Kaamos: Competition has intensified in the Latvian real estate market

In the conditions of rising prices of building materials and energy resources, as well as delays in material deliveries, the largest Latvian real estate market players are able to re-profile their range of cooperation partners and find new solutions, but some companies have found themselves in a situation where they have to make painful decisions – to close workshops or stop work on construction sites, according to Guntars Cauna, manager of the Estonian real estate developer “Kaamos” in Latvia. “In crisis market conditions, everyone suffers, and in order to agree with cooperation partners, everyone has to give up something. In this situation, responsible real estate developers balance business modules by reducing profit indicators in order to bring all started projects to completion,” explains Guntars Cauna, head of Estonian real estate developer “Kaamos” in Latvia. The rise in prices and delays in material deliveries created big problems in the industry already in 2021, but after the war started by Russia in Ukraine, the situation has only worsened, especially due to the rise in the prices of energy resources, and the lack of workers in construction is still a big problem. Therefore, the Association of Latvian Builders (LBA) warns of the approaching emergency situation in the industry, which could delay the implementation of construction projects or postpone them indefinitely. At the same time, a paradoxical situation has also developed in support programs for the insulation of multi-apartment buildings. “On the one hand, due to the prices of energy resources and the European green course, it is necessary to increase the energy efficiency of buildings more than ever before, but on the other hand, this process from the submission of the offer to the conclusion of the contract and the start of construction works is too long for the builder to be able to plan it and complete the building materials due to the increase in prices and availability,” LBA manager Normund Grinberg expresses concern. As the energy efficiency problem of old multi-apartment buildings worsens, there is an increasing demand on the market for quality-built new project housing that meets the criteria of an almost zero-energy building. This is also facilitated by flexible lending conditions – some banks are ready to offer loans to buyers of energy-efficient homes on more favorable loan terms. However, even in such favorable conditions, Latvia lags behind neighboring countries Estonia and Lithuania. “Riga still has the slowest rate of development of new housing in the Baltics, and therefore it is expected that in the next few years the competition in the real estate market will only intensify, from which the buyer will be the winner. Although this does not mean that the prices of new apartments will fall, the market will become more demanding and the developer’s reputation, as well as the offered housing energy efficiency solutions, will be increasingly important,” says Guntars Cauna. “Kaamos” plans to invest more than 90 million euros in Latvia in the next five years. According to G. Cauna, thanks to the company’s stable financial security and 20 years of experience in the real estate market, the existing short-term complications with disruptions in building material supply chains and price increases have not affected the investment plans of “Kaamos” in Latvia.

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