RIGA - Inconsiderate proposal on cadastral values will leave a negative impact on investments in new housing, offices, production plants and other properties in Latvia, said Martins Vanags, chairman of the board at the Alliance of Real Estate Developers.
He said that the planned cadastral values of real estate properties starting from 2022 will grow three or more times, which means that property tax for offices, productions plants, logistics centers, hotels will grow three times on average.
"New housing prices will grow by about 5 percent. It is a serious blow for investments in real estate," said Vanags.
He said that this step contradicts economic logic, when during the crisis situation the economic development should be stimulated. This will result in downsizing, increase of unemployment, rise of rental prices, halt of investment projects.
As property tax is based on the cadastral value, the sector categorically objects to any changes in calculation of cadastral value before impact of the Covid-19 pandemic on real estate market is assessed and impact of the planned changes on the business sector. Vanags said that changes should not be introduced before 2023.
Vanags said that 72 percent of residents of Riga still live in Soviet-era buildings that are not energy efficient, but new housing is being built three times less than in Vilnius, for example. "Therefore we have to fight for every investor who still wants to invest in Riga and Latvia and improve the situation with new offices, plants and housing," he said.