Estonian developers increasingly enter Riga market — ERR News
Estonian real estate developers are becoming increasingly active in Riga, Latvia, as land in the Latvian capital is considerably cheaper and the approval of plans and construction permits is faster. This was reported by ERR News.
Prices and demand
Over the past five years, real estate prices in Latvia have risen by approximately 51%, but their average level remains significantly lower than in Estonia. Elar Ollik, head of partner relations at Luminor Bank, explained Riga's attractiveness by noting that new buildings account for a smaller share of the housing stock than in Tallinn, so developers see greater potential there.
According to him, people's ability to take out loans is also growing in Latvia, making new residential projects more affordable. Merko Ehitus CEO Ivo Volkov noted that the fundamentals of the Latvian and Estonian real estate markets are generally similar, and the situation depends on consumer confidence and the state of the economy. He added that consumer confidence in Latvia had been higher than in Estonia over the past two years.
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Faster construction permits
Ollik also linked lower housing prices in Riga to the large share of Soviet-era housing stock. In Tallinn, many such buildings have already been renovated, which has increased their value, while the share of renovated buildings in Latvia remains small.
Invego and Reterra are jointly developing a new residential district in central Riga, investing nearly €40 million in it. Invego CEO Kristjan-Thor Vähi said that processing detailed plans and construction permits in Latvia effectively takes three times less time than in Estonia.
Reterra CEO Reigo Randmets gave an example: obtaining a construction permit for the Estonian Hipodroomi project took six years, while the company's latest permit in Latvia was obtained in seven months. At the same time, he noted that purchasing power in Latvia is lower and housing sales in Riga are not easy. In his assessment, a five-year wait for a detailed plan for an apartment building can increase the price per square meter for a buyer by €1,000.
