ARCO REAL ESTATE

• First signs of revival in the market segment of new projects in Jurmala appeared already at the end of 2009

Price scissors between prices preferred by buyers and those offered by sellers is still increasing

First signs of revival in the market segment of new projects in Jurmala appeared already at the end of 2009, and in 2010 the Jūrmala market became more active. In 2011, in particular from the second quarter, the sellers and not the buyers began to dictate market rules in Jūrmala, respectively, the new project market of Jūrmala in 2011 was a market of developers. Predicting a rapid growth in demand also in 2012, project developers continued to raise the offer price, despite the warnings of many experts on the improper increase of the prices, which did not correspond to the demand, and on the possible reduction of number of transactions. According to forecasts, the volume of transactions in the new project segment in 2012 was lower than in 2011, regardless of the increase number of buyers. This year was more successful to developers of small but exclusive new projects located close to the sea.

„Having analyzed the number of transactions in the past 2 years and the data on residence permits issued by purchasing real estate in Jūrmala, it can be concluded that approximately 70 - 80% of all transactions in Jurmala were carried out by non-residents in order to obtain residence permit”, informed Mr. Māris Laukalējs, member of the Board of Directors of ARCO REAL ESTATE.

In 2012, there were registered 131 transactions, including 26 apartments which were sold at one and the same time in the same building for a relatively low price of 890 EUR / m². Largest deals: sale in the 3^rd quarter of a residential property in Melluži located in dunes and overlooking the sea, with an area of ​​129m², at the price of 800 000 euro or 6 191 EUR / m²; and a residential property of 109m² sold in the 4th quarter at the price of 630 000 EUR, or 5 758 EUR / m².

Customers are most interested in 2 - 3 room apartments on the sea side with an area of ​​80 - 120m². The most frequently demanded apartments are apartments with full interior decoration, with the exception of exclusive apartments. Usually, the client chooses his own design for these apartments and often also an interior decoration work performer and supplier of furniture and equipment. In recent years, for all categories of customers it has been important that the house was of high quality, with well-developed infrastructure and a stable manager. Despite the fact that many customers choose Jūrmala projects because of the summer concert arrangements, they still want to have an apartment in a peaceful and quiet place at a distance from the venue of the arrangements and the area of active visitors, because Jūrmala is a relatively small town and, if necessary, the "epicentre" of the event can be reached quickly enough. Currently, customers buy not only finished facilities, but also make reservations in houses still being built – this is a facility purchase method that was popular in the pre-crisis years, and in this case it is important for a project developer to have a "recognizable name" and reputation guaranteeing that the project would really be completed and put into operation. In Jūrmala in 2012, there were put into operation a number of new projects, where most of the apartments were bought on the basis of reservation prior to commissioning.

„It should be noted that most of the buildings currently being under construction are small and of interesting architectural design, which could be attractive to potential customers. There is still a relatively small supply in the sector of the lowest prices, or 1800-2000 EUR, with the apartment area from 50 m² - 70m². The offer includes a number of new projects, where the price driving factors correspond to this price category, but developers are offering the apartments at significantly higher prices”, says Mr. M.Laukalējs.

ARCO REAL ESTATE is a leading real estate company in the Baltic countries. It was founded in Estonia in 1992. The company is listed on the Tallinn Stock Exchange since June 2007. ARCO REAL ESTATE commenced its activity in Latvia 16 years ago and currently provides services in Riga, Saulkrasti, Jelgava, Cēsis, Liepāja, as well as in Liepāja and Jūrmala. The company employs about 70 specialists of high professional qualification.

Additional information:
Māris Laukalējs

ARCO REAL ESTATE

Member of the Board of Directors

maris.laukalejs@arcoreal.lv

Tel. + 371 6736 5555

31.01.2013.