A new shortage of apartments is predicted in the next two to three years
In recent years, various external challenges, including the increase in the cost of living, have forced many to postpone the decision to purchase a new home, reducing activity in the new apartment market. Developers have tried to stimulate it with various discounts and gifts for apartment buyers, but as the demand has decreased for the second year in a row, they themselves have become more cautious both in purchasing land and starting new projects. This, in turn, can lead to a shortage of apartments in the next two or three years. The data of the real estate consulting company “Colliers” show that 1,725 middle and economy class apartments are currently available for purchase in the first-time market in Riga and Pieriga, where you can move in immediately, while another 2,950 apartments in the affordable segment are under construction or planning. “On the one hand, if we look at the number of houses put into operation, it is quite a lot. The market has not had such a wide offer of finished apartments for several years, so this situation is beneficial for buyers, because it is finally possible to physically view, walk around and buy exactly the kind of housing you want. This is also confirmed by the sales statistics of “Bonava Latvija” – currently the majority of transactions take place directly with completed apartments. On the other hand, most of the available apartments are located in locations that buyers may or may not like, and the rest of the completed housing are essentially small remnants of almost sold projects scattered all over Riga and Pieriga,” says the marketing and sales manager of SIA “Bonava Latvija” sales manager Kaspars Ekša. As Agija Vērdiņa, head of the Research and Consulting Department of “Colliers Baltic”, reveals, the average registered transaction for an apartment in a new building in 2023 was 152,000 euros, compared to 131,000 euros in 2022. On the other hand, in the segment of renovated projects, developers have switched to selling apartments without interior decoration, thus allowing lower sales prices to be maintained. As a result of these changes, the average transaction has remained unchanged – around 100,000 euros. “Of all the completed and unsold apartments in Riga, the most – 570 new apartments – are available in the center, and 440 apartments – in the project of one developer in Jugla. However, judging by the relationship between demand and supply, the largest supply is in Dreiliņi, where two potential buyers apply for each new apartment, while the most intense demand is in micro-districts favored by many – Purvciem with 37 people per new apartment and Imanta with 24 potential residents in each new apartment. For comparison, in the center of Riga, the demand is 10 people for one new apartment. In general, it can be observed that there is less demand in those districts of Riga, where intensive development of new projects is taking place, and accordingly the supply is higher. However, it should also be concluded that people still willingly choose those neighborhoods that are familiar to them, are located close to the center and are easily accessible by public transport,” says Agija Vērdiņa. It is expected that in the next two or three years, the real estate market will be significantly affected by the fall in the volume of plots purchased by housing developers, which has been experienced with the war in Ukraine and the increase in Euribor. Read the rest of the article here
