Property investments Latvia and Lithuania

Read an interesting personal experience from Auto on Bulgaria.

Wondering if some one can compile or share their experiences of buying in capital cities of Latvia and Lithuania- worth of the hype of 25% gains and also potential pitfalls

Thanks

Just a word of warning on Latvia. The Latvian PM recently said that the price of real estate was growing too quickly. The gov. is taking the following actions to cool the sector..

(1) set minnimum down payment to 10-15%

(2) forcing lenders to base their decisions only on declared income of potential borrower

(3) implement some kind of real estate capital gains tax.

I bought 3 properties in latvia 2 in riga 1 on baltic coast.over last 3 years. first bought 2004 for 70k euro now valued at 220k second in 2005 bought for 6k (yes 6k) now valued at 35k (baltic coast) 2006 bought for 70k now valued at 110k i get rent in two in riga 650euro /month and 450/month . i think there is still good value in riga but you really need to have a latvian/russian speaker with you.who is on your side!my wife fits the bill nicely alot of the off the plans and new builds are overpriced and some in not so good locations with little rental potential.i bought near the embassies and have non latvian tennants who get there rent paid by various companys.the 6k appartment was in my better halves home town in lepjia.no rental market worth renting.rather keep as a holiday home.mafia is in all walks of life in latvia so really be careful who you ndeal with.I think without my wife i would have given up .

Stick to the Old Town in Riga although it seems pricey now for the Region now because it has experienced a couple of years or so of high capital appreciation. The Art Nouveau area is also a possible option, it's within walking distance of the Old Town across the park (sorry forget the name), there's some beautiful buildings in this area with many having lots of refurbishment potential.

Setemupjoe has stated one of the basics that most people seem to ignore - the value of someone who knows the market working for you i.e. not just to try make a killing out of the gullible "investor".

It is very hard to make money on the foreign property market without some inside knowledge.

Hi Setemupjoe,

Interesting what you say about price growth and renting. I have 2 riga properties in Pardaugava and Imanta, purchased early 2006. I found it difficult to find tenants for Pardaugava which is a two room apartment, it took about 3 months to find tenants even though I engaged about 5 agencies and at a market price.

The unit in Imanta finishes in 2008 and I'm worried I might have difficulty finding tenants again. The developer has sold out and the property is valued 30% higher, but is there a re-sell market out there? Are locals buying these new completed properties at these prices or is the market driven entirely by investors greed?

Problem here is that locals are not able to pay the level of rent sought by foreign investors for high-end properties. Most locals are happy enough to rent the old communist block apartments at the much lower rents that reflect the market price of these old flats. You are chasing a small sector of wealthy yuppies or expats (very low numbers in Riga) who would be willing/able to pay market rent --related to purchase price -- for expensive new stuff.

This pretty much sums up the problem for investors right now in Latvia or Estonia. For the same level of investment you can buy similar properties in Hungary or Poland where rental demand is a bit stronger. In Budapest there is a much larger expat commuity with foreign students and business interests, and parts of Poland are the same. Problem with the northern countries is that less people go there, either as tourists or to live for extended periods.

There was a bit of money made by early investors in Latvia (particularly in the old town in Riga) a few years ago, but everybody now has high expectations regarding property values and there are no bargains anymore. The bird has flown!

Quick profits may have gone but the medium to long term prospects look really good for baltic states. There is a risk that there may be some overheating in Latvia but if you're in it for the long term you will benefit from economic growth being experienced in these countries.

the appartments i have are on Elizibeths street ,(1) 58 sq m two room flat(one bed) and we get 650 euro for it.(2)45 sq m we get 450 euro. both flats are within 2 mins of about 10 embassies and numerous banks etc . it usually take us only 1week-10 days to get new tennants . its the usual ! location location etc.expats really cluster together in certin areas ,even 1 mile from our location there are not so good areas.as i said before my wife was invaluble in our choice of locations.