Property Articles | Real Estate Articles

During the last year the real estate market experienced a sharp decline in prices – the price decline was observed in all real estate sectors.

The sharpest decline was observed in apartment prices because the average monthly fall of these prices was 4-8%. The total apartment price decline from the beginning of 2008 was 35%. Also the number of apartments supplied has been changed during 2008 – this number has been reduced both in Riga and Riga District. This trend may be explained by the difficulties of sale of apartments in the market which is influenced both by the economical situation in the country and the apartment price decrease. It has led to a significant increase of rental objects, which resulted in declined rent rates, especially in the second half of the year.

A price decline has been observed also in the sector of single-family private houses in 2008, which was associated both with the low activity in the real estate market and the sufficient number of dwellings in the market, having been built mostly in the previous year. In 2008, the prices of private houses decreased by 40% in average.

The land market has been relatively inactive in 2008, with significantly fewer transactions; also the number of land offers has been relatively small. The prices of land intended for private building in Riga decreased in 2008 by 34% in comparison with the previous year, but the prices of land plots intended for commercial building and with developed design decreased by 20-30%.

As to retail space, no one new shopping centre was commissioned in Riga in 2008 but, from the other side, construction of shops was extended throughout the whole territory of Latvia. Throughout the year the number of rental objects offered increased and the transaction volume decreased; therefore, the retail space rent rates continued to decrease, and these rates at the end of 2008 were by 31% lower than the rates of the previous year.

During the press conference devoted to the market overview, Mr. Māris Laukalējs, Manager of the Valuation Division of “Arco Real Estate”, came up with the proposal to municipalities to purchase real estates and not to plan construction of new houses. It should be mentioned that the specialists of “Arco Real Estate” do not forecast any development of new housing, in view of the construction costs compared with the apartment prices and their still existing trend to decline.