Latvian Real Estate Market - 3Q Commentary
Economy
Latvian GDP will contract by 18.9% in 2009, according to most analysts and this is one of the biggest drops in EU. The drop in construction business if we compare with previous year reached level of 78%. Also in this year decrease in construction bossiness in Q1 to Q2 is 9.1%. This situation affects real estate developers and other companies which are postponed their payments in 39.3% occasions. Ministry of Finance in 2010 prognoses GDP decline of 4%, retail turnover drop for 3.5%, and decrease in average gross salary of 8%. At the same time unemployment already jumped to 18.3% by Q3 2009 and have a bad tendency to increase.
Office
Office vacancy rates in Q3 still are the same 25% as in Q2 2009, even though many office projects slated for delivery over the next two years have been halted.
Rents for A class offices in Riga fell to 9 - 13 EUR per sqm by the end of Q3 2009. Landlords also offer other incentives, like lease payment holidays, covering of movement costs and other specific needs of clients. Typical service charges in A class buildings are 1.5 – 2.5 EUR per sqm per month (...)
Click here to read the whole 3Q 2009 Latvian Commercial Market Commentary
Residential
In Q3 2009, residential real estate prices at least stopped their relentless fall. In Q3 prices were stable for three months, after falling 8.8% in Q2, and plummeting 29.3% in Q1. The average price by the end of Q1 was 763 EUR/sqm, in Q2 was 478 EUR/sqm, then fell to 460 EUR/sqm in July and stayed there through the whole Q3. This could be the break point where owners are not ready to sell their property cheaper (...)
Click here to read the whole 3Q 2009 Latvian Residential Market Commentary