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Properties offered to non-residents at inadequately high prices

  • According to observations of Mr. Māris Laukalējs, a member of the Board of Directors of ARCO REAL ESTATE, in the 2nd quarter of 2014, the owners of apartments located in the city centre, have artificially raised prices hoping for a growing interest in real properties from the part of non-residents before the date of effect of the amendments to the Immigration Act. For this reason, the supply was saturated with apartments the selling price of which did not correspond to their actual condition and location.


As indicated in the overview of the apartments in the Riga city centre prepared by ARCO REAL ESTATE, in July 2014, the average price of apartments in the Riga city centre reached the position of 2079 EUR/m², and this indicator was significantly influenced just by transactions carried out by non-residents. 57% of all the transactions entered into in the second quarter of 2014, exceeded the threshold of 142 300 EUR, but only 10% reached the amount of EUR 250 000, which from September 1 will be the minimum threshold for obtaining a temporary resident permit.

 

The Riga city center area (the so-called Near Center) in the second quarter of 2014 made 32% of the total number of transactions with apartments in the Riga city center. Average prices in this part of the center was around 1400 EUR/m2 for apartments in satisfactory condition, about 2,000 EUR/m2 for apartments in good condition and around 2900 EUR/m2 for apartments in very good condition. Higher prices were characteristic for apartments with high-quality interior decoration, located close to the Old Town or to a park, for example, apartments in the buildings at Raiņa Boulevard. The Near Center likely will be that part of the center which would be most affected by the above-mentioned changes in the Immigration Act, because this part of the city has the highest share in number of the transactions within the limits of the minimal threshold for current and future temporary residence permits, emphasizes Mr. M. Laukalējs.

 

As mentioned in the market overview, the Quiet Center made 10% of the number of transactions with apartments in the Riga city center in the second quarter of 2014. Average prices in this part of the center was around 1700 EUR/m2 for apartments in satisfactory condition, around 2400 EUR/m2 for apartments in good condition and around 3400 EUR/m2 for apartments in very good condition. Since in this part of center a large impact on the price is made by the building's historical and architectural value, higher prices are characteristic for restored pre-war buildings having these values. In turn, the lowest prices in this part of the center were characteristic for buildings, which are in very poor condition, such as in the beginning of Dzirnavu Street.

 

Mr. M. Laukalējs adds that a characteristic feature of both the Old Town and the Quiet Center in the 2nd quarter of this year was that the price of apartments being in similar condition and located in these neighborhoods can greatly differ, depending on the location specifics. Higher prices in this part of the center are characteristic for apartments located in renovated and new buildings.

 


28.08.2014.

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