● THE LATVIAN PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • AUTUMN 2021
THE LATVIAN PROPERTY MARKET LATVIAN INVESTMENT MARKET EXPERIENCING UNPARALLELED GROWTH
The economy in the first quarter of 2021 continued to follow the trends of 2020, remaining relatively slow and still unpredictable. However, Q2 was more active, with GDP growth jumping by 11.1% compared to the same period last year. Annual average inflation also climbed to 2.7%. The economy reached pre-crisis levels and is expected to maintain this path towards growth. Although the economy is expected to stabilize in 2021, and grow in 2022, there are still several uncertain factors which may significantly alter the picture. First, Latvia has a relatively low vaccination rate and as a Covid-19 cases go up; restrictions may come into force again. In addition, there is the threat posed by the Delta Variant, which has already wreaked havoc globally. Any restrictions and limitations that arise from this may undermine the economy and erode
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the population’s optimism and confidence for the future. The decision to change the current cadastral values of real estate has been delayed. Beginning in 2020, the government has been working on a plan to set new and increased values from 2022. Having cadastral values that were close to actual market value would significantly increase the amount of property tax paid by individuals and businesses. However, in June 2021 current cadastral values were frozen until 2025. This decision brings relief for business as it gives them extra time and will not impose a further tax burden on current properties, especially during the period of planning, construction, or when business activities are low or even absent and cash flow is limited.
Despite the prevailing uncertainty and risks in the health segment, the real estate investment market is amassing record market deals. By September 2021 there were 9 significant investment transactions in various sectors - hotel, office, retail, industrial and logistics, and residential. The total investment volume reached about EUR 310 million and exceeded 2020 full-year volumes by 25%. This year will definitely be the most successful year for real estate in Latvian history.
Contact: Inita Nitiša i.nitisa@newsec.lv Kristina Živatkauskaitė k.zivatkauskaite@newsec.lt
