In the press conference organized by ARCO REAL ESTATE, where the representatives of the company – the Chairman of the Board Aigars Smits and the Member of the Board Maris Laukalejs – presented the Latvian real estate market overview of 2014, reminding of the events of the previous year by reflecting statistical data and forecasting the further sector development scenarios.
A. Smits acknowledged that the most influencing events in the real estate market were amendments in the Immigration Law, the attempt to implement the “left key principle”, as well as the state support programme intention, but N.Laukalejs demonstrated statistical data in graphs and curves, and told about the general situation in Latvia, as well as analysed each of the real estate field sections.
During the performance A. Smits dedicated harsh words to the legislators and emphasized that the new families, which are being offered the state support programme for purchasing their first dwelling, have obtained a wrong impression of this programme, i.e., these families do not conceive the fact that the support for covering the first installment in amount of 10 – 15% becomes a guarantee received by the lender in a case of the borrower`s insolvency. Besides, the “left key principle” promotes the new families to become borrowers, allowing them to recede from their obligations in a case of insolvency. “The legislator must promote the citizen well-being, not to stimulate them to become borrowers within the framework of the state support programme,” explains A. Smits.
Also, the specialists pointed out that the frequent standpoint changes of the legislator significantly influence the real estate developers who have worked out a niche product for the non-resident sector as a result of a long-term procedure. As the Immigration Law came into force in the last year, the number of deals was reduced drastically, which allows to forecast financial difficulties of particular developers if the same up-to-date sales prices are maintained. M.Laukalejs added that one of solutions in the moment of the new project overproduction, which is being observed in the center of Riga and in Jurmala, could be the sales price reduction.
Also, apartment scarcity and increasing rental costs observed in the rental market in 2014 allows one to draw conclusions of the sector development scenarios.
M. Laukalejs reminds that ARCO REAL ESTATE was publicly offering a perspective idea of rental house construction for several years.