2008
“During the last months, in the house and land market there has been a more rapid fall in prices than previously; there is interest from buyers; however, as the supply is sufficiently large, the choice is usually made in favour of the cheapest and best offer. Besides the prices, if being decreased, often are decreased by 5-10% at once”, says Aigars Zariņš, President of “Balsts” Executive Board.
Since its start in May 2007, the overall fall in prices of standard design apartments has now reached 32.6%. In September, the prices of standard design apartments decreased on average by more 2.3%, and at present the price for one square metre in Riga is EUR 1226. The rapid fall in prices in the secondary market indicates that soon credit costs again could again reach monthly rental costs, which will certainly make more customers decide to buy, not to rent.
Economic recession both in Latvia and in the
rest of the world affects also changes of rental payments, as they are the
direct costs related to business. This has mainly affected the fall in prices
of sales areas for which the rental payment has decreased by 30–35% since the
end of 2007. “At present, the choice of sales areas is relatively wide, which
had not been observed for already a couple of years. If some time ago there was
one or two options of choice, then now there are much more of them; it is
possible to compare and choose the best variant”, comments
To optimise costs, some companies are moving to smaller office premises or premises that are cheaper than the present ones. Those tenants of offices and sales areas who have concluded agreements 2-3 years ago are now often paying more than the present market price of such offices. Most tenants are at present ready to pay a rental payment of EUR 9–11/m². The fall in prices in the office segment has reached 25% this year.
Price corrections in the rental segment will certainly continue; however, the end of this year could be the time when rental payments will have reached their lowest point. At present, tenants have great opportunities to find premises for an attractive price which could pay off in the long term.
However, despite the present depressing economic situation the construction of the largest investment project RIXPORT (Riga Airport Business Park) has been commenced, which for now is the largest and certainly also the most interesting emerging business park in the whole Northern Europe. The business park is located near Riga International Airport, and its total area will be 300 000 m². Company “Balsts” has started a search for tenants for this project and invites all interested parties to turn to any office of “Balsts” for more information.
