ARCO REAL ESTATE

• Characteristic feature of the beginning of this year was an increased interest of Russian investors in purchase of various buildings in the central part of Riga and the Old City

Characteristic feature of the beginning of this year was an increased interest of Russian investors in purchase of various buildings in the central part of Riga and the Old City

 
„February 2011 in the field of commercial property should be considered as a commercial space market stabilization time - gradual reduction of non-rented space is continuing. It is observed in all sectors of the commercial space segment, especially in the retail space sector", comments Mr. Guntis Kanenbergs, Head of the Commercial Department of ARCO REAL ESTATE.

Retail space
Characteristic feature of the beginning of this year was an increased interest of Russian investors in purchase of various buildings in the central part of Riga and the Old City. Space type which is selected in most cases is restaurant and shop space. „If in Latvia a Russian investor with one million euros is regarded as a serious negotiating partner, then, for example, in Moscow it would be difficult for him to find a good investment object for this amount of money. Additional factors giving arguments in favour of selection of Latvia are location outside the Euro zone and absence of language barrier," informs Mr. G.Kanenbergs. Real estates that are purchased in most cases are those with the rate of return on investment 7-10%. The trends of the 1st quarter of 2011 show that most tenants of retail premises are engaged in restaurant, beauty care and grocery business. Rent increases of 7-8% are observed in the most demanded shopping street sections in the city centre and in the local community shopping centres, which may be explained by insufficient availability of retail space in locations with intense pedestrian flow.

Office space
Office space sector is characterized by increased demand for high-quality medium or large office space, i.e., from 150 to 1000m2. Tenants still want to have premises with easy access to the office, taking into account both convenient transport possibilities and parking facilities at or under the office building. Modern solutions of space layout, including spacious and well-illuminated office space, in more and more cases play an important role for the selection of premises by tenants. Although landlords persistently wish to keep the existing rent price levels, tenants tend to look for and find high-quality space for adequate rent (5-7 EUR/m²).

Warehouse and industrial space
Along with the overall improvement of mood in the industrial sector, an increased demand for industrial premises both in metalworking and woodworking is observed. Simultaneously with search for space, possibilities of purchase of an active company having good future development opportunities are frequently considered. "In our opinion, the demand for prospective manufacturing companies will continue to grow rapidly both from the part of investors from our Eastern neighbouring countries and from the part of Scandinavian entrepreneurs", says Mr. G. Kanenbergs regarding the existing situation. Along with an increase of the export market volumes, a substantial increase in demand for technically well-equipped and contemporary design industrial buildings with the rent level of 3 - 5 EUR/m² is expected.

Additional information:
ARCO REAL ESTATE

Guntis Kanenbergs

23.03.2011.