● THE LATVIAN PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • SPRING 2021
THE LATVIAN PROPERTY MARKET
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INVESTORS WERE MORE ACTIVE THAN IN 2019 IN LATVIA
Despite the global pandemic, Latvia’s economic decline was not as pronounced as many were expecting. In 2020, the preliminary drop in GDP was smaller than the EU average, hovering at roughly 3.5%, whereas the Bank of Latvia had forecasted a 6.5% decrease in March and a 7.5% decrease in June 2020. However, Latvia’s GDP drop is the largest among the Baltic States. Latvia’s unemployment rate reached 8.3% by the end of 2020. However, the unemployment rate is not critically high, increasing by 1.7% compared to 2019. At the end of 2020, inflation in Latvia was close to zero but as the economy recovers, inflation is likely to return to previous levels. The Latvian economy may recover in line with or even outperform other EU countries. A return to 2019 levels of economic growth may be achieved
30
by 2023, although that will depend on future covid-19 scenarios. The real estate investment market was significantly more active in 2020 than it was in 2019, and saw roughly the same in transaction volume as in 2018. The total transaction volume reached around EUR 250 million in 2020. Two office deals, both involving major banks as occupiers, were closed last year. Further, EfTEN Capital was among the most active investors in 2020, acquiring four properties – three logistics centres and an office building. The total area acquired in the industrial market exceeded 100,000 sqm, thereby breaking previous records and confirming investor interest in this segment. The retail segment also saw some significant changes in landlords, but continues
to struggle, similarly to the rest of Europe. The year 2021 will be the time to absorb currently vacant spaces and to prepare for new projects. Lords LB had already started demolition work at the Presses Nams site in September 2020 and plans to deliver the first stage in 2022. SBA has started its Verde project on Skanstes and intends to deliver the first stage in 2022. All in all, the coming years are expected to be exciting for both the Latvian office and transaction market as a whole.
Contact: Inita Nitiša i.nitisa@newsec.lv Kristina Živatkauskaitė k.zivatkauskaite@newsec.lt
