RIGA - Latvia's commercial real estate market is still capable of attracting foreign investors if it can adapt and change to current market conditions, according to a recent report by an international real estate company.
The Baltic Property Market Report for the first quarter of 2009, prepared by Re&Solution and law firm Klavins & Slaidins LAWIN, found the Baltic real estate markets still presented attractive options for investors.
"Foreign investors are scrupulously evaluating real estate supply in various markets, choosing the most attractive offers," the report said.
Andzejs Neguliners, head of Re&Solution, said success would come to those commercial property owners best able to adapt to existing requirements of retailers and changing habits and income of buyers, as well as the ability to separate the successful commercial sites from the less successful.
"But this is a time when it is possible to take decisions and initiate implementation of new projects and conclusion of new transactions in a more pragmatic and weighed manner. The real estate market like other markets is developing cyclically, and this market depending on the location, is subject to certain laws which must be taken into account," said Neguliners.
According to the study now was the best time for international retail chains to enter the commercial real estate market.
With ongoing economic uncertainty retail space owners have become more flexible and ready to offer better tenancy terms and conditions.
It is also possible to secure well located properties at the lowest rent rates, the report found.
After a period of explosive growth, Latvia's real estate market suffered a major crash amid the global economic slowdown.
There will be no immediate relief from the market crash, with many distressed properties expected to continue to appear on the market.
Future trends will depend on the economic situation and the government's ability to change the public and business state of mind, the report found.
Meanwhile the office space market also presented opportunities.
"As construction costs have decreased significantly, currently it is a most attractive time to develop new projects and to get better return on investments in the future (in comparison to the projects developed during last years)," the report said.
In the current markets, tenants are also weighing their options.
"Tenants are evaluating existing rented space with a purpose to optimize their costs and, therefore, are seeking more attractive conditions 's prices, contractual terms and conditions," the reports aid.
The report also found that better regulation, reduced bureaucratic burden in the fields of project development and construction, exercise of mortgages, debt collection and real estate management would help improve the market's credibility.
Re&Solution is the leading regional provider of integral real estate, financial, investment and property management services in Lithuania, Latvia, Estonia, and Northern Europe.
The firm currently manages commercial properties totaling more than 11 billion euros, making it the largest player in the region.