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Investor Guide to Europe 2014
The real estate market in Latvia is steadily
recovering from a complete standstill. Many
investors wish to benefit from low construction
prices and developers are maximizing the potential
of their assets. Tenants are optimizing their leases,
and in some sectors demand exceeds supply.
This unique situation can greatly benefit the
knowledgeable and the quick-witted.
The latvian market is still in its infancy and this is reflected
in the size of its stock. Despite being one of Europe’s smallest
markets it has been evolving rapidly over the past decade. We
expect this trend to continue and will offer opportunities for
investors.
latvia with its policy of conferring residency status through
investment in real estate attracts a lot of interest from
private individuals from Russia and CIS (Commonwealth of
Independent States) countries. Many concentrate their activity
towards the capital city of Riga. latvia is also on the active list
for institutional investors coming from within the Baltic region
itself (Estonia in particular) and from Scandinavian countries.
Asset transfer deals and share transfer deals are both
common practice, whereas institutional investment within the
country is limited to close-ended real estate funds managed by
asset management companies.
Debt funding for existing commercial assets is relatively easy
to obtain, whereas development opportunities have to be
backed-up with a clear asset development strategy. With the
recent accession to Eurozone, capital availability improved;
the capacity of developers is still under-exploited, whereas
government policy is generally favourable.
Market sizing
latvia
Europe
Invested stock*
(Total stock)
EUR 6bn
(EUR 14bn)
EUR 3,380bn
(EUR 8,150bn)
liquidity ratio*
(10y average)
1.3%
n/a
4.0%
(4.5%)
2013 volumes
(10y average)
EUR 0.1bn
n/a
EUR 139bn
(EUR 135bn)
Investment activity by asset type, 2013
Source : DTZ Research
Investment activity by source of capital, 2013
Source : DTZ Research
Market pricing – Riga (Q4 2013)
office
Retail
Industrial
Current Yield 7.50% 7.00% 9.50%
Min/Max
(10y)
6.50-11.00% 6.00-11.00% 9.50-13.00%
Yield
definition
net initial yield
Source : DTZ Research
LaTvIa
* 2012 figures
