Experts: The rental market in Latvia is expected to become much more active in the next couple of years
The new rental regulation, i.e., changes in the Residential Tenancy Law and amendments to the Civil Procedure Law coming into force on 1 May, is a long-awaited event in the industry, as it will finally revive the rental market in Latvia and encourage investor activity in the industry. An increase in the activity of housing management funds is also expected, as well as new developments in the renovation of historic buildings, which are still facing various economic obstacles. Visible changes in the Latvian rental market are already expected in a couple of years, as it is planned to attract up to 100 million euros of investment every year. These and other conclusions were drawn by industry experts in the “From the new rental law to annual investments of 100 million” discussion, which was organised by the Alliance of Real Estate Developers.
Until now, the rental market in Riga and Latvia has been very passive compared to other European and Baltic countries. Since 2016, a total of only five new rental buildings have been built in Riga, two of which were built in 2020 and one of which is currently under construction. “Currently, there is a total of around 175 rental houses in Riga, with about 5500 apartments. However, the professional rental market in Latvia has been very inactive, with just over 2000 apartments on the market, managed by about 30 professionals. We anticipate that with the new rental regulation, this segment will grow very rapidly in the future,” says Agija Vērdiņa, Associate Director of Colliers, a Real Estate Consulting Company.
Regulatory changes have been long awaited by housing management funds and now, with the industry being regulated and organised more clearly, active work on expanding the rental market offer will be able to start. “If the property rights are not sufficiently protected, the market is closed from a business point of view - this has been the situation in the Latvian rental market thus far. However, thanks to the new regulations, the rental market is finally open to investors and investment will grow significantly. In addition, we are not only looking to improve the situation in Riga, but are also working on the development of a cooperation model with the public sector for building rental houses in the regions,” says Harijs Švarcs, Executive Director of SG Capital, a Baltic Commercial Real Estate Investment Management Company.
Real estate developers are also looking forward to the near future. In the discussion, the largest developers of apartment buildings argued that the regulatory changes are a historic turning point for the Latvian rental market, as it will finally also promote the rental of new apartments, not just the sale of properties. The developers acknowledged that, with the new regulations in force, Riga currently has the most attractive rental market of all the Baltic capitals, both in terms of rental prices and progressive legislation. The developers also argued that the situation in the management of rental apartments is very bad in Latvia, because of the lack of professional apartment managers and the very inefficient management of buildings. Often, it is almost impossible to agree with apartment building owners on repairs, renovations, and other important issues. According to the real estate developers taking part in the discussion, this will be the main difference in the future, as the new rental buildings will have one owner who will be able to ensure the maintenance of the building in good condition.
A recording of the event is available on the Facebook page of the Alliance of Real Estate Developers: https://fb.watch/5bx7kdR_lJ/
About the NĪAA
The Alliance of Real Estate Developers (NĪAA) brings together the most significant players in the industry in order to achieve the sustainable development of the real estate industry, represent it in a collective manner on a state and local government level, as well as emphasise the role of real estate developers and investors within the economy of Latvia.
For further information:
Mārtiņš Vanags - Alliance of Real Estate Developers (NĪAA)
martins.vanags@niaa.lv
Until now, the rental market in Riga and Latvia has been very passive compared to other European and Baltic countries. Since 2016, a total of only five new rental buildings have been built in Riga, two of which were built in 2020 and one of which is currently under construction. “Currently, there is a total of around 175 rental houses in Riga, with about 5500 apartments. However, the professional rental market in Latvia has been very inactive, with just over 2000 apartments on the market, managed by about 30 professionals. We anticipate that with the new rental regulation, this segment will grow very rapidly in the future,” says Agija Vērdiņa, Associate Director of Colliers, a Real Estate Consulting Company.
Regulatory changes have been long awaited by housing management funds and now, with the industry being regulated and organised more clearly, active work on expanding the rental market offer will be able to start. “If the property rights are not sufficiently protected, the market is closed from a business point of view - this has been the situation in the Latvian rental market thus far. However, thanks to the new regulations, the rental market is finally open to investors and investment will grow significantly. In addition, we are not only looking to improve the situation in Riga, but are also working on the development of a cooperation model with the public sector for building rental houses in the regions,” says Harijs Švarcs, Executive Director of SG Capital, a Baltic Commercial Real Estate Investment Management Company.
Real estate developers are also looking forward to the near future. In the discussion, the largest developers of apartment buildings argued that the regulatory changes are a historic turning point for the Latvian rental market, as it will finally also promote the rental of new apartments, not just the sale of properties. The developers acknowledged that, with the new regulations in force, Riga currently has the most attractive rental market of all the Baltic capitals, both in terms of rental prices and progressive legislation. The developers also argued that the situation in the management of rental apartments is very bad in Latvia, because of the lack of professional apartment managers and the very inefficient management of buildings. Often, it is almost impossible to agree with apartment building owners on repairs, renovations, and other important issues. According to the real estate developers taking part in the discussion, this will be the main difference in the future, as the new rental buildings will have one owner who will be able to ensure the maintenance of the building in good condition.
A recording of the event is available on the Facebook page of the Alliance of Real Estate Developers: https://fb.watch/5bx7kdR_lJ/
About the NĪAA
The Alliance of Real Estate Developers (NĪAA) brings together the most significant players in the industry in order to achieve the sustainable development of the real estate industry, represent it in a collective manner on a state and local government level, as well as emphasise the role of real estate developers and investors within the economy of Latvia.
For further information:
Mārtiņš Vanags - Alliance of Real Estate Developers (NĪAA)
martins.vanags@niaa.lv