This year started with strong turbulence on almost all financial markets. The inflation concerns were intensified by the talks about restraining of the monetary policy, and the expected rise in the interest rates created strong capital flows, which was particularly strengthened by the most tense atmosphere on the geopolitical arena of the century. The impact of these factors on the Latvian real estate market in a longer perspective cannot be clearly determined yet; however, the beginning of 2022 has been less ambitious than the end of the last year.
In general, in the period of January-March of this year, 268 transactions were concluded on the Latvian premium housing market, which is significantly less than 499 transactions concluded in the closing quarter of the last year; still, it is solidly more than 218 transactions concluded in the first three months of the last year.
This is evidenced by the study conducted by premium segment real estate company “Latvia Sotheby’s International Realty” on the activity of transactions in the first quarter of 2022 in three studied regions and three segments of premium properties: apartments, private houses and land plots for residential construction in Riga, Jūrmala and Pierīga.
Logically, that alongside the decreased number of transactions, also the turnover generated by these transactions has dropped – the investment in premium housing constituted EUR 67.1 million in the first quarter of this year, which is by EUR 40.9 million (-37.9%) less than in the period of October – December of 2021. However, compared to the first three months of the last year, the aforesaid 218 transactions attracted the total investment of EUR 56.4 million, which has allowed the year 2022 to start by 19.0% more rapidly than in the previous year.
Compared to the last quarter of 2021, a downfall can be observed in all three reporting regions. Whereas, compared to the first quarter of the last year, an increase is observed in all regions; moreover, this time the increase has developed exactly outside the capital.
This year, 175 housing transactions worth EUR 39.2 million have been concluded in Riga, which is by 38.0% less than in the previous three months, but by 1.2% more than in the first quarter of 2021. In Jūrmala, the year 2022 has started with 49 transactions worth EUR 17.5 million, which is by 35.2% or EUR 9.5 million less than in the closing months of the last year, but by 25.3% more than in the first quarter of 2021. In its turn, 44 transactions concluded in the surroundings of the capital have generated total turnover of EUR 10.3 million, which is by 41.4% less than at the end of the previous year, but by 186.3% more than at the beginning of the last year.
Ilze Mazurenko, the owner and manager of “Latvia Sotheby’s International Realty”, reveals that the entire previously mentioned growth has been generated exactly from apartment transactions, which kept the market afloat. “In the first three month of this year, 251 apartment purchase transactions were concluded worth EUR 56.7 million, which constitute 84.6% of the premium market turnover in the first quarter of this year. This is by 132 dwellings and EUR 31.6 million (-35.8%) less than in the period of October-December of 2021, but by 196 transactions and EUR 44.3 million more than in the period of January-March of 2021 (+27.9%).”
In the first quarter, 172 apartment worth EUR 38.1 million were sold in Riga, out of which 150 transactions were concluded in the price range from EUR 150,000 – EUR 300,000, constituting in total EUR 28.8 million, which is by EUR 16 million less than at the end of the last year, but by 17.5% more than the turnover of EUR 24.5 million at the beginning of the last year. In the price segment from EUR 300,000 – EUR 500,000, the demand has been surprisingly stable, generating turnover of EUR 7.9 million. In the market segment of exclusive apartments with prices exceeding EUR 500,000, the first quarter of this year has shown the weakest indicator – only 2 transactions worth in total EUR 1.3 million have been concluded. The average apartment transaction price in Riga at the beginning of this year has been EUR 221,000, which is approximately at the same level as EUR 222,000 at the end of the previous year, but by 2.9% less than in the first quarter of the last year. The average price per square meter this year has been 2,200 EUR/m2, whereas the average area of purchased apartment – 104 m2. A decrease in the average prices per square meter can be observed at the beginning of this year, dropping from almost 3,000 EUR/m2 in December to 2,100 EUR/m2 in March.
The end of the last year reached a record in terms of apartment transactions in Pierīga. The period of January-March of this year has not broken this record, but it has achieved the second highest indicator in the last ten years. During this period, 35 apartment purchase transactions worth EUR 6.6 million have been concluded, which is by 43.5% less than in the closing months of 2021, but by 180% more than in the first three months of the last year. The average transaction value has dropped to EUR 189,000, which is by 3.1% less than in the period of October-December. The price per square meter has remained at 1,800 EUR/m2; however, the average area of purchased apartments has decreased to 118 m2, which is by 42 m2 less than last year.
Whereas in Jūrmala new apartments were acquired by 44 owners, paying in total EUR 12.0 million from them, which is by 36.1% less than in the last quarter of 2021. Although last year the first quarter was weaker, the rest of the year was significantly more active, which shows that the year 2022 might be weaker on Jūrmala’s premium apartment market than in the previous years. Alongside the decline in the overall demand, also the value of transactions has decreased – the average apartment price at the beginning of this year has been EUR 272,700, which is by 8.5% less than in the previous quarter. The area of apartments is the only aspect that shows undeniable growth – the average area of apartments purchased in the period of January-March has been 167 m2, which is by 47.1% more than at the end of the last year.
The demand for apartments in new projects is growing in all regions. 164 of 174 premium apartments purchased in Riga are located in the new projects, only 2 of 44 premium apartments purchased in Jūrmala were not located in the new projects, whereas this proportion in the territory of Pierīga is slightly lower – 27 transactions of 35 were concluded for apartments in the new projects.
As regards the Latvian premium private house market, this year has started indisputably slower than last year. In total, 13 private houses with total value of EUR 9.4 million were purchased in the reporting regions this year, which is by 30.7% less than EUR 13.5 million at the end of 2021, when 29 properties were purchased. Only 2 transactions worth EUR 950,000 have been concluded in the capital this year, the average price of property constituting 1,300 EUR/m2. This shows a significant drop from EUR 3.2 million both in the first and the last quarter of 2021.
Whereas in Pierīga, 7 housing purchase transactions were concluded in the period of January-March with the total value of EUR 3.2 million. Although it is by 24.3% less than the turnover of EUR 4.2 million at the end of 2021, such a beginning of the year shows an increase by 300%, compared to the first quarter of 2021 and an increase by 780%, compared to the first quarter of 2020. The average price of property has increased by 8.1%, compared to the period of October-December, reaching EUR 457,000. Also, residents of Pierīga keep buying increasingly smaller houses – the average number of square meters have dropped by 5.9 to 370 m2, compared to the last quarter of 2021. Respectively, the prices per square meter have slightly increased this year, reaching 1,300 EUR/m2.
In Jūrmala, only 4 housing purchase transactions have been concluded with the total turnover of EUR 5.2 million. This is a decrease by approximately 14%, compared to both the first quarter, and the last quarter of 2021, where the value of concluded transactions was approximately EUR 6 million.
As regards the market of land plots for residential construction, it has significantly depleted, compared to the previous year. In the first three months of 2022, 4 land plots for construction with the total value of EUR 975,000 have been purchased in all three reporting regions, whereas at the end of the last year this number was EUR 6.1 million. One land property has been purchased in Riga and Jūrmala, and two properties in Pierīga. The value of the property purchased in Riga is EUR 190,000, in Jūrmala – EUR 324,000, and the total value of two properties purchased in Pierīga is EUR 460,000.