Amendment bringing in high-end property buyers

RIGA - Foreigners who have bought real estate in Latvia over the past nine months in order to apply for Latvia’s residence permit were mostly interested in properties located in Riga and Jurmala, and much less in other regions of Latvia, according to the Office of Citizenship and Migration Affairs (OCMA) statistics, reports news agency LETA. Since July 1 last year, when the Immigration Law was amended, OCMA has received applications for Latvian residence permits from 190 foreigners who had bought real estate in Latvia, mostly in Riga and Jurmala and in the vicinity of these two cities, OCMA public relations officer Andrejs Rjabcevs said.

107 foreigners applied for residency permits on the basis of real estate bought in Riga, 61 had bought real estate in Jurmala, seven in the Babite region. The other applicants had bought properties in Saulkrasti, the Garkalne region, Cesis, Aizkraukle, Langstini, Liepaja, Ludza, Mersrags, Rezekne, the Amanta region, the Ozolnieki and Stopini regions, according to OCMA data.

The total number of applications for Latvian residency permits based on ‘investments’ in the national economy of Latvia has reached 270 since last July. Besides buying real estate, foreign nationals can also invest money in banks’ subordinate capital or companies’ share capital to become eligible for Latvian residence permits.

The total amount of these transactions has reached 39.9 million lats (57 million euros), of which the majority, 25.9 million lats, is made up of real estate deals. Foreigners’ investment in banks’ subordinated capital totals 13.5 million lats, whereas investment in companies’ share capital stands at only 500,000 lats, said Rjabcevs.

Currently the Immigration Law envisages the issue of temporary residence permits to foreign investors outside the European Union, who purchase at least 50,000 lats worth of real estate (100,000 lats for Riga and other Latvian cities) or deposit 25,000 lats in a company’s share capital or 200,000 lats in a credit institution’s subordinated capital.

Of course, none of this so-called investment can be considered to contribute to Latvia’s long term economic growth. It doesn’t bring in productive capacity, such as factories which actually produce something and create jobs, but continues the real estate speculation that helped to bring down Latvia’s economy in the first place. What started out as a questionable program remains just that – a poor plan.