Real estate: Is it still an attractive future investment?

Two-thirds or 66% of people surveyed in Latvia would likely purchase real estate as an investment in the near future, if they had such a possibility, shows a survey conducted by “Merks mājas” in cooperation with “Norstat”*. This tendency indicates that real estate remains to be considered as a stable and safe way to protect and grow your capital, even at a time when other markets may be less predictable. How does real estate manage to be appealing to people even in volatile economic conditions?

 

Real estate – is it a safe long-term investment?

Real estate has traditionally been deemed to be one of the safest ways to preserve and grow your capital. It is a tangible asset, the value of which usually increases over time and cannot be lost as easily as some other investments. Increasing urbanization both in Latvia and globally creates a constant demand for living space, thus making the purchase of real estate attractive in the long term.

An important factor is the ability of real estate to outpace inflation. The value of real estate often increases over time, often exceeding the inflation rate, therefore, people who purchase real estate are able not only to protect their funds, but also increase their value. Unlike other assets such as shares, real estate is less subject to market fluctuations.

 Even though financial markets may be unstable, people will always need a place to live, therefore real estate acts as a stable long-term investment.

Dynamics and forecasts of the Latvian real estate market

The Latvian real estate market has experienced stable development, and real estate prices continue to grow. In Riga, this tendency is particularly marked due to the high demand for new housing. Although moderate increase in prices is forecasted for 2024 and 2025, experts point out that price increase could slow down due to rising interest rates and the global economic situation.

Interest rates and inflation affect the real estate market, however, experienced buyers know that such conditions can also create new opportunities. During a market recession, when prices are lower, purchasing a property can create a 'win-win' situation, as prices usually increase again over time. This means that even in more difficult economic conditions real estate is able to ensure value growth in future.

New projects continue to develop in Riga and other regions of Latvia, offering wider choices for those considering purchasing a property. Projects with good infrastructure and convenient access to transport and services are particularly attractive, increasing the value of real estate and making it attractive to both local residents and foreign buyers.

The benefits of owning real estate

The benefits of buying real estate are as follows. First of all, it can provide a stable income if the property is rented out. Regular income from rental can help cover property maintenance costs and mortgage payments. Secondly, the value of the property increases over time, which means that the property can be sold at a profit in the future.

However, there are also some challenges to consider such as a lack of liquidity. Unlike some other assets, real estate cannot be sold quickly if the need for additional financial resources suddenly arises. Closing a deal can take several months, so it is important to carefully consider your financial capabilities and strategic goals before purchasing real estate as an investment.

 

What to choose – a property in a new or serial project? 

In Latvia, many people considering purchasing a property choose between new and already existing projects. New projects often offer more modern amenities and the opportunity to adapt the property to their needs, while already existing properties are usually available at lower prices and can be used more quickly.

An important consideration when choosing a property is its location. Developed infrastructure and nearby services such as public transport, schools and shopping centres significantly affect the future growth of the property value. A high-quality property in a good location can provide higher returns and a safer investment, reducing risks.

In recent years, energy-efficient and sustainable housing has also become increasingly popular, meeting modern demands for more ecological solutions. Such properties offer lower operating costs, providing greater added value in the long term.

Why is real estate a smart choice for the future?

Real estate remains one of the safest choices for people who want to protect and grow their capital in the long term. The market can be volatile, but with a careful assessment and long-term planning real estate can offer both stability and income. Residents of Latvia are increasingly choosing real estate as a safe way to build their financial stability and future prosperity. With smart planning, purchasing a property can be a valuable step that ensures both security and growth.

* “Merks mājas” conducted a survey in October 2024 in cooperation with the research agency “Norstat Latvija”, surveying 1,001 Latvian residents aged between 18 and 74.