Latvian Real Estate Market Overview
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LATVIAN REAL ESTATE MARKET OVERVIEW JANUARY - JUNE 2007 Introduction 3 General economical indicators 4 Content Apartment business Low-storied wooden buildings 7 Apartments in the center of Riga 7 New residential houses 8 Apartment market in suburbs of Riga 9 New housing market in suburbs of Riga 9 Summary of apartment market in Riga 10 Rent of residential premises Rent of residential premises 20 Lease of private houses 20 Private family houses Private family houses 2 Suburbs of Riga 2 Riga 2 New residential villages 22 Market of shopping areas 26 Land parcels for building of single family houses Office premises 27 Land parcels for building of single family houses 23 Building estates 28 Land in Riga 23 Land in suburbs of Riga 23 Nekustamo īpašumu tirgus Latvijas reģionos Jūrmala 29 Agricultural land in Latvia Jelgava, Region of Zemgale 30 Land for recreation purposes 24 Sigulda 3 Land for agriculture purposes 24 Saulkrasti 32 Land for timber cutting purposes 24 Cēsis 33 Land for speculative purposes 24 Liepāja 34 Ogre 35 Land estates for production and commercial building Eastern Vidzeme Commercial land 25 (Madona, Gulbene, Alūksne) 36 Land estates for building of production/logistic/industrial parks 25 Current Projects of Arco Real Estate 37 Arco Real Estate Lāčplēša street 20a, Riga, LV-0 Phone 67365555 Contacts Fax 67284423 e-mail: [email protected] Arco Real Estate, branch Cesis Bērzaines 6, Cesis, LV-40 Phone 6422373 Fax 642237 e-mail: [email protected] Arco Real Estate, branch Sigulda Ausekļa 9, Sigulda, LV-250 Phone 67973737 Fax 67973732 e-mail: [email protected] Arco Real Estate, branch Jelgava Driksas 4-205, Jelgava, LV-300 Phone 63028245 Fax 6302252 e-mail: [email protected] Arco Real Estate, branch Saulkrasti Ainažu 5, Saulkrasti, LV-260 Phone 6782678 Fax 6782685 e-mail: [email protected] Arco Real Estate, branch Jūrmala Jomas 65/67, Jurmala, LV-205 Phone 6746333 Fax 6746332 e-mail: [email protected] Arco Real Estate, branch Liepaja Tirgoņu 22/7, Liepāja, LV-340 Phone 6348886 Fax 6348885 e-mail: [email protected] Arco Real Estate, branch Ogre Tīnūžu , Ogre, LV-500 Phone 65067770 Fax 65067778 e-mail: [email protected] Arco Real Estate, branch Teika Brīvības 306, Rīga, LV-006 Phone 6702580 Fax 670258 e-mail: [email protected] www.arcoreal.lv 2 Introduction The survey of market analysis prepared by SIAArco cooperation partners and publicly available information Real Estate provides concentrated information on the sources as well as the information summarized by the real estate market of Latvia in the first half of 2007. Central Statistics Board, Land Registries and the Bank It presents a brief report on the key sectors of real of Latvia. estate market. Please address your proposals, comments or The survey of real estate market analysis presents queries to Survey Division of SIA Arco Real Estate at: the value of estates at the given market as of the end of reporting year as well as it provides information Lāčplēša street 20a, Riga about the events in the given sector during the first Phone 67365556; fax 67365557 half of 2007. E-mail: [email protected] Māris Laukalējs, Head of Survey Department The analysis was based on information sources E-mail: [email protected] including the real estate transaction database of SIA Linda Vanaga, Market Analyst of Survey Department Arco Real Estate as well as the data provided by E-mail: [email protected] 3 RIGIBOR 3 and 6 month rates, years 997. – 2007. 16,00 3M 6M 14,00 12,00 10,00 8,00 6,00 4,00 General economical indicators 2,00 0,00 8 8 8 8 8 8 8 8 8 8 8 8 8 0 0.04.0 1.04.0 2.04.08 3.08.08 6.04.0 7.04.0 0 1997.12.081998.04.081998.08.081998.12.081999.04.01999.08.081999.12.08200 2000.08.082000.12.0820 2001.08.02001.12.08200 2002.08.082002.12.082003.04.0200 2003.12.082004.04.2004.08.02004.12.082005.04.02005.08.082005.12.0200 2006.08.02006.12.0200 Mortgage loans granted by Latvian commercial banks (in million LVL) 2007.* 5925,4 2006. 5311 2005. 2806,7 2004. 1392,2 2003. 772,6 2002. 404,9 2001. 235,9 2000. 111,5 1999. 56,8 0 1000 2000 3000 4000 5000 6000 7000 * 1st april, 2007 Number of apartments built (commissioned) in Latvia 2007.• 1922 2006. 5865 2005. 3807 2004. 2821 2003. 830 2000. 899 1995. 1776 1990. 13325 0 5000 10000 15000 • 1st quarter 2007 4 Available housing in the end of the year (total area in million m2) 70,00 58,70 60,00 57,00 54,90 55,40 56,05 52,90 52,70 53,40 50,00 40,00 30,00 25,70 23,90 24,30 24,80 22,60 23,60 21,30 19,90 20,00 General economical indicators 10,00 0,00 1990 1995 2000 2002 2003 2004 2005 2006 Housing fund (million m2 ) Average on one resident, m2 Breakdown of credits granted to domestic companies and private persons by term of repayment (%) December, 2000 September, 2005 1st april, 2007 Short term. 1-5 years Over 5 years Monthly average official work remuneration of an employed person (net, at the end of the quarter) 280 268 260 245 240 220 200 193 180 162 160 139 140 120 1st quarter, 2004 1st quarter, 2005 1st quarter, 2006 4th quarter, 2006 1st quarter, 2007 5 Apartment business Apartment prices experienced relatively rapid A number of new housing units have been offered increase during the first half of 2007 (till middle April) at the market in late 2006/early 2007, and the while from April to June there was relatively still more total housing fund of the State has been therefore rapid decrease in demand. The average decrease of increased by .7 mil. m2 – i. e., residential space has the average supply prices in May/June ranged from 5 been increased by 0.9 m2 per resident (however, to 8%. Notwithstanding the minor decrease of price the dramatically negative demographic situation is Apartment business level during May/June, it has still been capable of relevant to this calculation). Taking into consideration ensuring the following total increase of apartment the volume of pending construction, similar increase prices during the half-year (starting from January: should be expected in the first half of 2007 as well. • insignificant increase of prices in the center of Should the high demand for new dwellings persist, Riga and the Old Rigs; increased supply of secondary dwellings with poor • increase of prices for seriated apartments in quality may be expected and it will have corresponding Riga by 0–5%; effect on selling price. • increase of prices outside Riga (regional cities) by up to 25% (in certain locations). In general, the average growth of prices by months during the first half of 2007 ranges from 3–5% from The following amendments to laws adopted by the January to April and stabilization of price level with LR Saeima have made the most significant impact on minor inclination from April to June up to 5%, mostly the real estate market from April to June 2007: due to the fact that the sellers have been setting prices • increase of Land Register fee and mortgage in the previous years with regard of the expected registration fee; increase of price level. • amendments to the Law on Resident Income Tax; The number of offers has also experienced changes • amendments to the Law on Protection of the in the first half of 2007, in particular in Riga and Riga Rights of Consumers; Region. About 6000 apartments have been offered • discussion of rapid increase of cadastral value in the end of previous year in Riga, mainly due to the for the purpose of real estate tax; increased number of apartments in the new projects, while in the end of June 2007 this figure reached about Assessment of the disposition of market players 9000, where seriated apartments formed major part leads to conclusion that psychological aspects, of the increased supply. The total supply of seriated in particular temporary uncertainty of market apartments in Riga during the first half of 2007 makes development options play the key role. Coincidence about 5500, compared to 3500 apartments in the end of decreased activity and the forecasted period of of 2006. stabilization of real estate prices is also relevant. In the first half of 2007, the aggregate changes in Price equalization by housing estates has been average level of apartment prices are outpacing the taking place during the previous reporting periods, decrease of monetary value due to inflation to minor while in 2007 there can be observed differentiation of extent. prices between housing estates where the difference in price levels remains stable or trends to increase, in The prices for apartments in Riga and the particular in case of the „cheap” housing estates such largest townships in Riga Region have experiences as Bolderāja, Vecmīlgrāvis, compared to the overall the average increase by 0–5%. The number of housing market of Riga. transactions has decreased in the first half of 2007 (compared to the first half of 2006), in particular The pace of changes in price level outside Riga has during April – June, though even the handling of been more rapid than in the capital, in particular in ownership matters and executing of pre-agreed the case of largest cities and region centers close to transactions is typically taking place during these Riga, such as Ogre and Jelgava. The average increase months, due to enactment of amendments to the of housing prices there has been 20-25% in the end Law On Resident Income Tax on 2 June 2007.