What is causing the surge in the market?
At the moment, the real estate market is characterized by a positive outlook and confidence in the future, partly driven by a shift in media rhetoric that has reduced emphasis on geopolitical tension. People are tired of living in fear and are beginning to take more active steps toward making important life purchases.
At the same time, several other economic factors are stimulating market recovery and the growth of transactions. The most significant is the decrease in the Euribor rate, which has substantially improved the affordability of purchasing real estate. When Euribor was high, mortgage interest costs became very expensive, preventing many from buying the property they wanted at the desired price and forcing them to opt for renting instead. Now the situation has become much more favorable. More than 60% of real estate buyers purchase their properties using a loan. The high cost of loans in previous years slowed the market because renting was slightly more advantageous at the time. This also highlights an interesting comparison with rental prices: when Euribor was high, rent payments were only 10–15% more expensive than interest-only mortgage payments (excluding principal), but now the dynamic has changed. Interest payments have decreased, while rental prices have risen sharply. People see that taking a property with a mortgage has now become much more cost-effective than renting it.
Secondly, commercial banks have also become more open to lending, offering more favorable interest rates, especially for energy-efficient, sustainable “A-class” properties. During the first half of this year, banks carried a heavy administrative burden due to the refinancing of loans, but this has now stabilized, and lending specialists are seeing a large number of new applications for real estate purchases.
At the same time, recent macroeconomic developments are also having a positive impact on the market—GDP has begun to grow again, average incomes are rising rapidly, and inflation has decreased. All of this strengthens people’s purchasing power and sense of security.
In which segments are transactions the most active?
In the apartment market of Riga and its surrounding areas, the average transaction value is approximately €70,000–€80,000. The most active sector is the series-built apartments (Soviet-era buildings), which make up around 60–65% of the entire apartment market, as they are the most affordable. Transactions in new projects account for about 15–20% of the apartment market, and the remaining fifth is divided between pre-war building apartments and new project apartments on the secondary market. The average price of a new project in Riga is around €2,600 per square meter, an increase of approximately €500 compared to five years ago. Due to rising construction costs, prices are expected to continue increasing.
An interesting trend is observed in the segment of unrenovated pre-war apartments (mostly in central Riga), where the number of transactions in the second quarter of this year increased by 42% compared to the same period last year, which may be explained by increased supply.
Compared to neighboring Baltic countries, for example, Tallinn and Vilnius, average prices in new projects are higher (around €4,000/m² in Tallinn and €3,300–3,500/m² in Vilnius). In the near future, Riga is unlikely to reach these levels due to lower purchasing power and salary levels. However, developers remain optimistic, buying land plots for the coming years and expecting price growth, seeing business potential. For example, the Estonian developer “Invego” has entered the Latvian market because, although real estate selling prices here are lower, construction costs are also lower, preserving profit potential.
Interest in exclusive apartments is growing
Activity is also observed in the market for exclusive apartments. Buyers are mostly wealthy local entrepreneurs, including those whose business bases are elsewhere. They appreciate the relatively good prices compared to Western European countries—for example, a similar-class property in Düsseldorf would cost twice as much. Interest is also growing from nearby countries such as Estonia, Lithuania, Sweden, and Denmark, while Russian buyers are currently practically absent. Meanwhile, the premium house market, where prices start from €1–2 million, is notably quiet. Previously, large, exclusive, and expensive villas were mostly purchased by Russian buyers.
Interestingly, buyers have recently become much more knowledgeable and carefully evaluate the properties they are considering. They pay attention to legal details, the status of shared versus individual ownership, the condition of the building, energy efficiency, future development plans, and they avoid properties that require renovation, taking into account rising costs and the shortage of skilled craftsmen. This trend is also related to experiences from the early period of the COVID-19 pandemic, when rushed decisions led people to purchase properties with numerous issues.
Plans to conquer the European market
This year, AVER forecasts reaching €60 million in the value of sold properties, which would be a new company record, surpassing last year’s €48 million. This achievement demonstrates the company’s ability to effectively leverage the market situation and help property owners successfully sell their assets.
AVER is also a pioneer in the Latvian real estate market, becoming the first agency founded in Latvia to plan international expansion. The goal is to enter the European market by exporting AVER’s internal systems, sales processes, and organizational structures. The first steps of expansion are planned in Poland, Germany, Lithuania, and Estonia, seeking local partners for localization and system deployment.
AVER is unique in its specialization—it is the only company in Latvia that works exclusively in the interests of sellers. This approach ensures that sellers receive full-service support, knowing that AVER represents their interests, as they are the ones paying the commission. While this could raise concerns among buyers, AVER’s experience shows that buyers appreciate transparency, comprehensive property information, and the high-quality service they receive. For a buyer who has found their ideal property, it does not matter whether AVER or another agency is selling it—the main goal is to acquire the desired property.
AVER achieves, on average, a 6.2% higher selling price than the market average. This is accomplished through a careful and professional approach, beginning with a comprehensive property evaluation. Each property undergoes a detailed assessment, which includes analysis of similar transactions in the past six months, research of current market offerings (by contacting other sellers to gauge interest and offers), and the opinion of a certified appraiser. This combination of three aspects helps determine the property’s true market value.
Equally important is a professional sales strategy. Most price losses occur during the negotiation process. AVER trains and prepares its sellers to manage negotiations as effectively as possible. Attractive listings are created, and properties are prepared for photoshoots to evoke positive emotions and impressions (tidy, without personal belongings).
AVER’s mission is to maintain the highest quality service to break the negative image of the industry, which has persisted since the manipulation of the 1990s. Overall, around a thousand five-star client reviews serve as proof that the company is moving in the right direction.
The Latvian real estate market shows strong signs of recovery, and AVER, with its innovative approach and client-focused strategy, is ready to continue leading this growth.
