According to Daniil Aal, Chief Operating Officer at the digital financing platform Estateguru, this trend is driven by falling interest rates, a dynamic new-build market, and more accessible price levels.
“Activity in Latvia’s real estate market started picking up last year, when a growing number of developers began seeking early-stage financing for their projects,” Aal explains. “Now we’re also seeing buy-to-let investors entering the market, looking to expand their portfolios with Latvian properties.”
However, Estonian investors who already own property portfolios face a funding gap, as local banks typically don’t issue loans backed by Latvian real estate. Meanwhile, Latvian banks are usually unwilling to finance purchases until the buyer’s company has demonstrated at least a year of local cash flow. “This kind of market barrier can be overcome with the support of Estateguru’s investor community,” says Aal. “Our platform enables convenient financing of cross-border investments – Latvian properties can be accepted as collateral when borrowing through Estateguru.”
According to Aal, investors have three main options in such cases:
- Partner with a local investor familiar with the market, who can issue a direct loan and help meet bank financing requirements.
- Set up a company in Latvia and start small, gradually building the required cash flow to become eligible for bank financing.
- Use a digital financing platform like Estateguru to secure funding based on the property itself.
Aal adds that, in addition to Estonians, Lithuanian investors have also been actively buying property in Riga. “Real estate prices in Latvia remain significantly lower than in Estonia or Lithuania, while purchasing power is steadily increasing. Around one million people live in Riga and its surrounding areas – roughly double the population of Tallinn – yet the number of new apartments entering the market is about the same,” Aal explains. “This imbalance may lead to a shortfall in new-build housing, especially as more Latvians look to upgrade from Soviet-era apartments to modern homes.”
Estateguru currently hosts a variety of developers from both Estonia and Latvia who are seeking loan capital for projects with solid business plans and real estate collateral. In 2023 alone, Estateguru investors funded over €80 million in new real estate developments.
Aal highlights that investing has become even more accessible for retail investors this year, thanks to a recent legal change in Estonia allowing investment account funds to be used on investment platforms.
Estateguru is Europe’s leading real estate investment platform, offering property-backed loans to small and medium-sized businesses, while providing attractive returns for thousands of investors who fund these loans.
By connecting developers with investors, Estateguru helps bring to life real estate projects that make our living environments more modern, energy-efficient, and welcoming to live and work in.
To date, the platform has facilitated over 7,000 projects with a total funded volume exceeding €850 million. More than 160,000 investors from over 100 countries have joined the platform, with an average historical return of 10.17%.
Estateguru is licensed under the European Crowdfunding Regulation.
Disclaimer: Investments carry risks. Before making a decision, read Estateguru T&C’s, and if necessary, consult with a specialist.
