Latvia Property Investment Guide

The Republic of Latvia is situated in north-eastern Europe, on the eastern shore of the Baltic Sea. It shares its boarders with Estonia to the north, Lithuania to the south, the Baltic Sea with the Gulf of Riga in the west, Russia in the east, and Belarus in the southeast. Latvia is largely a fertile lowland with numerous lakes and hills to the east. Latvia’s territory of 64,000 sq. km is larger than Denmark, the Netherlands, Belgium and Switzerland. With over 500 km of coastline stretching along the Baltic Sea and Gulf of Riga, Latvia is famous for its beautiful beaches and is home to the Baltic Riviera. It also enjoys over 12,000 rivers and 3,000 lakes providing numerous opportunities for boating, walking or simply enjoying the outdoors.

Latvia’s capital Riga lies on the banks of the Daugava River, close to where the river flows into the Gulf of Riga. Riga is the largest city in the Baltic States and due to its history and geographic location, an important centre of industry, finance and transportation for the Baltic region. Population rates in Latvia are low at just over 2.3 million, with nearly half the country living in Riga or its environs.

The Latvian climate is moderate with distinct seasons. Summer daytime temperatures average 22°c (71°F) dropping to 4°c (40°F) in the winter. Latvian is the official language of the Republic of Latvia but Russian is often spoken as well. Both English and German are spoken to some degree, with English becoming increasingly common.

Property Market

1. For the last two decades real estate market prices in Latvia have been constantly growing with the most significant increases over the past few years being seen in the capital Riga, where some areas saw price rises of between 30-40% during 2004 & 2005.
2. The legislation of Latvia provides foreign investors an opportunity to purchase or sell real estate with virtually no limitations and Latvian banks offer competitive mortgage rates for foreigners wanting to finance their real estate purchases in Latvia. The success of the Latvian government’s commitment to improving levels of foreign direct investment and boosting the local economy is key to the ongoing and long term success of the investment real estate market in Latvia.
3. The combination of high GDP growth and low interest rates (under 4%) ensures high local demand for property, where the average residential investment yield is 6-8%. In some of the most desirable areas of Riga real estate investors have been able to make consistent double-digit returns during the past three years, with gains in excess of 30-40%. This provides evidence that this emerging property market can give impressive capital growth.

Low Interest Rates and favourable lending conditions

1. Interest rates have decreased significantly and are at the lowest ever rate, starting at 3.8% and the mortgage sector is just beginning to emerge and grow.
2. Currently Latvia is the only Baltic country where a foreigner may obtain a mortgage for their real estate investment. Latvian banks are ready to give loans of up to 90% of the property value and offer competitive rates for foreign investment.
3. Outstanding mortgage loan figures in Latvia are at least 40% lower than in other EU countries. This means that more and more local and international lenders are becoming aware of the huge potential for profit in Latvia and are beginning to enter the marketplace. The Latvian government welcomes foreign investors and they enjoy all of the same rights and opportunities as local investors and are offered investment incentives.

Rental Market Opportunities

1. Demand for furnished apartments is high and the greatest demand for high-end rentals comes from members of the foreign community. The expatriate workers typically seek renovated 90-100sq.meter apartments in Riga's city center and in the Old Town.
2. Expected monthly rental incomes are between US$500-1200 and rental income can be completely exempt from VAT.

Taxes

1. In Latvia there is no capital gains tax if you own the property for at least twelve months. Should you wish to sell within a year, capital gains tax is charged at 25%.
2. Individual investors can declare rent as ordinary income and are taxed accordingly at the standard rate of 25%. Loan interest and improvements are both tax deductible.

As the capital city of Latvia, with high economic growth and low interest rates, Riga has become a very desirable destination for property investments. It is a beautiful old city with the largest seaport and airport in the Baltics and has earned recognition as a UNESCO Cultural Heritage site. Demand for property in Riga continues to increase, helped by Latvia’s entry into the European Union in May 2004. Located on the north coast of Latvia in the Gulf of Riga, it is a beautiful place to visit and the boom in the property market confirms why visitors and investors alike continue to come.

Learn More about Riga View Property in Riga

1. Membership to the EU in May 2004 has fuelled an increase in European countries undertaking business in Latvia. It has recorded impressive economic growth in the past few years with real GDP growth of 6.4% per annum in 2002, 7.5% in 2003 and 8.5% in 2004. In the first half of 2006 GDP increased by 12.0%, according to the Central Statistical Bureau.
2. Growth has been broad based, with increasing domestic demand and strong export performance. (Source: Worldbank). Latvia's ports of Riga, Ventspils and Liepaja anchor Latvia's vital shipping and transit industry, and continue to expand their trading ties with the EU, Russia and other countries. With one of the fastest growing economies in Europe today, the capital of Riga is re-emerging again as a major financial, trade and business centre in the Baltic Sea region.
3. Latvia has an extremely robust and impressive economy that is growing fast in a sustainable way, which is creating good long-term prospects for intrinsic wealth growth. This is already beginning to fuel the domestic demand for property. Since its inception in 1994, Latvia’s fixed exchange rate regime has tied the domestic currency, the Lat, to special drawing rights. At the end of 2004, the Lat was tied to the Euro to support the country’s entry into the Euro zone (expected in 2008).

1. Since Latvia gained its independence from the Soviet Union, tourism has become a major industry. Thousands of foreigners stream into the country each and every year. Latvia is a dynamic country with a young population and cities offering great cultural opportunities, cozy pubs and restaurants.
2. Riga's historic Old Town, spectacular architecture and bustling night life are just part of what Latvia offers. Riga, which has celebrated its 800th birthday, is famous for its Art Nouveau architecture, broad boulevards, and cosmopolitan flair. Outside of Riga, there are unspoiled beaches, vast forests and picturesque villages, often with medieval centres.

1. Low cost airlines such as Ryanair run daily flights to Riga from London, Liverpool and Dublin. AirBaltic also has direct daily flights from Heathrow, Manchester, Dublin, Amsterdam, Brussels, Cologne, Milan, Moscow and others.
2. In North America, AirBaltic partners with SAS to reach New York (Newark), Chicago, Seattle and Washington DC airports via Copenhagen.

1. Short Stay - Those permited for visa free entry :
   • Citizens of many countries, including Australia, Canada, United States, Mexico, New Zealand, do not need a visa to enter Latvia for up to 90 days.
   • As of May 1, 2004, Latvia is a member of the European Union, so citizens of EU countries do not need a visa for 90 days in 6 month period. If you want to stay longer you will need to get a residency permit. Life or travel insurance must be presented at border crossing points.
   • If a visa is required an application must be submitted to the Latvian embassy or consulate prior to entry into Latvia
2. Long Stay - A residence permit is necessary if you wish to reside in Latvia for a period of time exceeding 90 days within half a year counting from the first day of entrance. Latvia will grant EC long-term resident status, if person has resided legally and continuously within its territory for five years immediately prior to the submission of the relevant application.