FIRST QUARTER TO CLOSE ON A POSITIVE NOTE

The average price for apartments in block buildings in Riga has now dropped to EUR 1352 per square metre. Overall, in the first 4 months of this year the prices for apartments in block buildings have decreased by 5.8%.

Comparing March and April this year with the same period in 2007, the number of sales transactions of the company Balsts has increases by roughly 10 – 20%, number of rent and lease transactions in the same period of time has increased by approximately 100%. Of course, this increase is related to development of the company and constant increase of its staff. However, there is a clear tendency that the number of rent and lease transactions has grown much more rapidly compared to the number of sales transactions.

The supply continues to grow in the lease segment – the lessees have extensive opportunities to find the premises that they were looking for, the ones that match their business needs. In Q1 the highest number of transactions took place in the office space segment. The number of transactions in leasing retail premises has dropped rapidly, which is related to the increasing supply of such premises, as well as due to failure of some lessees to generate return high enough to cover the comparatively high lease costs. There are cases when the owners of office premises agree to cut their lease by EUR 1 – 2 or offer to make additional improvements for the premises.

Corrections continue in the rent segment, which are related to the large number of apartments in the market that were initially purchased for speculation purposes, but with the price dropping, the owners choose to rent out these apartments and wait for the price to climb back to the previous level. The activity on the part of people renting apartments has increased with the start of the spring. The tourism season has started, as a result the demand for short-term rent of apartments in Old Town of Riga, downtown Riga and rent of houses in Jūrmala has increased.

“The government recently expressed its endorsement for abolishing the first down payment, which is very commendable. However, I am of the opinion that it will not significantly improve the market situation, but it will at least create a positive and supporting environment for those borrowers that postponed the decision on buying a real estate due to restrictions imposed by the government. The price corrections in the real estate market will continue throughout the year and no sudden changes are expected”, says Aigars Zariņš, Chairman of the Board of SIA Balsts.

For more information contact:

Evita Strazdiņa
Marketing Manager
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SIA Balsts 57 Dzirnavu Street,
Riga LV-1010,
Latvia Phone: +371 7212276
Mob.: +371 29488824
Fax: +371 7214164
E-mail: evita.strazdina@balsts.lv
www.balsts.lv