If we talk about real estate, a sector mass secondary housing market became effectively "for internal use", and the sector of real estate - business-class housing - offers a product almost entirely to external demand.
Related article: What to expect from residential real estate market in November 2011?In this market of mass housing continues to minor fluctuations in the price corridor of 550 - 580 euros per 1 square. m, while the elite new homes have increased in price about 15%.
Prospects, as often happens in Latvia recently, obscure. They depend, firstly, on the economic and political factors, and secondly, the mood of the country's inhabitants. Moreover, in Latvia, the second indicator is not always correlated with the first. But now is not encouraging any one nor the other, says Engel.
The economy, despite the triumphant government is full of stagnation and further decline in consumer demand. Actually it is noticeable and on an unprecedented reduction in the number of transactions in the market.
On the other hand do not expect a collapse. Latvian real estate market economy class is anything but overrated, and the proposals is still not much. Likely volatility of prices in this sector will continue at the level of 550-600 EUR / square meters. m
"And we may well expect the fall to a lower level of the corridor in recent summers, and then the correction in the early fall, when the market will the money earned by local residents for the overall good summer tourist season" - the expert adds.
According to him, optimism was added foreign investment that really do make the weather in the market. But here is not that simple. On the one hand amendments to the Immigration Act clearly work that led to the present, according to experts SEB-Bank, to an increase in interest from investors from the CIS, primarily Russians, 50% (compared to the same period last year) . Moreover, polls show, Latvia came in the top ten countries that are trusted by the Russian property buyers, along with Britain, France, Germany, the United States and Israel.
In this sector there are not many market factors, many political and social - Residence Permit in Europe remains an attractive tool for potential investors in this sector. Economic factors, such as buying a property undervalued, the desire to cash in on future price increases and to rent - all while playing a secondary role, although clearly this will not last forever.
But it is political factors pose a risk to this, in general positive for the Latvian economy, the investment process. Since the adoption of the amendments is for the year in the Latvian Sejm has been made two attempts to correct the innovations - the first was aimed at the abolition of all the amendments (which failed), the second was a success and touched the new conditions in obtaining residence permit on the basis of real estate investments.
By and large, two new terms: Now in order to obtain a residence permit should only buy a property from a resident of the country. These are the citizens, non-citizens in Latvia, EU citizens and those who already have residence permit in Latvia. Second - when buying a property with the aforesaid order will need to consider not only the market but also the cadastral value of the acquired object. There is a definite problem. The fact that the majority of properties worth 100-110 thousand lats, which is usually acquired by the investor, have the cadastral value below the required limits (30 thousand LVL in major cities and 10 thousand - in district centers). It hovers around 17-25 thousand lats.
Innovation aimed at combating fraud, when my brother sold his sister 10 square meters. meters in their garage for the required 100 thousand. But now the problem of non-compliance required and the actual land value of the object need to be addressed by the appraiser. Ie If the purchase object there is a discrepancy between the market and land value, you will need to contact the appraiser, who will confirm or refute the real value of the object. But, first, this procedure is even smaller and, yet the money (about 100 lats), and secondly, on everything about everything will go longer.
It is clear that the amendment was adopted in the interests of appraisers, but in general it does not harm the interests of investors. Another thing is that frequent changes in rules of the game any harm to the investing process, but this is a global issue of the Latvian policy.
A global Latvian policy can give different surprises. As you know, in September 2011 in Latvia, most likely, will be held early parliamentary elections. The fate of foreign investment in real estate is directly linked to their results. The success of the national-radicals can lead to their entry into the government and attempts to undo the very same amendment to the Immigration Act, which are now just starting to work for the Latvian economy.
So that market participants can only hope common sense of the Latvian electorate and the fact that the new government will finally real economic reforms in the country.