Archived Articles

Simeon Mitropolitski is a Canadian analyst, of Bulgarian origin, and a former syndicated columnist with the Bulgarian News Agency (BTA). He is the author of several hundred articles dealing with hot political and economic topics, both national and international.

He was part of the first group of Bulgarian intellectuals and students that began the opposition movement that finally put an end to the communist regime in this country in 1989, and in 1996-1997 participated in international observation teams during the elections in several Balkan countries - Romania, Albania and Bulgaria.

In 2002 Simeon and his family moved from Bulgaria to Canada where they live now in Montreal, province of Quebec. Simeon is a Master of Political Science from McGill University and a B.A. of Political Science and History.

Global Real Estate Project
News Index

Directories
  Int'l Realty
  US Realty

• Latvia 2000
  
• Latvia 2008
  

Moscow is still looking at the local Russian population as a means to pressure the local authorities and to turn them away from their western aspirations. Riga has applied for membership in NATO and expects a positive response from Western powers at the NATO summit in 2002. Russia has repeatedly warned the USA and the other Western countries not to invite any former Soviet republic into the western military alliance. So far these hurdles haven't diverted Latvia from its strategic goal but have forced the foreign businessmen to be extremely prudent before deciding to invest in this country.

A real estate market began to develop in Latvia in 1991, just after it regained its independence from the former Soviet Union. The initial push forward was given as a result of the property rights reform which included large-scale privatization. For the first five years of independence credit was very tight, with rates slowly declining from their high levels of 150 percent in 1992 to 20 percent in 1996. These prohibitive rates held back quick market development and only a few significant reconstruction or greenfield projects were undertaken. National and foreign banks and other clients, such as German insurance companies Kolnische Ruck and Munische Ruck and Swedish construction company Skanska, developed office space for their own use.

In 1997 a significant change occurred in a real estate market with banks starting to give loans to consumers at interest rates of 10 to 16 percent, triggering a jump in the number of transactions and a rise in prices. During the last decade the prices for residential properties in the country (almost all transactions are concentrated in the capital city of Riga) rose from under $100 per sq.meter (1 sq.meter = 10 sq.feet) to more realistic levels 10 times greater, or even higher.

In central Riga the new apartments and houses cost around $1100-$1600 per sq.meter. The old but renovated residential properties can be found for $700-$1300 per sq.meter and properties that have not been renovated can be found for as little as $300-$500 per sq.meter. In the suburbs the prices are significantly lower than in the downtown and can be bought for $250-$350 per sq.meter. Among Latvians looking for residential properties, the demand is greatest for 70 to 125 sq.meter apartments. The larger properties are affordable only by Latvians returning home from Western countries after decades of forced emigration.

If you need to rent an apartment in the center of Riga for residential purposes, it will cost you around $300-$400 a month for 1BR, $400-$600 for 2BR, $650-$1000 for 3BR and $900-$1500 for 4BR. The house rents vary between $300 a month in the suburbs and $2000 in the downtown. The greatest demand for high-end rentals comes from members of the foreign community. The expatriate workers typically seek renovated 90-100 sq.meter apartments in Riga's city center and in the Old Town.

Following the August 1998 financial crisis in neighboring Russia, Latvia as well as many others republics from the former Soviet Union experienced a temporary a sharp decrease in value of investments, as foreign and local investors adopted a wait-and-see attitude. The national economy, which is now closely linked to the European Union markets, proved less affected by Russia than many experts had imagined so the prices on the real estate market were not significantly corrected. The positive sign for foreign investors was the announcement by the European Union (EU) in December 1999 that Latvia will begin the talks for becoming a member of the EU. It is widely expected that Latvia will enter the EU not later than 2005.

In the commercial real estate market in central Riga, office space can be rented between $10 and $30/sq.meter a month. Retail spaces can reach as high as $30-35/sq.meter per month. In the central area of the capital city, retail rental space is always in great demand because the supply remains limited and the demand is ever growing. Riga's first newly developed class A (by Western standards) office space - the Valdemara Centre, was brought to market in autumn 1999 by the Swedish construction firm Skanska, with space renting for $30/sq.meter a month.

In the capital suburbs the rent for office space falls to $3-10/sq.meter a month. Space for retail businesses command $15-20/sq.meter a month. Warehouse space can be rented for $1-4/sq.meter a month.

The most common lease period in Riga is 5 years, although periods of 1 to 10 years may also be negotiated. Consent of both sides is required to extend the lease. Termination clauses of the contracts generally require 3 months notice.

Rents are mostly quoted in US dollars. Quoted rents generally include only base payments to the landlords. The VAT (Value added tax) - 18 percent, plus utilities and service charges - $2 to $4 in central Riga are additional to the rent. Landlords can be flexible with rents within 5-10 percent of the asking price if the tenants are internationally known companies.

Property tax rates in Latvia are significantly higher than those in the other two former Soviet Union Baltic states - Lithuania and Estonia. The yearly tax on land is 1.5 percent of the government determined assessed value. The taxes on buildings range from 0.5 to 4.0 percent per year and are levied according to a sliding scale based on the value of the structure.

--------------------

See also the directory of companies providing real estate services in, and general real estate information of Latvia.