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What will happen in Latvia’s real estate market? Will prices go up or down? Is Riga still a hotspot for foreign investors? How is Latvia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Latvia, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Latvia’s home prices will rise slowly as the economy improves and consumer confidence grows
The Latvian real estate market is seeing a moderate price increase as the economy stabilizes and consumer confidence returns.
One clear sign of this trend is the rising property transaction volumes. Even though demand has dipped, residential construction in Latvia is still on the rise. In 2022, the number of new dwellings authorized went up by 10.1%, and the area of these new dwellings increased by 22.9%. This growth suggests that developers are optimistic about future demand.
Foreign investment is another key player in this scenario. In 2023, foreign direct investment made up 3.4481% of Latvia's GDP, showing a healthy influx of foreign capital. This kind of investment often boosts the real estate market by driving up property demand, as international investors look for opportunities in a stable economy.
Looking at the bigger picture, positive GDP growth forecasts are also fueling expectations of a price rise in real estate. Although growth slowed to 1.4% in 2024 due to high inflation, the economy is expected to bounce back in the medium term. This recovery is likely to boost consumer confidence, which typically leads to more people buying homes.
Insider knowledge suggests that certain areas, especially in Riga, are becoming hotspots for both local and foreign buyers. The capital city is known for its vibrant culture and historical charm, making it a desirable location for property investment. As the economy stabilizes, these areas could see even more interest.
For those considering buying property in Latvia, now might be a good time to explore options. With the economy on the mend and foreign investments flowing in, the real estate market is poised for growth. Keep an eye on emerging neighborhoods and new developments, as they could offer promising opportunities.
Sources: Global Property Guide, Trading Economics, Bank of Latvia
2) Rental yields in Latvia will drop as more properties increase competition among landlords
Latvia is seeing a boom in new residential construction, especially in cities like Riga.
Take the Lucavsala project in Riga, for example, which is adding 590 new apartments to the market. This is just one of many developments popping up, meaning more rental units are available. With more options, landlords might face higher vacancy rates, which could lead to lower rental yields.
The government is also stepping in with its "Rental Housing for Latvian Professionals" program, planning to build up to 2266 rental units by 2030. While this aims to make housing more affordable, it also means more competition for landlords, potentially squeezing rental yields further.
In major Latvian cities, rental prices are showing a downward trend. In 2023, rents grew by only 2.87% nominally, and when you factor in inflation, the real change was negative. This indicates that rental prices aren't keeping up with inflation, making it tough for landlords to raise rents as much as they'd like.
With more properties entering the market, landlords are facing increased competition. This influx of new rental units is likely to drive down rental yields as landlords compete to attract tenants.
Sources: Global Property Guide, VNI, Statista, GlobeNewswire
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Latvia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
3) Urban rental yields in Latvia will dip slightly as more rental units become available
Latvia is buzzing with new residential construction projects popping up everywhere.
In 2023 alone, over 3,133 building permits were issued, covering a massive area of 829,000 m². This construction boom is set to continue, with projects like "Tērbatas dārzs" in Riga planning to add 800 new apartments by 2032.
As more permits roll out, the rental property inventory is expanding. Real estate players like Estera Development are snapping up land to build over 3,200 new apartments in and around Riga. This is happening even though apartment sales were modest in 2022-2023, hinting at a possible rental market oversupply.
In 2023, rental price growth slowed down, with rents rising by a nominal 2.87% but actually dropping by 6.06% when you factor in inflation. This shows that rental demand might not be keeping up with the growing supply, potentially leading to a dip in rental yields.
Sources: Statistikas portāls, LSM.lv, Ober-Haus, Statista
4) Rental yields in Latvia will rise as demand for rentals exceeds supply, especially in cities
Rental yields in Latvia are on the rise as the demand for rental properties outstrips supply, especially in cities.
In places like Riga, rental prices are climbing, showing just how strong the demand is. Back in 2024, the average gross rental yield in Latvia was 8.06%, but Riga was even higher at 8.47%. Some neighborhoods, like Agenskalns and Vecriga, are seeing even better returns, which means people really want to live there.
More and more people are moving to cities like Riga, chasing better job opportunities. This urban shift is pushing up the need for housing, and as a result, rental prices are going up. In major Latvian cities, there's a housing shortage, and about 40% of the population can't afford to buy or rent a new home, especially outside of Riga.
There's also been a drop in new housing construction, according to government stats, which is slowing down urban development. In places like Cēsis, this means high rents and not enough affordable housing. Younger folks are leaning towards renting instead of buying, which is adding to the demand for rentals, particularly in urban spots like Riga.
With fewer new homes being built, the rental market is feeling the squeeze. This is especially true in cities where people are flocking for work and lifestyle reasons. The lack of new housing stock is making it tough for people to find affordable places to live.
As the trend continues, rental yields are expected to keep climbing, making it an interesting time for potential property investors. The combination of high demand and limited supply is creating a ripe environment for those looking to invest in rental properties.
Sources: Global Property Guide, LSM.lv
5) Demand for energy-efficient homes in Latvia will grow as government incentives make them more appealing financially
The demand for energy-efficient homes in Latvia is on the rise, thanks to enticing government incentives.
In recent years, the Latvian government has been actively promoting energy efficiency with various subsidy programs. For example, the Ministry of Economy launched a program in 2021 with a budget of EUR 2.37 million, which expanded in 2022 to include solar panel installations with an additional EUR 3.27 million. By 2023, another EUR 400,000 was added, showing the government's commitment to this cause.
These financial incentives are making energy-efficient homes more attractive to buyers. About 36.1% of homes in Latvia have seen energy efficiency improvements in the last five years, a clear sign that people are catching on to the benefits. The "Live Warmer" campaign has also been instrumental in spreading the word about the importance of energy efficiency and sustainability.
Financially, energy-efficient homes are proving to be a smart choice. Take the renovation of a house in Sigulda, for instance, which resulted in an 83% reduction in heat energy consumption. This kind of saving means lower utility bills, making these homes a wise investment for many Latvians.
As more people recognize the long-term savings, the demand for these homes is expected to grow. The government's ongoing support through subsidies and awareness campaigns is likely to keep this trend moving upward. Energy-efficient homes are not just a trend but a financially savvy decision for those looking to buy property in Latvia.
Sources: LSM, IEA, Ministry of Economics
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6) Latvian buyers will increasingly prefer homes with outdoor spaces as health and wellness trends grow
In Latvia, there's a growing trend of people preferring homes with outdoor spaces.
Back in 2022, investments in the countryside outside Riga soared, jumping from 36.3 million euros in 2021 to 60.9 million euros in 2022. This trend has continued, with more people seeking homes with terraces, balconies, or gardens. The pandemic made everyone realize how important it is to have a bit of nature at home.
People are craving a peaceful, eco-friendly environment, and it's not just in Riga. Rural areas are becoming popular as folks look for "islands of peace" away from city life. Developments like the wellness community in Kemeri National Park are a hit, offering health-focused living with plenty of outdoor activities.
Media has been buzzing about the health perks of outdoor living, which has fueled this demand. Articles and social media posts about Latvia's natural landscapes and outdoor activities have made people want homes with gardens or balconies. This aligns with the broader trend towards sustainability and eco-friendliness in Latvia.
Social media is also playing a big role, with trends promoting outdoor activities and home gardening. These trends are shaping what people want in a home, pushing them towards properties that offer a slice of nature.
Latvian buyers are increasingly drawn to properties that support a lifestyle focused on health and wellness. This shift is evident in the growing interest in homes that offer outdoor spaces, reflecting a change in lifestyle preferences.
Sources: Latvia Sotheby's International Realty, Spa Business Magazine
7) Demand for modern urban homes with amenities will grow as more young professionals move to Latvia
Latvia is becoming a hotspot for young professionals seeking urban living.
In 2021, Latvia saw a 55.2% jump in new immigrants obtaining residence permits for over a year, signaling a strong interest in settling down, especially in cities. This influx is reshaping the housing market, with cities like Riga experiencing a noticeable uptick in rental demand. Young professionals are flocking to urban areas, drawn by the vibrant lifestyle and career opportunities.
Riga's rental market is heating up, with average rental prices climbing by about 5% from the previous year. This surge is fueled by the demand for housing in well-connected urban areas, particularly those near transportation hubs and educational institutions. The convenience and accessibility of these locations make them highly attractive to young professionals.
Renters in Riga are increasingly on the lookout for modern, well-furnished apartments that come with amenities like high-speed internet, secure parking, and energy-efficient appliances. These preferences underscore a clear demand for contemporary living spaces that align with the lifestyle needs of young professionals.
Insider knowledge suggests that the influx of young professionals is not just a passing trend. The demand for modern, urban living spaces is expected to continue growing, driven by the desire for convenience and a vibrant city life. This trend is particularly evident in areas with easy access to public transport and cultural hotspots.
As more young professionals move to Latvia, the real estate market is adapting to meet their needs. Developers are focusing on creating living spaces that offer both style and functionality, catering to the expectations of a modern, urban lifestyle. This shift is transforming the urban landscape, making cities like Riga more appealing to a younger demographic.
Sources: OECD iLibrary, CityStar
8) More foreign buyers will invest in Latvia’s luxury real estate due to its stable economy and appealing lifestyle
Foreign buyers are eyeing Latvia's luxury real estate market, attracted by its stable economy and appealing lifestyle.
In 2024, Abu Dhabi's Eagle Hills Properties made a splash with a €3 billion investment in Riga, planning to build 8,000 luxury homes and a 1,000-room hotel. This move highlights the growing interest from Middle Eastern investors, who see Latvia as a promising opportunity.
Latvia's real estate market is on the rise, with a projected growth of 3.87% from 2024 to 2029. This growth is fueled by low interest rates and a welcoming investment climate, making it a hotspot for foreign investors.
Latvia's charm lies in its high quality of life, drawing expats with its natural beauty and rich cultural heritage. The historic center of Riga, a UNESCO World Heritage Site, offers a exciting nightlife and diverse dining options, adding to its allure.
International schools are popping up, and expatriate communities are thriving, making Latvia even more attractive for those seeking luxury real estate. The country's modern amenities and cosmopolitan vibe are hard to resist.
With its stable economy and appealing lifestyle, Latvia is becoming a top choice for foreign buyers looking to invest in luxury real estate.
Sources: AGBI, Statista, World Schools
This video offers a glimpse into the top luxury homes in Riga, showcasing that Latvia is not just affordable but also offers high-end real estate for those seeking a touch of elegance
9) Tech-savvy buyers will be drawn to new Latvian homes with standard smart home technology
In Latvia, smart home technology is quickly becoming a must-have in new residential developments.
Latvian homebuyers are increasingly drawn to the convenience and security that smart home devices offer. Imagine controlling your lights, thermostat, and security system all from your phone. This tech-savvy trend is not just a fad; it's a lifestyle change that many are willing to invest in. In fact, about 75% of potential buyers are ready to pay extra for these features.
Latvia's tech scene is buzzing with startups and companies focused on smart home solutions, creating a dynamic ecosystem that supports this growing demand. These local innovators are making it easier for residents to integrate smart technology into their homes, offering everything from automated lighting to advanced security systems.
Government policies are also nudging this trend along. There are incentives for first-time homebuyers that make smart home technology more accessible. Plus, EU regulations are pushing for energy-efficient homes, which means smart meters and other gadgets are becoming more common.
With these developments, it's no surprise that the market for smart home devices in Latvia is expected to grow significantly. By 2029, the market volume is projected to hit $40.2 million, reflecting a steady rise in consumer interest and adoption.
As smart home technology becomes more integrated into daily life, it's clear that tech-savvy buyers will find these features increasingly appealing. Whether it's for energy savings or enhanced security, the benefits are hard to ignore.
Sources: Markets and Markets, Exploding Topics, Statista
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.