In the UK, landlords are facing an onslaught of attacks by the government, as the country introduces a string of buy-to-let crackdowns. Investing overseas could be the answer for some, as a new opportunity in Riga highlights Latvia as a pro-landlord market with promising returns.
Known as the Jewel of the Baltics, Riga is certainly the star in Latvia’s property crown, with the country (and city) enjoying steadily recovering house prices since the global financial crisis. The capital has also become a popular destination among tourists and expats, partly thanks to its extremely affordable living conditions: Riga is one of the 70 cheapest countries in the world to live, according to Expatistan, while it is the cheapest European capital for overnight stays.
Total visitor numbers in the first three quarters of 2015 rose 2.6 per cent year-on-year, with the number of foreign visitors up 3.4 per cent. These increases occurred despite a decline in the number of Russian visitors, due to the devaluation of the rouble in the last year – traditionally, Russian, German, Lithuanian, Estonian and Finnish visitors account for the majority of foreign visitors to Latvia.
In 2015, the number of visitors to Riga, in particular, rose from Malta (312 per cent), Iceland (85 per cent), Luxembourg (62 per cent), India (56 per cent), Belgium (54 per cent), Japan (14 per cent) and the UK (17 per cent).
That rise in overseas visitors is directly fuelling the city’s property market, with the number of nights spent in rented accommodation or hotels in 2015 totalling 4.1 million (up from 3.5 million in 2012) the number of foreign visitors staying in accommodation rising to 2.8 million, from 2.4 million in 2012.
In May and August 2015, hotels and other rented accommodation saw their best occupancy figures in a decade, thanks to major events, such as the Latvian Presidency of the Council of the EU. With an extended NATO mission in the Baltics, Riga’s recognition as a former Capital of Culture, cooperation between Central and Eastern European Countries and the China 16+1 summit all on the cards for 2016, the year is predicted to be another positive one for Latvian real estate.
“We expect further market development both in terms of visits and hotel performance indicators,” says Colliers International, which forecasts international hotel chains to continue investing in expanding their presence in the market.
Commercial property and residential property, therefore, both have the potential for reliable returns. Riga Apartments, for example, combines both in a landlord-friendly package: two full renovated buildings, comprising 181 apartments, plus multiple stores, garages and parking spaces. In total, they promise 6.5 per cent NET returns for investors and a 10.7 per cent ROI.
Tenants pay for maintenance and other fees, with both buildings located in high demand areas. Matisa 38 is next to Ziedonu Park, it is on two transport routes to the central train and bus stations and is close by to various retail outlets. Barona 109 is located on the main pedestrian and bike street in the city, it is near to a heated tram stop and is also near to a sports complex, the city’s main health centre and two schools.
Tenants in each property are expats working and studying in the city or local working professionals. The current owner will even ensure that both buildings are fully leased when the purchase is completed. For pro landlords, you’d have to look hard to find a more pro-landlord opportunity, in the UK or anywhere else.
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