Latvia Property

So is Latvia property investment worth considering? I am a huge fan of the Baltic nations right now, having been out 5 times over the last few months – and the opportunities they have for property investors. They tick all the right boxes for investors – great rates of borrowing over up to 30 years, an emerging market, excellent legal systems, and a strong local market – but still you must find the right deal amongst some pretty ordinary deals out there.

For our latest deal in Latvia, click on the linkLatvia Investor Pack

For an excellent article highlighting Latvia in the Sunday Telegraph, click on the linkLatvia Article

Key Points are:

Prices 20% Below Comparables

50% of Development already sold to Locals Off Plan

Team based in UK and Latvia to assist all the way

Latvia has shown one of the highest economic growth rates in the EU. In the period from 2001 to 2003 the average gross domestic product growth in Latvia was 7.3% a year. For further details on why Latvia is a very attractive country for international investors, go to Latvia - key reasons why Latvia property makes an excellent investment!

High growth rates are due to stable domestic demand dynamics and increase in exports. The economic activity increases in all major branches of the national economy. In the last years almost three-fourths of the increase was ensured by growth of service sectors where the biggest contribution was made by growth of trade, transport and communication sectors.

The Ministry of Economics forecasts that GDP in Latvia will grow by 7.5% in 2005. Economic growth in Latvia is achieved in conditions of stable macroeconomic environment. The Bank of Latvia implements a defacto policy of fixed national currency exchange rate. This reduces uncertainty, eliminates exposure to currency risk and gives entrepreneurs a stable base for planning and price determination.

Location

One of the most powerful reasons why Latvia, and Latvia property investment is an excellent opportunity, is like Estonia, it is surrounded by some expensive cities and countries who have been quick to invest in the Baltic nations.

If we look at the world’s most expensive cities:

1. London

2. Oslo

3. New York

4. Tokyo

5. Copenhagen

6. Hong Kong

7. Zurich

8. Paris

9. Chicago

10. Geneva

11. Dublin

12. Stockholm

13. Basel

14. Helsinki

Source: UBS

We can see that 4 of the top 14 are based in Scandinavia – and with Riga down in 62nd place, you can see why Latvia is so popular to the Scandinavians – and why it has a long way to go in terms of growth.

Increase in Air Passengers

I always find statistics so much more powerful than opinion – and one factor I always look at when I visit a new city, is the numbers of passengers going through the airport. Well even I was surprised at how huge the growth has been over the last 2 years!

Year Passengers (000s)

2005 1878

2004 1060

2003 712

2002 633

2001 623

2000 574

1999 562

1998 555

1997 535

1996 506

What an increase since 2003! Copenhagen, Stockholm, London, Helsinki, Frankfurt, Moscow, Prague and Vienna routes have the largest number of passengers. Furthermore, direct flights link the capital of Latvia with Jonkoping, Kiev, Tallinn, Tel Aviv, Vilnius and Warsaw.

Riga

The capital of Latvia, is the largest city in the Baltic States with a population of 735,000.

In May, the World Championships Ice hockey and in November the next NATO summit will be held in Riga: two completely different events, but both a testimony to Latvia’s capacities and potential. In the meantime the economy continues to grow, emphasized by US Govt Export Portal who said “Riga is the transport, financial, commercial and cultural hub of the Baltics”.

• GDP growth of around 7.5% in 2005, the highest in Europe for second year running

• Mortgage loans currently account for only 5% of annual GDP (EU average is 48%); it is predicted that over £500 million of increased lending will be spent on the Latvian property market in the next 5 years – this point cannot be emphasized enough – it means huge internal and external demand over the forthcoming years, and upward pressure on prices of Latvia property

• Foreign Direct Investment increased by 103% in 2004 to £360 million

• Real wages increasing by 10% per annum

• Rated the 6th best emerging country in the world to invest in for retail development (AT Kearney 2004)

• Labour costs are amongst the lowest in Europe

• Riga Airport has seen a 90% increase in passenger numbers in 2005

How many countries in the world are experiencing this type of growth?!

Finance – another huge factor, is available to foreign investors at very attractive rates – of around 4%, over up to 30 years.

So, overall Latvia, and the Latvia property market clearly present an excellent opportunity to invest in a country at the right time, with the right infrastructure and borrowing.

Having said all that, you must still get the correct Latvia property deal, and there are many deals being sold by UK agents that are not particularly attractive to the investor – I have checked many out on my visits out there.

We have been working on several deals for 3 months now, to ensure the value is there is for the investor. For full information on our Latvia property deals, as soon as they are released, make sure you have signed up at latvia@property-investment-deals.com and have signed up for instant email updates in the box in the top left hand corner.

For our latest deal in Latvia, click on the linkLatvia Investor Pack

One other thing to be very aware of, there are many deals, not just Latvia property deals, offered by agents in the UK - always check if they have physically seen the development, and what infrastructure is in place going forward ie finance contacts and management companies - this is critical as will give you an indication how well your investment will perform going forward.