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Annual review 2009

2009 has been a year of price stabilization. This is the first time in 2,5 years there has been price growth. Since price decline in year 2007, real estate drop of prices has increased average to 75 %. That has ranked Latvia in first place in Europe.

     “2009 has continued features that was in year 2008 when drop of prices continued in all real estate sectors. Only in autumn 2009 drop of prices decreased and market stabilized”, says Aigars Zariņš real estate company’s Balsts chairman.

     “The highest descend of prices for series-type apartment was in first half of the 2009, descending average to 45%, the average price descend was till 480 EUR in square meter.” Already in other half of the year descend was not so sharp and prices stabilized, and at the end of the year prices experienced 2 % growth in some areas. This situation was stimulated by the flat owners who did not want to sell the property for such a low price which was the main reason for the low property offer in the market. In the meantime, there was a demand for the average quality series-type apartments for prices that was in the middle of the year 2009. Also a great part wants to deal in cash”, says Aigars Zariņš.

      The renting market was facing the price drop from beginning of the year to the lower point in the middle of the year till 30%, but prices stabilized at the end of the year 2009. The offer in the renting market didn’t reduce as the owners, who wasn’t ready to sell their properties for the market prices offered them for rent. The average rent for one bedroom apartment per month was 200 LVL in the center of Riga and 130 LVL in the neighborhood at the end of the year.

     The price drop for the houses reached 15%, but since the beginning of descend from the middle the year 2007, the total price drop reached 50%. The most demanded was houses for the area of 150 to 200 square meters, with full finish, communications and infrastructure.

     Meanwhile the drop in the land segment was till 50%, but historically from the highest point the price drop was 70-80%. This happened due to banking sector influence, as the credits for buying the land was accepted just in few banks in Latvia. Banks were co-financing maximum 50% from the land value. The Most demanded were the lands for the private house building in good area.

     The renting prices for commercial premises in the year 2009 shrunk for 30%, therefore average price in the Riga center on pedestrian streets with high intensity is from 15 to 20 EUR per square meter now. In the streets with small activity rent is from 5 to 10 EUR per the square meter.

     Rent for office area has decreased for 50% since beginning of the year, therefore prices varies from 5 EUR per square meter for now. There was also 50% price drop for storage premises, therefore the average price was 1- 2,5 EUR for square meter at the end of the year 2009. The highest demand for now are offices and storage spaces from 100 to 500 square meters. „The Latvian enterprices will continue the cost cutting, saving not only on sallary, but also on renting prices and other expences. Companies will look for adequate renting prices”, explains Aigars Zariņš.

     “Also the beginning of the year 2010 has showed that there will be stable prices, without sharp increasing or decreasing. Slight increase may be caused by small amount of the offers in the market, but that cannot be considered as a tendency in the market, because the prices are affected also by banking sector and economic situation”, predicts Aigars Zariņš.

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