A markedly lower entry price, the market’s growth potential and long-standing experience are the main reasons why Estonian real estate investors are currently even more active in Riga’s apartment market than locals, says Invego CEO Kristjan-Thor Vähi.
According to Kristjan-Thor Vähi — head of Invego, which is currently developing eight different residential neighbourhoods in and around Riga — it is above all Estonian, but also Lithuanian, investors who, alongside ordinary homebuyers, are betting on the growth of the Latvian capital’s property market. “Many investors share our view that the broader growth phase that began last year is only just gaining momentum. At times it almost feels like an Estonian embassy here, because groups of Estonians, large and small, are constantly visiting our Riga office — and not only for the good coffee,” Vähi comments, adding that the Invego team now has solid experience advising investors in Latvia.
According to Vähi, experience is an important advantage for Estonians, as back home many rental investors have been building their portfolios for the past decade or so. “For historical reasons, Latvians are only now overcoming their distrust of buying apartments in buildings that have not yet been completed. The Estonian investor, however, knows from experience that the best-priced deals are made right before the cornerstone is laid, because developers usually need to secure a critical volume of pre-sales,” Vähi comments, adding that among Invego’s developments investors have so far been most interested in Vitolu Parks, which has already entered its second construction phase, and the Miera and Nordale neighbourhoods, which reached construction contracts this spring.
According to the Estonian entrepreneur, more than thirty apartments have recently been bought from Invego for investment purposes, and over half of those deals were concluded with buyers from Estonia. “In Riga, new apartments are still up to a third cheaper than in Tallinn, and as a result the numbers add up better in rental investors’ plans. On top of that, they are betting on the market’s faster overall development and the rise in property prices that comes with it,” explains Kristjan-Thor Vähi, adding that in many ways the current sentiment of Riga’s property market resembles that of Tallinn some 7–8 years ago.
According to the Invego CEO, the Riga market used to be dominated by very cheap and very expensive projects, but the segment of quality mid-market new developments — the kind that meets the expectations of today’s homebuyers — has now grown quickly. “People increasingly value energy efficiency, well-considered layouts and a fully planned new residential quarter. This means demand is concentrating in quality new developments whose value grows over time — and that is exactly what makes these projects attractive to investors as well,” explains Vähi.
The Invego Group is a new-generation real estate developer operating in three countries, specialising in building large-scale residential neighbourhoods and business quarters with a holistic concept that shapes the urban space of the future. With more than 10 years of operating history, the Invego Group comprises over 60 companies in Estonia, Latvia and Portugal, with 30 different development projects currently underway. The group has developed over 150,000 m² of residential space — 1,500 homes in total — and 50,000 m² of commercial property. A further 500,000 m² of development volume is in the pipeline across both residential and commercial real estate.
In recent years, Invego has built new homes for more than a thousand families in and around Tallinn. Its largest developments to date include the completed Vana-Peetri, Tiskreoja and Tabasalu Kodu, as well as the Luccaranna, Uus-Järveküla, Keila Pargikodud and Verve neighbourhoods currently in progress.
In the Latvian capital, Invego is developing the Nordale, Tornakalna Terases and Vitolu Parks neighbourhoods, and — together with its development partner Reterra — the Parka Kvartals, Skanstes Rezidences and Miera Rezidences neighbourhoods. In the immediate vicinity of Riga, Invego, together with the EfTEN Special Opportunities Fund, is developing the large Marupes Sirds neighbourhood and the Vide Adaži residential area, which consists solely of terraced houses. In southern Portugal, Silves Hills — spanning 65 hectares with 154 villas suitable for both year-round living and seasonal use — is currently under development.