With the economy getting better people are striving to improve their living conditions, which were generally poor under the Soviet regime. The increased development of the real estate market can be viewed as an indicator of economic revival.
Cheap on demand
The dramatic price hike for apartments in Riga continued until the end of 1999. In 2000 prices rose only 2 percent to 3 percent, evidence of a balanced market, said Vita Gudkova of the real estate firm Latio. The demand for cheap apartments in Riga's suburbs has increased, as this is the first level of housing many people can afford. With that increase in demand, prices for such apartments should also rise in the future.
Modern apartments, with prices ranging from $400-$500 per square meter, are easily available, but many people just can't afford them, Gudkova stressed. The locations most in demand and most expensive are the city center, the suburbs of Teika, Purvciems and Agenskalns, which have developed infrastructure and are close to the center.
In Riga people are more interested in building new homes rather than refurbishing old ones. The 300-square-meter homes built in the first years of independence in the Baltezers or Langstini regions now have lost their attraction and people are trying to move closer to the center, Latio experts say. The prospective regions for private housing are the old prestigious district of Mezaparks and the Riga suburb of Marupe, named the most prospective region for private housing - it's close to the city center and without multi-story, Soviet apartment buildings.
The city of Jurmala, a 15-minute drive from Riga, is a complicated region with high demand for houses near the sea.
Regarding office premises in Riga, the supply exceeds the demand, Gudkova noted. As the large companies move out of the city center into their own administrative buildings, office prices in the city center have decreased and will continue to drop.
There are several new building projects in Riga. The Latvian subsidiary company of Norway's Linstow Warner will invest a total of $40 million to develop a shopping mall near a former industrial plant.
Linstow Warner Director General Peter Salomonsen told reporters Jan. 26 that the company has already begun the first stage of the project, which will turn the former Alfa plant on the outskirts of Riga into a modern shopping mall named Alfa Centers. Alfa Centrs will consist of three sets of buildings. The total area of the building will be 122,977 square meters. The total sales area will be 60,000 square meters. The first stage of Alfa Centers, which will include a Rimi grocery store and several other shops, will be opened on May 24. The Rimi store will take up 8,500 square meters and will be the largest Rimi outlet in the Baltics.
Another Scandinavian trading giant, Stockmann, and Finland's Rautakirja signed a letter of intent with the Latvian construction company Re&Re to transfer the land lease of a site in downtown Riga to a company controlled by the two foreign companies.
The companies said in a statement that they plan to construct a new building with a total floor area of about 38,000 square meters on the plot of land, which is located near the central railway station and is owned by the city of Riga.
Officials from Stockmann and Rautakirja say they are ready to invest 24 million lats ($38.77 million) into the project to develop it into a modern shopping and entertainment center. The planned investment into the Stockmann store is 14 million lats and Rautakirja plans to invest 10 million lats into a movie theater complex.
The building will house a complete Stockmann department store with a sales area of approximately 11,000 square meters and a 15-theater cinema complex with a total of 3,200 seats to be operated by Baltic Cinema, a subsidiary of the Rautakirja company Finnkino Oy. The building will also include restaurants and other ancillary services.
The structure will also include a car park and be linked to the adjacent parking facility by an underground tunnel. As a result, customers will have about 450 parking spaces at their disposal.
If the terms of the letter of intent are fulfilled as expected, the building will be completed in late autumn 2002.
Stockmann said the complex now being planned for Riga is unique in Europe. The company's department store in Tallinn has a total area of 14,000 square meters and is Stockmann's second largest behind the one in Helsinki.