Curtailing of the programme on granting residence permit in exchange for investment led to sharp changes in the resort real estate market. Using a retail terminology, we can say that Jurmala has turned from an expensive boutique into a low – price store, which, moreover, moved from the dunes of Lielupe and Bulduri to workers’ and peasants’ Kauguri.
As the main reason of the market shocks we can consider the changes in the procedure for granting residence permits in exchange for buying real property—at the end of 2014 the necessary minimal value of purchase was increased to 250 thousand euro.
Besides, the ranks of buyers and sellers have depleted because of cooling in Latvian – Russian relationship, where a politician passed through a businessman has nothing to do.
At the last, the buyers’ appetites were visibly limited by the economic recession, which swept through the CIS countries.
But still, in the first quarter of 2016 the market in Jurmala showed a 5% growth and made up on the average 60 deals a month. It seems that congratulations are due to the realtors, brokers and developers on a successful beginning of the year. But upon closer examination one can note that this is about a quantitative jerk rather than a qualitative one. If to translate all these deals into monetary terms, it appears that the Jurmala real estate market in the first quarter of 2016 if compared to the last quarter a year ago fell by 42%.
Which is not surprising. If last year they managed to sell few facilities in Bulduri worth of about million euro, then this year predominantly apartments in Soviet – time houses in suburbs of Jurmala – Kauguri were sold. As a result, the secondary market yielded 80% of the total turnover, while new projects were not popular because of decrease in demand, first of all, on the part of the Russians, who still have not got accommodated to the rouble worth of 70-75 euro.
Moreover, the number of new projects dropped – there is not point to build apartments in Latvia, which survived the crisis in 2008-2010, for the Russians, who are struggling the crisis now.
As for the Latvian buyers, we can state the rise in demand. That’s good. Of course, the Latvian middle class has not grown yet to the dune line in prestigious districts of Jurmala, but has quite accustomed in the market of 5- and 9-storey serial houses in Kauguri. You need to begin at the beginning, don’t you?