Latvia is surely among the ten most popular countries for Russians to buy real estate abroad. Components of success are evident: good quality of apartments and houses, low prices (especially in regions), inimitable charm of Old Riga and Jurmala, and the widespread use of the Russian language. And the trump card that has made Latvia a very popular country during the past three years - is the opportunity to get the "cheapest" and the most affordable residence permit in the European Union. Experts rely on that when they make optimistic forecasts for the future.

Immigration law made ​​a profit

Market practices do not hide this fact: exactly the Immigration Act, which came into force in 2010, helped to return and even to increase the demand from Russian buyers, and then to stabilize the prices that have fallen before. Since last year, the Latvian realtors have started talking about the second group of active buyers after Russian customers, those are citizens of China, who were attracted by virtue of the good working "immigration" law as well.
The minimum threshold for entering the market for buyers in this country, who are aiming to obtain a resident status (and as a consequence, to receive the opportunity to live permanently in Latvia and to have a visa-free travel to Europe) is worth just €72,000. It is the price that should be paid for the real estate in Latvia, if it is acquired in the province. If you want to buy an apartment in Riga, the above amount, according to the law, must be multiplied by two. The conditions are precisely the same for those people, who want to purchase an apartment in Jurmala.
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"To obtain a residence permit, you can purchase two apartments in Latvia with the total value of €150,000: one for yourself, and the second one - for rental"
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"The most typical purchase in Latvia at the moment is one or two apartments with the total value of approximately €150,000 - for the purpose of receiving a residence permitsubsequently. Typically, these objects are rented out after the purchase. Sometimes customers purchase apartments for their own use, and in this situation the sum of the purchase may be higher. The optimal option: one object for themselves, and the second one for renting it out, so when receiving the leasing payment you will be able to compensatemaintenance costs of the first object," saidMaria Konstantinova, the Director of SIA Ally Estate."Last year, there was quite a significant demand for the objects in the region, which have passed at the minimum threshold value for a residence permit. However, since late last year, when the first project of the amended Immigration Act was proposed, it turned out that Riga and Jurmala became more preferable."

Change should not be left

At the end of 2013, the Latvian Parliament had adopted a series of amendments, which made the procedure for obtaining residence permits for investors and homebuyers more complicated and more expensive. In particular, it was planned to cancelthe "provincial", the lower threshold for the purpose of entering the market. Realtors have already said goodbye to the powerful flow of medium-budget clients, almost claiming his resignation from the Latvian real estate market. It happened, because the sale of real estate in Latvia is inextricably linked with the terms of the issuance of a residence permit. However, the new edition of the Immigration Act was not signed by the President of Latvia, and today antecedent rules and regulations operate in the country.
Last year a new record was set: the Department of Citizenship and Migration Affairs (DCMA) has issued 7,353 residence permits in Latvia. It's almost a thousand more than in 2012.
The majority (2751) of residence permits were issued for homebuyers. The second most popular option (in fact 1372 permits) became operations with commercial activity. Another 428 residence permits were issued in connection with an investment in the authorized capital of Latvian companies with no less than 25,000 lats. Two hundred and thirty-one foreigners had received residence permits due to the financial investments in the Latvian credit institutions.
According to the data of the Department of Citizenship and Migration Affairs, last year the process of issuing a residence permit on the so-called the Investor articles of the Immigration Act provided a total investment of $252,344,477 lats, which is 44% more than in 2012, and twice more than in 2011. Approximately 80% of these investments are real estate acquisition. 743 real estate objectswere purchased in Riga. 955 investors preferred to buy a house in Jurmala. An area Ozolnieki (Jelgava suburb, which is 40 kilometers from Riga) is in third place, 56 properties were acquired there.
"This area, I would say, had been in excessive demand a year and a half ago, due to the fact that it is located in half an hour drive from Riga, but currently there is a valid provincial threshold for obtaining residence permits," said Andrejs Kozels, director of the housing department of the company Realia. "And here's the result: all ready-for-service apartments in new buildings there were sold out instantly. At the moment there are no offers, which would be priced below €100,000."
The majority of the residence permits in accordance with investment articles were received by Russians - 3,090 permits, Chinese - 445 permits, followed by the citizens from Uzbekistan, Ukraine, Kazakhstan, and Belarus.

How expensive are the Latvian square meters?

"The number of transactions with residential real estate in Riga in 2013 in comparison with the previous year increased by 14%, and became a record for the last six years. The average level of prices for apartments in Riga has increased by 3% during the year.Eventhe apartments in "serial" multifamily buildings, built during Soviet times have risen in price. This is particularly true for one-bedroom and two-bedroom apartments. Most of all a square meter of housing in Riga has risen in price in the district Ķengarags (+4.7%), and only the apartments in Bolderājabecame cheaper (-4.1%)," said Larisa Bogdanova, the Director of the companyJusmajas (Riga).
In December, in most districts of Riga the apartments had increased in price by 0.2-1.3%, while in Bolderāja, Āgenskalns and Zolitūde apartments became cheaper by 0.6-0.7%.
In Riga, the prices are very different depending on the district and the building itself: apartments in stone houses, without repair, in Old Riga are worth €1,850-2,100 per square meter, in the quiet centre the prices vary from €1,900-2,000, in the near centre 1 sq.m usually cost €1,300-1,500, while in the distant centre - €850-1,000.
In the partially renovated stone houses in Old Riga a square meter is worth €2,300-2,750, in the quiet centre - €2,300-2500, in the near centre - €1,900-2,200, in the distant centre - €1,350-1,500.
In the capitally reconstructed houses and in new-projected buildings, square meters, of course, are the most expensive: in Old Riga - €3,150-3,500, in the quiet centre - €3,200-3,500, in the far centre - €1,800-2,000. The exception is the so-called diplomatic district: here the prices can vary from €5,000 to 6,000 per square meter.
The cost of 1 sq.m in stone houses:in Old Rigain the quiet centrein the near centrein the far centre
without repair€1,850-2,100€1,900-2,000€1,300-1,500€850-1,000
with a little repair€2,300-2,750€2,300-2,500€1,900-2,200€1,350-1,500
renovated or new€3,150-3,500€3,200-3,500n/a€1,800-2,000

Nevertheless, it is absolutely possible to purchase a quite inexpensive apartment in Latvia, especially in the provinces. If we do not take into consideration the luxurious sector, the average price is €550-650 per sq.m in unrepaired apartments and €750-870 per square meter in the apartments after renovation.
The selling of real estate in Riga veritably breaks alternate records. The number of transactions in Riga during the last months in 2013 has increased by 20% from the same period in 2012. Meanwhile, the number of purchased apartments has increased by 19%, and homes - by 24%. In October 2013, 865 apartments in Riga were sold, it became the record of sales after 2007.

To purchase an apartment in Riga and rent it out

The rental market is highly developed in Latvia. Everything is rented out to Lease, but, of course, various real estate objects bring different income. "We have a client, who gradually bought with mortgage loans within two years seven small studio apartments in a renovated house in a residential area of one of Riga's suburbs, and currently all these apartments are rented out and completely cover his mortgage payments. Thus he bought a property for 40% of its value. Expenditures amounted €144,000 in aggregate, apartments cost from €18,000 to €25,000. At the moment, this investment brings him collectively €1,100 per month. However, such real estate objects cannot be always found easily, and moreover, they must be selected carefully," Maria Konstantinova said.
Rental rate depends on many reasons; maintenance costs of the object plays a significant role. The higher public utility payments, the lower rental rate is. The quality of real estate is essential as well: the equipment, the project, according to which the house was built, and the infrastructure. An example: an apartment with two bedrooms and two parking spaces in the new project Mežciems in Riga was recently rented out for €600 per month (while public utility payments are paid by the tenant). However, in another new house, which stands exactly in front of the first one, two-bedroom apartment is rented out just for €360. Meanwhile, the first apartment is worth €149,000, and the second one cost €78,000. In the first case, the payback is 20 years, and in the second case it will be 18 years.

Real estate from developers and in the secondary market in Latvia

The forecasts of experts for Latvia resemble the same, that analysts currently say about the markets of other small European countries that have experienced a serious drop in prices after the crisis, and which are currently demonstrating the recovery of the market and a slight increase. Everything is the same: the stabilization, and in some segments of property there is the continuation of the moderate growth which started before. The new development projects will continue to enter the market and will be bought up gently and quickly as soon as available, but without apparent agiotage. At the same time apartments from the developer in Latvia, as well as the objects of the secondary market will veritably enjoy moderate popularity. It is expected that the flow of customers will continue to grow, including the stream of applicants for the resident status in exchange for the spent on the purchase of an apartment or a house amount of money.
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"The ideal apartment for investment is in the new or recently constructed house in the quiet centre and in some sleeping districts"
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"The prices of houses from the developer in Riga are gradually increasing, we do not expect the decrease - there are no appropriate preconditions. But those developers, which already implement not the first successful object, try not to increase prices for the duration of the sale of the object. Some increases tend to occur at the stage of the final sale of apartments, by 2-5%. However, developers are trying to inform about it in advance", Larisa Bogdanova said.
Набережная в Риге
"If the buyer is considering the acquisition of real estate as an investment, in this case the most reasonable thing to do is to purchase two small apartments already with decoration, which then will be quite easy to rent out and to sell later. The object must be either in a new project or on the secondary market, but in the house of recent construction. From this particular point of view quiet center and some sleeping areas of Riga are very interesting, in which the real estate is in great demand.
If we talk about the quiet center, then the interesting objects are worth about €1,600 per square meter, while in a sleeping area - around € 1,350 per square meter. There are very few such objects, but nevertheless, there is a chance to find them. Sometimes it is possible to combine: to purchase an apartment in the quiet center and add to it another apartment in a sleeping district, and, in my opinion, it is the perfect combination. Both apartments will not lose in price and will be liquid in the future", Maria Konstantinova summarized.