can be found for as little as $300-$500 per sq. meter. In the suburbs the prices are significantly lower than in the downtown and can be bought for $250-$350 per sq. meter. Among Latvians looking for residential properties, the demand is greatest for 70 to 125 sq. meter apartments. The larger properties are affordable only by Latvians returning home from western countries after decades of forced emigration.

If you need to rent an apartment in the centre of Riga for residential purposes, it will cost you around $300-$400 a month for 1BR, $400-$600 for 2BR, $650-$1000 for 3BR and $900-$1500 for 4BR. The house rents vary between $300 a month in the suburbs and $2000 in the downtown. The greatest demand for high-end rentals comes from members of the foreign community. The expatriate workers typically seek renovated 90-100 sq. meter apartments in Riga's city centre and in the Old Town.

International Property Brokers forecast that the property prices will increase more in near future and there will also be demand on rental property market.

Our Forecast

International Property Brokers forecast that the foreign investors who are currently keenly interested in the Latvian real estate market will continue to increase over the time period of coming two decades. By looking at increasing number of investors now and in future the more developments and modernizations will be made in the country.