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In 2011 the Latvian real estate market has evolved in two directions, price differences are very large in Latvia

  • The main trend in the real estate market in 2011 was the demand orientation to good quality properties.


In 2011 the Latvian real estate market has evolved in two directions, price differences are very large in Latvia

 

Due to positive tendencies of the overall economic indicators, increased activity was observed in several market segments – the demand has increased, which has resulted in increase of real property prices. The main trend in the real estate market in 2011 was the demand orientation to good quality properties. In one of the most active segments of the market - in the standard-type apartment market - it was observed price decline in 2011. Price level in the market of building land of any type has not changed significantly, in most cases it has slightly decreased, and the activity is minimal.


Major trends in the real estate market in 2011:

 

  • Real estate market situation has become more heterogeneous – the market is divided into segments where there is evidence of both price decreases and increases. However, virtually in all market segments there is still high demand for good quality properties at prices adequate to the existing market situation.
  • Activity in building land market is still low, which to a great extent is caused by lack of funding of such properties from the part of credit institutions due to the high liquidity risk.
  • As in 2010, many real estate transactions were concluded by paying in cash, without attracting bank financing. However, in 2011 loans granted by credit institutions for purchases of real estates were increasingly used.
  • There is a large proportion of forced sales transactions when banks sell mortgaged real estates. Ofteh such properties have been purchased at auctions by companies related to banks and in most cases they have not been offered for sale or have been gradually included in properties offered for sale.
  • The amendments to the law adopted at the end of 2010, which in 2011 doubled the property tax rate for residential areas. All real estate owners and potential owners are increasingly exposed to the real estate tax. It is intended from 2012 to repeal the existing RET growth "ceiling", which until now was 25% compared with the previous year. In the future the local governments will determine whether RET increase is limited in the territory of the local government.
  • The relatively large demand for new housing segment has caused an interest in the new apartment building development and construction. In 2011 there was observed appearance of a slight interest in parcels of land with good location for implementation of such projects.

 

 

Mr. Māris Laukalējs, a member of the Board of Directors of ARCO REAL ESTATE, Head of the 1st Valuation Department: „In 2011, the Latvian real estate apartment market has evolved in two directions – in the whole territory of Latvia the average apartment price developed by a minus sign, while in the centre of Riga, and new projects, and Jūrmala a rise was observed.


Price differences throughout Latvia are very large – average price of an apartment in Līvāni is 120 EUR/m², but in Riga the price of a standard-type apartment at the end of December 2011 was 583 EUR/m²; but in Jūrmala the average price of an exclusive apartment has reached already 4500 EUR/m²."


ARCO REAL ESTATE is the leading real estate company of the Baltic States, founded in 1992 in Estonia. The Company is listed in Tallinn Stock Exchange since June 2007. ARCO REAL ESTATE Latvia was founded in 1997, and today we offer services in Riga, Saulkrasti, Jelgava, Cēsis, as well as in Liepāja and Jūrmala. About 60 highly–qualified employees work in the company.

 

Additional information:
ARCO REAL ESTATE
Brīvības Street 39, Riga, LV 1010, Latvia
+371 67365551
www.arcoreal.lv


31.01.2012.

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