Latvia remains a major newsmaker in the Baltic region: one day – tightened rules for obtaining a residence permit, another one – the Radical Party proposes to ban the Russians to move to the country. Ekaterina Ansip, Head of Client Relations Department in EuroLandRealty (Latvia) tells us what is really going on and whether you should hurry to get a residence permit, and also where housing prices will go in the capital cities and provinces.
– Now everyone talks only about residence permit. The minimum cost of investment in real estate for obtaining a residence permit has increased significantly from September 1 and up to €250,000 at once. How did the market react to this innovation last month?
– When arguing how the market will behave, experienced experts expressed a bold statement that nothing will change and that sales will continue to be as active as before, and that demand will remain the same. Optimistic predictions have not come true. In fact the demand and interest in the Latvian real estate did not fall very much, but the number of actual transactions decreased significantly.
The fact is that today many potential buyers took a time-out. Amendments to the Immigration Act cut off those people who buy housing mostly for a residence permit. This summer there was a boom in sales in the regions where customers bought several apartments at once (total cost of €71,150 – as required under the old rules), while some of them did not even go to Latvia for viewing the property: so, these deals were exclusively for obtaining a residence permit.
Now there will be practically no sales in the regions. An adequate purchase for a residence permit is only buying property in Riga, Riga district and Jurmala. In the regions, there are practically no properties for €250,000. The majority of them have been sold, or only a few remained. Not to mention big cities, the price range is €25,000-35,000 for 3-4 room apartments in good condition.
– In your opinion, how will issuing residence permits for the purchase of real estate fall compared to the past 12 months, for example?
– Probably 3 times. Many buyers took a break while the market is trying to find optimal and fair prices.
– Will prices grow speculatively in order to raise the value of properties offered to a foreign investor, up to €250,000?
– It happened in summer, when a property cost, for example, €120,000, but it was sold for €150,000 (according to old rules, in Riga and Jurmala €142,300 was enough for obtaining a residence permit, and now the rules are the same for all areas of the country – €250,000).
– But the government came up with a good mechanism to prevent speculation: either cadastral value must exceed €80,000, or you had to hire appraisers to prove that true value exceeds €250,000...
– You are absolutely right, and independent appraisal companies will slow down speculation in the current environment. Each property has the cadastral value, but it exceeds €80,000 very rarely, so that the final word will be from professional appraisers.
– Lately you could "collect" the necessary amount from several properties, but now you need to buy one for €250,000. However, there is news that in fact you can buy two or three apartments, and the main criterion is their common address, is it right?
– Yes, that's right. You can buy two apartments in the same house or one apartment and a parking space in the same building. Such comments were given by representatives of the Office of Citizenship and Migration Affairs of Latvia.
– What is the minimum budget for buying a marketable housing in Riga or Jurmala? Are Soviet series houses supposed to be marketable?
– The price range is very different, starting from €30,000 for a Soviet-built apartment. But buying Soviet apartments of 103rd series is not a profitable investment as most of them fall in price. The most interesting is investing in new properties, which are in demand and can gradually grow in value. Speaking of minimal budgets, this summer we had properties in Jurmala for €145,000 – €160,000 – two-room apartments of 55-60 sq.m, but they have already been sold. In addition, the Old Town of Riga may be a good choice: it is combination of high-quality housing and prestigious area: the houses underwent renovation, and the historic center of the capital will always be popular.
– To sum up, in what mood are you starting this autumn and winter season?
– I hope for that situation will stabilize by winter, the demand will increase, and everything will be back to normal.
Interview: Alexander Fetyukov, ee24.com