In the first five months of 2012 the number of premium-class real estate offers in Riga worth up to 250,000 euros fell considerably, only one new project was put into service. Deficiency was caused by the high level of activity of foreign buyers, thus by the end of the year a price increase by 10% is likely. This is according to the review of Baltic Sotheby’s International Realty – company operating on the premium-class real estate market.
“At the beginning of summer 2012 the trend of increased demand for premium-class real estate in Riga persists. Variation of prices in the Old Town – 2500-6000 euros / sq.m, in the “quiet” city centre – 2000-5000 euros / sq.m, the highest level of activity can be observed in the price segment of 150-250 thousand euros per object”, says Ilze Mazurenko, co-owner of Baltic Sotheby’s International Realty.
According to her, almost 90% of buyers are foreigners. Real estate is acquired not solely for the purpose of residence but also renting out. “Today, renting out an apartment located in the embassy district is not too difficult. Although the level of profitability of the business has not changed for six years and still remains quite low (about 3-5% per annum), foreigners are happy to enjoy the benefits of changes in the law “On Immigration”, she says. The second category of buyers focus on objects at the lowest price range. Those who choose housing for themselves, as a rule, consider apartments at the price of 200-500 thousand euros.
“Buyers are interested in fully renovated buildings and new premium-class buildings. For one category, historical aura is of great importance, for another – comfort which is seldom available in old houses: parking and elevators. In addition, the size of the apartment in a new project is relatively small, while apartments in the historic buildings are comparable to the area of the house. For example, one of the objects of Baltic Sotheby’s International Realty – apartment overlooking the park – occupies half the floor, its area – 300 sq.m. Of course, in the segment of premium-class apartments there are also successful combinations of history and modernity, such as a project on 4 Ausekla Street. But this is rather an exception”, says Ilze Mazurenko.
New projects in the centre of Riga are being built very slowly. In the beginning of this year only two were put into operation – on 16 Antonijas Street and 21 Elizabetes Street. Offers of apartments in new buildings constructed earlier are limited. Popular projects are Centra nams, 7 Martas Street, Viesturdarza majas.
Owners of premium-class real estate in the centre of Riga believe that their property is unique and deserves the highest price. “This is indeed the case”, says Ilze Mazurenko. “However, in some cases, the price of the object is overvalued by 20-30%. The buyers of premium-class real estate are intelligent people, they also explore the market. Therefore, if the owner is not bound by any obligations, we suggest postponing the sale instead of raising the price artificially.”
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