Residential Housing Market Report
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RESIDENTIAL MARKET REPORT Riga City and other regions Q4 2017 RESIDENTIAL MARKET TRENDS Price dynamics for apartments in Riga ▪ The apartment market activity (the number of 4 500 concluded transactions) in Riga increased by 6% 4 000 in 2017. The increase in new apartments segment 3 500 was 19%, in city centre apartments - 20%, while the series-type apartment market activity did not 3 000 change. 2 500 EUR psqm EUR ▪ There was an upsurge of activity in the new 2 000 apartments segment in the second half-year, as an 1 500 increasing number of domestic-demand-oriented 1 000 projects appeared on the market. 500 ▪ In the first half of the year, the series-type 0 apartment prices rose by more than 10%, although 2009,I 2010,I 2011,I 2012,I 2013,I 2014,I 2015,I 2016,I 2017,I Series type apartments in residential districts New apartments in residential districts the rise came to a halt in the second half-year and Source: Land Register, 2 LATIO New apartments in City Centre steadied at an average of 800 EUR/m . No New apartments in the vicinity of Vecrīga significant price rise is expected in this segment in 2018. Riga residential market profile by segments, 2017 ▪ Prices in other segments are stable. Market supply New apartments City Centre apartments has shifted its focus on the domestic customer. Series-type apartments ▪ Economy-class new apartment prices in sleeping areas are on average 1,300 – 1,400 EUR/m2, while 24% the mid-range apartment prices in projects close to 36% the city centre and more prestigious 44% neighbourhoods are 1,600 – 2,000 EUR/m2. These are the prices that a local customer would 60% 17% purchase dwellings at. ▪ Series-type apartments account for 60% of deals 19% concluded on Riga apartment market, although this proportion keeps dropping (2016: 64%), and it was Quantity of Value of transactions 56% during the last quarter of the year. transactions 2 Residential market report, Riga, 2017 LATIO Market Analysis Division Republishing data without a reference to the source is prohibited! ▪ Private housing market in 2017, especially the ▪ Residential market activity in Jūrmala has been second half-year, had a considerable leap in fluctuating throughout the year – a highly activity in terms of the quantity of transactions dynamic Q2 was followed by a sleepy Q3, but (by 21%) and the total value registered in the the transaction quantity rose again towards the Land Register (by 11%). year-end, and in all segments. ▪ Residential market activity has been quite high in ▪ The residential market in regions other than Riga in Q4 2017 and overall for the year. The Riga has remained stable with a slight rise in demand has been stronger in the economy-class activity. The major problems include the lack of segment. Tenants are primarily interested in supply meeting customer needs and the series-type flats in a good state of repair in the outdated housing stock. popular neighbourhoods. Riga apartments: dynamics of deal Riga apartments: dynamics of deal quantity and gross value by quarters quantity and gross value in 2017 (2015-2017) 1 000 45 2 700 130 900 120 40 2 400 800 mEUR 110 35 2 100 mEUR 100 700 30 90 1 800 600 80 25 1 500 70 500 20 1 200 60 400 50 15 300 900 40 Number transactionsNumber of 10 200 Number transactionsNumber of 600 30 20 100 5 transactions,apartment valueGrossof 300 transactions,apartment valueGrossof 10 0 0 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2015, II III IV 2016, II III IV 2017, II III IV I I I Series-type apartments Series-type apartments Source: City Centre apartments Source: City Centre apartments Land Register, New apartments Land Register, New apartments LATIO Gross value of apartments transactions LATIO Gross value of apartments transactions Number of transactions and transaction value of the Number of transactions and transaction value of the residential market of Riga residential market of Riga Change Change 2017, IV vs. 2017 vs. 2016, IV 2016 New apartments 597 + 32% New apartments 1,910 + 19% City Centre apartments 348 + 0.3% City Centre apartments 1,347 + 21% Series type apartments 1,214 - 6.5% Series type apartments 4,826 - 1.5% Total number of Total number of 2,159 + 3.0% 8,083 +6.1% transactions transactions New apartments 60.2 + 15% New apartments 197.7 + 13% City Centre apartments 24.4 + 9.1% City Centre apartments 86.5 + 26% Series type apartments 40.6 + 1.1% Series type apartments 160.9 + 12% Gross transactions value Gross transactions value (million EUR) 125.5 + 9.0% (million EUR) 445.0 + 15% 3 Residential market report, Riga, 2017 LATIO Market Analysis Division Republishing data without a reference to the source is prohibited! Economy class apartments in the new project at 4 Prūšu street NEW APARTMENTS Number of transactions and transactions MARKET ACTIVITY value of the new apartments market of Riga ▪ According to the Land Register data, the activity 30 250 225 mEUR 25 in the new housing market of Riga, after an idle 200 Q2 revived in H2 2017 and especially Q4 175 20 peaked at historical high for the past four years. 150 15 125 ▪ In Q4, an average of 200 transactions per 22,9 100 10 21,1 18,8 18,5 18,8 75 month were concluded for apartments in new 16,7 16,2 12,9 13,2 12,1 13,1 13,3 50 transactionsNumber of 5 developments, while the average monthly of transactions,valueTotal 25 activity resulted in 160 deals in 2017 in general. 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ▪ The year-on-year increase in the quantity of Source: Land Register, Total value Transactions transactions for new housing was 19% in 2017 , LATIO and 13% in the gross value of the transactions Proportion of new apartments of Riga residential registered with the Land Register. market in 2017 ▪ Transactions for new apartments account for 24% of the total number of transactions of the residential market of Riga in 2017, this share 24 was 21% a year ago. % ▪ Despite the relatively small proportion of 44% transactions, the gross value thereof took a significant share of the total quantity of Riga residential market transactions – it was 44% in 2017 (2016: 45%). Quantity of Value of transactions transactions 4 Residential market report, Riga, 2017 LATIO Market Analysis Division Republishing data without a reference to the source is prohibited! ▪ The transaction quantity growth in the new developments segment was driven by a general increase in well-being of the population. New families make an extensive The number of new apartment transactions in Riga by price range and floorspace in 2017 use of the Development Finance Institution ALTUM’s state aid programme for acquisition By transaction amount of first home. Banks as well are inventive in finding ways to acquire customers - by means of various additional services and integrated < 50 000 EUR 14% 17% offer packages. 50 000 - 100 000 EUR 19% ▪ An essential factor for the increased market 100 000 - 150 000 EUR activity is the growth of supply in the primary 50% new housing segment, where the market stock > 150 000 EUR is replenished by projects focused on the domestic demand – in economy and mid-class By floorspace segments. ▪ The rise in price level on the series-type apartments market and the shortage in good 17% quality apartment supply in popular 26% < 50 m2 neighbourhoods is a driver for a part of 20% 50 - 75 m2 apartment seekers to consider purchasing a dwelling in a new building. 75 - 100 m2 37% ▪ According to the Land Register data, the > 100 m2 primary market activity in 2017 grew by 18%, while the secondary market of new apartments added 22%. The new housing market of Riga ▪ It was the primary market that was particularly active in the last quarter of the year, recording Change a peak number of deals for the past four 2017 vs. 2016 years, while it was just the other way round in the secondary market of new apartments in Quantity of transactions 1,910 +19% Q4 – the market calmed. Gross value of transactions, * the primary market of new apartments: property sold by the mEUR 197.7 +13% housing project developers New apartments in Riga: quantity and Primary market, quantity of transactions 1,149 +18% gross value of deals 2015-2017 80 650 Secondary market, quantity of 600 761 +22% 70 transactions 550 60 500 Number of non-resident 450 50 transactions 301 +8% 400 350 40 300 transactionsof Number of resident transactions 1,609 +22% 30 60,2 250 52,2 50,8 48,3 200 42,1 20 41,2 41,3 39,4 41,9 38,4 150 31,4 Quantity Gross value of non-resident 100 10 24,3 44.3 +1.3% mEUR of transactions,valueTotal transactions, mEUR 50 0 0 Gross value of resident 2015, I 2015, III 2016, I 2016,III 2017,I 2017,III transactions, mEUR 153.4 +16% Source: Land Register, LATIO Total value Transactions 5 Residential market report, Riga, 2017 LATIO Market Analysis Division Republishing data without a reference to the source is prohibited! ▪ The quantity of transactions with non-residents grew by 8% and the gross transactions value added Riga's new apartments: quantity of deals 13% in general for the year 2017 in new apartments on primary and secondary market segment, nevertheless the proportion of such 240 transactions on the market has been keeping 220 200 shrinking for the fourth year in a row.