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While nationally-minded Latvians are worried about the loss of ethnic identity, but those thinking about economic growth defend the issuance of residence permits in exchange for the purchase of real estate, properties located in Latvia are sold to non-residents also by Latvians themselves, stresses Ms Olesja Bogodistaja, Head of the International Department of ARCO REAL ESTATE.
The current situation in the real estate market is a clear indication that the interest of non-residents is mainly focused on a property that meets the conditions for obtaining residence permits, because not all properties that are purchased by non-residents, provide the opportunity to the new owner to apply for a residence permit. The Immigration Law provides that, along with the size of the purchase amount, there is another special requirement: the property must be acquired from a legal person registered in the Republic of Latvia , or a natural person who is a citizen of Latvia, a non-citizen of Latvia, a citizen of the European Union or a foreigner residing in the Republic of Latvia on the basis of a valid residence permit.
Ms O. Bogodistaja stresses: “There is a misconception that real estate companies are selling Latvia to non-residents as advising companies provide only brokerage services, meeting the desire of the seller to sell his property.” Most of the properties that are sold to non-residents, are owned by local residents, including Latvians, in connection with thus it can be reasonably concluded that also Latvians contribute to the growing number of the residence permits issued, points out Ms O. Bogodistaja.
Answering the question of who buys the property in Latvia, Ms O. Bogodistaja says that most of buyers are wealthy intellectuals, members of the middle class with a high level of culture, as well as families with children. According to the data collected by the Office of Citizenship and Migration Affairs of Latvia, since the beginning of 2013 there are received 2,875 applications for residence permits in total: 1955 applications from citizens of Russia, 278 - from China, 181 - from Uzbekistan, 163 - from Ukraine, 108 - of Kazakhstan, 58 - from citizens of Belarus. The rest of the applications are received from citizens of Azerbaijan, Israel, Kyrgyzstan, Syria, Georgia, USA, and other countries.
The issue that is now being extensively analyzed in the public space and is relating to the interest in Latvian real estates demonstrated by citizens of China, does not cause any concern at the moment, as representatives of this nation acquire real estate for the purpose of obtaining legal right to move freely and to travel in the European Union. As pointed out by Ms O. Bogodistaja, the main problem of wealthy Chinese is the strict law against leaving the country, and this problem may be resolved by purchasing a real estate in Latvia. After purchasing the property it is often rented out, but there are cases where housing remains uninhabited and is reserved for the needs of the new owner.
“Non-residents searching a real estate in Latvia put forward specific requirements to be met by housing, which clearly indicates that the decisive criterion is not the price of the property, but the quality and convenience" – emphasizes Ms O. Bogodistaja. According to the data collected by ARCO REAL ESTATE, the average purchase price of a property in Jūrmala since the beginning of this year is 310 000 EUR, which is two times higher than the minimum necessary to obtain a residence permit according to the Immigration Law. The average purchase price of properties sold during the same period in Riga is 154 000 EUR, and this sum most often corresponds to large apartments in the city centre in a renovated house or a new project with one or two bedrooms and full interior decoration.
When asked why non-residents of Slavic origin are interested just in Latvia, Ms O. Bogodistaja responds that the lack of a language barrier and the similar mentality are the primary aspects of the choice, however, in addition, the good climate, ecosystem, good quality food, low levels of corruption and the quiet rhythm of everyday life are considered by the non-residents as benefits of Latvia. For example, the time which is necessary to reach by car a summer house located in the Moscow region from the Moscow city centre, sometimes is longer than the time needed to take a plane and come to Latvia. Especially appreciated is the fresh sea air. In the media there has been expressed a view that the granting of residence permits threatens the security of Latvia, but the representatives of the Russian intelligentsia are of the opposite opinion . "A citizen of Russia, who has purchased a house in Jūrmala, acknowledged that his choice was based on the security offered by a law-bound and democratic state", - said Ms O. Bogodistaja, representative of ARCO REAL ESTATE.
Despite the fairly large number of sceptical people, the positive impact of changes in the Immigration Law has been felt not only by the Latvian economy, but also by ordinary people. Ms O. Bogodistaja acknowledges that the sale of real estates to wealthy non-residents has contributed to the growth of employment among such occupations as designers, architects, manufacturers of interior items, gardeners, carpenters, builders, nurses, cleaners and other professions so that at the moment it is completely excluded that representatives of these occupations will leave Latvia due to the lack of jobs. The OCMA statistics show that the total investment in real estates is almost 390 million lats.
Also the general cultural level growth, owing to the increasing demand for high quality events, may be considered as a benefit for Latvia. Similarly, the local banking sector is developing, because it supports purchase of real estates by non-residents, by granting mortgage loans. Other winners are service providers such as taxi companies and the national airline. The cases when residents who have moved to Latvia for permanent residence and to whom the Latvian language apparently is not necessary, begin to attend the Latvian language courses, thus integrating in Latvia on their own, also should be estimated as positive facts.
16.10.2013.