Expert: Estonian Rental Investors Are Buying More in Riga Today Than Local Residents

A noticeably lower entry price, market growth potential, and long-term experience are the main reasons why Estonian real estate investors are today even more active in the Riga apartment market than local investors, comments Invego CEO Kristjan-Thor Vähi. 

 According to Invego CEO Kristjan-Thor Vähi, who is currently developing eight different residential areas in Riga and its surroundings, alongside ordinary homebuyers, it is primarily Estonian, but also Lithuanian investors who are driving growth in the Latvian capital's real estate market today. "Many investors share our view that the major market growth phase that began last year is still gaining momentum. There's even somewhat of an Estonian embassy feeling about it, since groups of Estonians, both small and large, are constantly visiting our Riga office and not just for the good coffee," comments Vähi and adds that the Invego team now has considerable experience advising investors in Latvia. 

 According to Kristjan-Thor Vähi, Estonians' significant advantage is experience, as many rental investors back home have been building their portfolios over the last decade. "Latvians, for historical reasons, are only now overcoming distrust of buying apartments in buildings not yet built. However, an Estonian investor knows from experience that the best deals are made just before the cornerstone is laid, as developers also usually need a critical volume of pre-sales completed," comments Vähi and adds that investors have been most interested in Invego's developments that have reached the second phase of construction, Vitolu Parks, and the residential areas Miera and Nordale, which reached construction contracts this spring. 

 According to the Estonian entrepreneur, over thirty apartments have been purchased from Invego recently for investment purposes, and more than half of these transactions have been concluded with buyers from Estonia. "New apartments in Riga are still up to a third cheaper compared to Tallinn, and thanks to this, the numbers also work out better in rental investors' plans. Additionally, investors are betting on the market's overall faster development and the resulting rise in real estate prices," explains Kristjan-Thor Vähi, adding that in many ways, Riga's real estate market sentiment today resembles that of Tallinn from about 7-8 years ago. 

 According to Invego's CEO, very cheap and very expensive projects previously dominated the Riga market, but now the quality middle-class new development segment, which meets the expectations of modern homebuyers, has grown rapidly. "People increasingly value energy efficiency, well-thought-out layouts, and a comprehensively planned new residential district. This means that demand is concentrated in quality new developments, whose value grows over time, and it is precisely this that makes these projects attractive to investors as well," explains Vähi.

 Invego Group is a next-generation real estate developer operating in three countries, specializing in the development of large-scale residential areas and business districts with comprehensive concepts that create future urban space. With a history of activity spanning more than 10 years, Invego Group includes over 60 companies in Estonia, Latvia, and Portugal, and currently has 30 different development projects underway. Invego Group has developed over 150,000 m² of residential property, comprising a total of 1,500 homes, and 50,000 m² of commercial real estate. Additionally, there are over 500,000 m² of development volume currently in progress in both residential and commercial real estate sectors.  

In recent years, Invego has built new homes for more than a thousand families in Tallinn and its surroundings. The company's largest completed developments to date are Vana-Peetri, Tiskreoja, and Tabasalu Kodu, and the residential areas currently under development are Luccaranna, Uus-Järveküla, Keila Pargikodude, and Verve.  

In the Latvian capital, Invego is developing the residential areas Nordale, Tornakalna Terases, and Vitolu Parks, and together with development partner Reterra, the residential areas Parka Kvartals, Skanstes Rezidences, and Miera Rezidences. In the immediate vicinity of Riga, Invego is developing together with EfTEN Special Opportunities Fund a large-scale residential area Marupes Sirds and a residential area consisting solely of row houses, Vide Adaži. In southern Portugal, a 154-villa Silves Hills development spanning 65 hectares is currently under development, which is suitable for both year-round living and seasonal use.