Although the prices of new apartments under construction in Riga have increased by 29% during the year, they are still lower than in Vilnius and Tallinn, concluded by Colliers Research & Advisory team, the Lithuanian branch of the real estate agency Ober Haus Real Estate Advisors, and the Estonian Land Board. As the cost of new apartments has increased, the buyers' behavior has also changed - people are buying more compact and functional apartments, the real estate developer Bonava Latvija observed.
According to Colliers research, in April 2022, a total of only 140 new apartments has been registered in the primary market in Riga and Pieriga, which is 35% less than the average number for the last 12 months. No large new projects entering the market has been observed, which previously had a negative impact on the primary market activity, especially given the small number of completed new apartments available in the market. In April, only about 1,000 fully completed new apartments were available on the primary market, which is 130 apartments less than in March this year.
In terms of sales prices of new apartments placed in service, 1 m2 of such housing type costs an average of 2,200 euros in April, which is 7% more than a year ago, when the price per square meter was 2,065 euros. A larger increase in the prices of finished apartments was in Pierīga - by 30% during the year. This can be explained both by the construction of projects in better locations, such as in Mārupe, and the greater impact on prices, given the increase in construction costs.
Prices for apartments under construction have risen even faster due to inflation and construction costs. "If in March the average price of apartments under construction reached 2250 euros per m2, in April the apartments under construction were purchased for an average of 2350 euros per m2. This is 29% more than a year ago, when purchases in this housing segment were made for an average of 1,825 euros per m2,” says Agija Vērdiņa, Associate Director in Research & Advisory department of Colliers.
Despite the rise in prices, apartments under construction in Riga are still cheaper than in Vilnius and Tallinn. According to the Lithuanian branch of the real estate agency Ober Haus Real Estate Advisors, in April the price of apartments under construction in Vilnius was on average 2,368 euros per square meter. It should be noted that in Lithuania, new apartments are mostly sold at a grey frame phase, so the price per m2 for a fully finished apartment is a few hundred euro higher. On the other hand, in the primary market of Tallinn, prices in the new housing segment averaged 3,510 euros per square meter in April, according to information compiled by the Estonian Land Board. As the Board does not separate prices for completed and under construction apartments, the actual price for the latter is likely to be even higher.
The rise in apartment prices has also introduced few adjustments in buyers’ behavior. According to Kaspars Ekša, Sales and Marketing Manager of Bonava Latvija, in the recent months, there has been a tendency for buyers to more often choose housing that is well-thought-out not only in terms of space, but also in terms of maintenance costs. "We see that with rising inflation and total cost of living, people now appreciate the functionality of their homes more, including the ability to adjust the cost of their utility bills. For example, in the new apartments, people can adjust the temperature in the rooms themselves, and pay only for the heat energy consumed, thus keeping track of their own expenses. As a result, it saves money, which is becoming more and more crucial during these times.”