Latvian Real Estate Market to Break Stagnation in 2024: Insights from Andris Bože

Latvia’s real estate market is⁣ poised for a significant turnaround this year, driven by⁣ declining euribor interest rates⁤ and renewed buyer confidence, according to industry expert⁤ Andris Bože.

The European Central Bank’s decision to cut the 12-month⁣ Euribor rate by 0.25 percentage points in December ⁤has set the​ stage for further reductions, ⁣with projections indicating it will fall below 2% by summer. This shift is expected to stimulate the​ housing market, particularly in ⁤the sale of larger properties.⁣ However, Bože warns that the increased⁤ demand could lead to a‌ shortage ‌of available apartments, as supply struggles to keep ​pace.

“Interest rates are dropping, and mortgage terms are becoming more attractive,” Bože explains. “This, combined⁣ with rising incomes and stable energy costs, has encouraged buyers to⁣ invest‌ in‌ larger homes, especially four-room‍ apartments.”

Riga, the capital, currently has around 1,500 new comfort-class apartments on the market, with a significant portion located in the Jugla district. Yet, the ⁤number of new construction projects remains limited. Bože estimates that riga’s real estate demand ranges between 2,500 and 3,000 units annually, meaning the‍ existing supply could be absorbed within six months. “We’re⁣ already seeing signs of a potential shortage later this year,” ⁢he adds.

The market’s recovery follows a period of economic instability marked by hyperinflation,the Ukraine conflict,and soaring energy prices,which forced manny ⁢developers to pause projects. “Now that ⁣conditions have stabilized, demand is rebounding faster than⁤ developers can​ complete new projects,” Bože notes. “This gap could lead to tighter supply in the coming months.”

To address‌ these challenges,Bože highlights the need for innovative financing models. “In Latvia, developers only receive ‍payment after a project is completed and registered in the land⁤ register,” he says. “This system delays cash flow and limits the ability to start new ‍projects. We could ‍learn from Poland’s ‘open⁢ escrow ‍accounts,’ where developers receive funds during ‍construction. Similarly, the Czech Republic’s reduced VAT rates for economy-class apartments‌ have made housing more⁢ accessible and stimulated market activity.”

YIT LATVIJA, the company ​Bože represents, is exploring partnerships ‍to accelerate ‍project progress.A recent collaboration ‍with Czech investment group RSJ Investments has led to a joint venture for new projects in Latvia⁤ and Lithuania. “This model allows us to pool resources ​and expand our capabilities,” Bože explains. “It’s a step toward meeting the growing​ demand for quality housing.”

As the Latvian real estate​ market gains momentum, Bože remains optimistic but cautious.⁤ “It’s a favorable time for buyers, especially with competitive prices compared⁤ to neighboring countries like ⁣Estonia ⁢and Lithuania,” he says. “However,​ rising construction and labour costs mean this window ⁤of ​opportunity won’t last forever. The market is evolving, ⁢and both buyers and developers need to adapt‍ quickly.”

What is driving the turnaround in Latvia’s real estate market in 2024?

interview with Andris bože:​ Latvia’s Real Estate Market Poised ⁣for a Turnaround⁤ in 2024

By Archyde News Team

January 20, 2025

Latvia’s real estate market has‌ been a topic of important interest in recent years, with fluctuating trends and evolving buyer behavior. In 2024, the market is poised for a notable turnaround, driven‌ by declining Euribor interest rates and renewed buyer confidence. To provide insights ‍into this shift, we sat down with andris Bože, a seasoned real estate analyst and industry expert, to⁢ discuss the driving forces behind this change and what it means for buyers, sellers, and investors. ⁢ ‍

Archyde: Good afternoon, Mr.Bože. Thank you for joining us today. Let’s start with the big picture. What’s driving the turnaround in Latvia’s real estate market in 2024?

Andris Bože: Thank you for having me. The ⁢primary driver is the‌ European Central Bank’s decision to⁢ cut the 12-month Euribor rate by 0.25 percentage points in December 2023. This reduction has set the stage for further declines, with projections indicating that the rate will fall below 2% by summer. Lower interest rates⁢ have made mortgages more affordable, which has renewed buyer confidence⁣ and stimulated demand, especially for larger properties.

Archyde: That’s captivating. Can you elaborate on how this shift is impacting buyer behavior?

Bože: absolutely. As interest rates drop, mortgage terms become more attractive, and this, combined with rising incomes and stable ⁤energy costs, has encouraged‌ buyers to invest in larger homes. We’re seeing a particular surge in demand for four-room apartments, ⁢as families and ⁤professionals seek ⁢more spacious living environments. This trend is especially pronounced in Riga, where there’s already a ‍noticeable shortage of available apartments.

Archyde: Speaking of riga, how is‌ the capital’s⁤ real estate market⁤ faring amid these changes?

Bože: Riga‍ is currently leading the way in terms of activity. There are around 1,500 new comfort-class apartments on ‌the market, but supply is struggling to keep pace with demand. The ⁣shortage is particularly evident in the‍ mid-to-high-end segments,where buyers are willing to pay a premium for quality and location. this imbalance coudl drive prices upward,⁢ especially if new ⁤construction projects don’t accelerate soon.

Archyde: What ​challenges does this present for the market?

Bože: The biggest challenge is the supply-demand imbalance. While increased demand is a positive sign, it could lead to affordability issues if supply doesn’t catch up.​ Additionally, developers need to navigate rising construction costs and regulatory hurdles, which could slow down new projects. For buyers, the competition for available properties may intensify, requiring them to act quickly and decisively.

Archyde: What advice would you give to prospective buyers and​ investors in this habitat?

Bože: My advice is‌ to stay informed and act strategically. With⁢ interest rates expected ‍to remain low,now is a good ‌time to secure favorable mortgage terms. Buyers should also focus on their long-term needs and prioritize quality and location. for investors, Riga’s comfort-class apartments and larger‍ properties offer strong potential for value appreciation, but it’s essential to⁣ conduct ⁤thorough due diligence and work ‍with trusted professionals.

Archyde: what’s your outlook for the Latvian real ⁢estate market in the ⁢coming years?

Bože: The​ market is on a positive⁤ trajectory, with ​declining interest rates and renewed buyer confidence laying the foundation ⁤for sustained growth. However, the pace of this growth will depend on how well⁢ supply can meet ⁤demand. If developers and policymakers address these challenges effectively, Latvia’s real estate market could become even more dynamic and attractive in the years ahead.

Archyde: Thank you, Mr. Bože, for sharing your valuable insights.⁣

Bože: It was my pleasure. Thank you for ‍the possibility.

This interview was conducted by the Archyde News Team. For more updates on ⁢Latvia’s real estate market and global trends, stay tuned to Archyde.