Radiks Landaus, Senior Consultant, Land and Development Projects
In an ideal world, real estate developers and investors would buy the right-shaped land plots with built-in utilities, without any encumbrances, easily accessible and in a great location, but in reality such “pearls” are rare. Entrepreneurs will increasingly have to resort to regenerative areas (or so-called brownfields) in Riga.
Like elsewhere, the scenario with large real estate funds and developers paying attention to the regeneration of land plots is gradually emerging. For example, recently a Scandinavian investor bought the Sporta 2 quarter in the central part of Riga. It has a great potential due to its location, but it has several buildings, including Soviet-era buildings.
If there are no other options, investors will have to consider such land plots for development. This is very good, as the old buildings in a bad shape are gradually disappearing from the city streets, and there will appear nice and neat offices or apartments instead. The city will only benefit from something new and visually more attractive. In addition, the renovation and reconstruction of such territories goes hand in hand with the mentioned necessity to build rental houses. Older buildings can be transformed and offered for rent, rebuilt into lofts.
There are such territories in Andrejsala, they are also huge at Ganibu dambis area. Many market participants appreciate Dreilini as a promising neighborhood, Plavnieki area is developing, but nothing really happens in between, but I believe that, at some point, this and other former Soviet construction areas will also experience positive changes.
The market of land plots for development is currently very hot. The first development cycle since 2008 is now coming to an end. Projects that the developers bought the land plots for, have actually been completed, which means that the next wave of land plot acquisitions is to come soon. Another important factor affecting the market is related to Covid-19 and the overall economic situation, rising inflation, as many people struggle to keep the value of their savings. Keeping the money in a bank account is not the best way to do that, while property development can increase funds. Investing in a piece of land may mean freezing that money for a while, but unlike cash, the value of the land will not decrease.
The market has been and continues to be affected by the expansion of certain companies, such as Lidl, whose activities once pushed up the land price. The potential development of rental housing must also be mentioned. An unprecedented trend that has not been experienced before - the developers have started to cooperate with each other, buying large plots of land together, where they plan to build apartments for rent, and there will certainly be strategic investors ready to buy such projects once they are developed. Such trend has not been experienced before.