Signs of this include the noticeably faster launch of new development projects, increasing interest in buy-to-let apartments, and strong demand among local investors for Invego’s recent bond issue, says Daniil Aal, Head of Business Operations at the digital real estate financing platform Estateguru.
According to Aal, the high level of interest from Latvian investors in Invego bonds – revealed this week – is a key indicator of overall market sentiment. “If local investors are subscribing to Latvian-focused bonds issued by an Estonian developer at this scale, that’s a strong sign of confidence in the property market’s potential. If Latvians themselves believe the market is working, chances are it really is,” he comments.
Estonian developers are currently very active in Riga, and their reputation on the local market is solid, Aal adds. “For Estonian developers, operating in Latvia is also a way to diversify risk – they’re not solely dependent on the performance of one market. Property prices in Riga are up to a third lower than in Tallinn. Meanwhile, interest rates remain low, average wages have increased by 23% over the past two years, and borrowing capacity is strong. Naturally, this is encouraging developers to act and moving the market forward,” he explains. Estateguru’s own portfolio analysis confirms that activity in the Latvian market has been steadily increasing over the past year. “In 2023, the number of projects we funded in Latvia rose by 43% compared to the previous year, and the number of new loan applications continues to grow,” says Aal.
In addition to local homebuyers, the Latvian market is also attracting rental property investors from Estonia and Lithuania. These investors are supported by Estateguru loan funders who are ready to finance their property acquisitions. “While Latvian banks often require a rental track record in Latvia before financing such purchases, Estateguru accepts the property being acquired as sufficient collateral,” Aal notes.
Last year, Estateguru investors funded new real estate projects totalling more than €80 million.
