More than alive

The most active segment of the Latvian real estate market for a year is the rental apartment market. In the first two months 2010 the number of transactions on it has doubled the same indicator of the last year. You have to pay.

Good offers are in short supply

A couple of years ago, such a segment, how apartment rent, was in the role of a kind of stepdaughter of the Riga real estate market. It seemed to be functioning and there was some demand. But the owners of living quarters were reluctant to rent them out to guests.. Most – only for the period of waiting for price increases. Then there was always a sale. The brokers themselves, by the way, also preferred transactions for the purchase and sale of apartments or land: they brought in much more tangible income. As well as the provision of intermediary services in the commercial segment. At the same time, brokers often repeated: there is no normal apartment rental market in Riga!

The situation has changed dramatically, after that, how real estate in Latvia entered a steep peak. Amid a sharp decline in purchase and sale transactions, the rental housing segment shone with new colors: the volume of supply increased significantly, the level of asking prices has significantly decreased and transactions have intensified. Over the past year, rental specialists have become one of the most sought-after employees in all large and medium-sized brokerage companies in the country.. "More than alive" – this assessment clearly reflects those aspirations and hopes, which are now assigned to the segment of renting apartments in the capital by representatives of the brokerage business.

“The demand for apartments is very high. There has even been a problem in recent months: few good suggestions – that is those, where the price corresponds to the quality ", – this is how M2 and the portal outlines the situation by Inga Upmale, Ober Haus specialist. And according to the observations of the head of the rental department of the housing stock of Arco Real Estate Liva Jaunozola, at the beginning 2010 year, the number of apartment rental transactions doubled the figures, recorded last year. And the competition among market players is getting higher.

The big ones love the center

The market for rental apartments in the capital of Latvia can be divided into two large groups: center of Riga plus new projects and, apart from them, typical apartments in microdistricts. Large brokerage companies try to concentrate on working with the first two groups. There is a material explanation for this. The thing is, that the traditional broker's fee – one month payment, which, in accordance with the practice that has taken root in recent years, is paid by the owner of the rented property. In the case of housing in the center or in a new building – it is at least a hundred or two lats. Serial options are so cheap, that the bonuses often due to brokers do not cover their expenses, directly related to the preparation of the deal.

“For a three-room apartment in normal condition, located in the Riga microdistrict, hosts can get 100-120 lats per month. The money is small and the owners are not ready to share it: they themselves do not have so much wealth. Yes, and all this is of little interest to us. How many impressions do you need to run, spend on the road and spend your time?! Then to hear from the owner, that he is ready to pay us some 30-50 LVL. It's not worth it! It is not profitable to engage in serial housing outside the center ", – explains Liva Jaunozola. Therefore, proposals for renting residential space in serial houses of microdistricts, behind which are the largest Latvian brokerage companies, – rarity. Advertisements in electronic databases and printed publications are usually placed either by the apartment owners themselves, or highly specialized and so-called gray brokers. New players are also trying to actively declare themselves in this segment.: you have to somehow win a name for yourself.

The scheme of work of small firms and private practice brokers most often looks like this: open public portals for real estate advertising and study them. Find owners and offer their services. If they agree, then they receive photos of apartments and post ads on the same portals, only with your coordinates. Who are these techniques for?? Difficult to answer. Most potential tenants usually browse real estate portals themselves. And if they find the owner's phone there, then they certainly turn to him. According to the brokers themselves, of the total volume of Riga apartments for rent, which appear in the domestic Internet space, real objects no more 40-50%. All the rest – "Hooks", with the help of which brokers are trying to catch a potential client.

Morning announcement, in the evening – customer

“Adequate apartments are quickly disappearing in the residential districts of Riga. What do I mean by this concept? If it is a neat and furnished 1-room apartment in Purvciems, then its price should be 60-70 lats per month plus utility bills. In the morning you place such an ad in the database, in the evening you sign a lease, – says the representative of the company Ober Haus. – For 2-room apartments the situation is almost the same, although for a couple of days an announcement with a price in the area 100 LVL, probably, will stand waiting for its guest ".

Latio's monthly rental targets are slightly more modest: 50-60 lats for 1-room apartments, 80-90 LVL – for 2-room and 110-120 LVL – for 3-room. of course, to this you need to add utility bills. true, Latio indicated, what is considering the rates for apartments in "average condition".

In recent months, in the segment of delivery of standard apartments in microdistricts, the tendency of convergence of rental rates for 2- and 3- room apartments. This is due to the fact, that utility bills for a 3-room apartment are much higher. The second new moment on the market – growing interest in such neighborhoods, like Teika and Mezciems. Explanation for this – the presence in them of rather large forest park zones. Traditional microdistricts of high demand from potential tenants – Purvciems and Plavnieki, a little worse – Imanta and Zolitude. In general, they are more willing to ask for standard-type apartments in the right-bank Riga. Kengarags and Bolderaja close the list of preferences.

In large regional cities of Latvia – in the same Liepaja – in the last six months there are examples of renting standard apartments without any rental rate – only for utility bills. In Riga, there is no need to talk about the mass character of this phenomenon. Although similar cases occur. There were two of them in Ober Haus practice.. However, its experts note: “The price in such offers usually corresponds to the quality. Don't count on, that it will be possible to get good housing. Often that, who enters for free, undertakes to make minor cosmetic repairs in the rented apartment ".

Taking into account the falling rates, apartment owners in microdistricts are less and less likely to make additional price concessions. Only, if their personal financial circumstances so require. When there is no need to rush to find a tenant, then stand their ground to the end.

cheaper, than never

Is it possible to talk about competition between rental apartments in microdistricts and in the city center?? The interlocutors of "m2" believe, that this is not the question. People are looking for housing within the limits of the amounts they have and the places they have chosen: ready to pay 200 lats per month and what can I get for it? If you wanted a good 3-room apartment in the center, but for the money only 2-room, then the client will quickly agree to the option to reduce the area, than going to serial housing in the microdistrict.

The current rental rates for apartments in the center of Riga are the lowest over the past six years and are within 3-5 lats per sq.. m. Even the most elite apartments are rarely offered more expensive 7-8 lats per sq.. m. Such facts speak about the state of affairs with prices.. None of our interlocutors have had any deals recently, the total rent would exceed 840 Euro per month. Another telling example: the level of request of the owner of a masterpiece building on Albert Street, 4, is now 7 lats per sq.. m monthly, whereas in 2006 year he was close to 21 latu for sq. m. Renting an apartment in the center and new buildings is definitely much more profitable, how to buy on credit. And still not a fact, that banks will provide you with a loan.

In particular demand in the center are 2- and 3-room apartments in renovated buildings. The availability of a renovated entrance and parking is being assessed, if the house is higher than three floors, they want to see the elevator. Unfortunately, few houses meet these criteria. Interesting, that the Latvians themselves usually ask to find "treshki" for themselves in the center for 180-250 lats plus utilities. Foreigners are considering offers similar in size with a price tag of 250-400 LVL. Requests for the repair and equipping of apartments with furniture and household appliances are higher.

Foreigners – these are primarily Scandinavians, Germans and British. Professionally – bank employees, as well as top and middle managers. AirBaltic pilots are also driving great demand. true, their budget is limited. Plus, they often stop not so much in the center, how many in new projects. One of the most popular houses among pilots – two completed Panorama Plaza towers. Apartments up to 100 quarter. m are offered in this complex for 260-300 lats per month.

Forced market participants

New buildings – a new and often forced segment of the rental market. While it is dominated by offers from resellers - that is, those, who rented apartments for the purpose of subsequent resale. It was not possible to do this at the desired price, but because, so as not to pay out of pocket for the maintenance of housing, it is rented. Every month, developers and banks are beginning to play an increasing role in this segment.. According to "m2", tenders for the right to provide services for the lease and maintenance of apartments taken over from debtors in February were organized by several Latvian banks.

“Banks have become more liberal towards developers who have found themselves in a difficult situation. There is no such thing anymore, what are they, like before, all take away. If the project is good, they even provide some small additional funding, to bring the house to mind. The project owners install kitchens and built-in wardrobes in the apartments and lease them. To ensure at least some movement of money in your accounts. In February we started offering one of these projects on the market, completely renovated house on Gertrudes street. Rate in it 5 euro (3,5 lata) for quarter. m, which is attractive by today's standards ", – gave the example of Liva Jaunozola.

The cost of proposals for renting housing in new projects varies depending on the location, where the house is located. If in the center, it will be about 4-6 euro per sq. m. The number of competitors plays an important role in microdistricts. If there are five to seven new projects nearby, apartments are available on the rental market, then the price will be within 3-4 lats per sq.. m. Fewer competitors – will ask for more.

Just talk about the emergence of a normal rental home market is not yet necessary.. Such a market, like in Germany, Where 40% population lives in rented apartments. Even those Latvian developers, who list apartments for rent, recognize: as soon as sales prices approach pre-crisis levels, they will start trading again. “Since the fall of last year, six apartments have already been commissioned with full finishing and furnishings.. Now we are preparing about two dozen more apartments. Of course, have to go for additional costs, but there is no other way. Sales are bad, yes and at prices, which are below the cost. But the apartments, especially with a small area, find tenants pretty quickly. Rental house?! No owners even consider this possibility. When everything is back to normal, sales will go again ", – told by "m2" and project manager Kengaraga zieds. In this project, square meter of housing is offered from 5 euro. Standard contract term – six months. It is short-term contracts that dominate the rental market today.. Three- or five-year agreements are not common. And tenants, and the owners of the rented housing are trying to protect themselves. The first are worried about, will they have work tomorrow and will they be able to pay for housing. The second are afraid to sell too cheap: suddenly the market goes up. The overwhelming majority of current rental rates do not cover and 50-60% mortgage payments of owners for these apartments.

With a positive mood

“Rental rates for apartments have stabilized, although in the process of concluding a deal, small concessions are possible in 5%. High demand prompts thought, that prices will not fall ", – this forecast was given by Inga Upmale. The representative of Arco Real Estate was even more optimistic: “I think, to summer 2010 year, even a slight increase in the rental price for 10%. The heating season will end and people will breathe more freely. Already in popular neighborhoods, apartments are leaving the market for 50-60 lats per month. Good properties cost more. hope, that the very quality of apartments will improve. There will be a clearer differentiation. And now we have all apartments with good and bad repair, with a good and bad location, in renovated and non-renovated houses… boiled in one pot. Customers must start evaluating quality ".

Author: Roman Golubev

Internet portal “”

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