Bold Buyers and the Prospects of the Collapsed Real Estate Market in Jūrmala – 2019

The director and co-owner of VIP Real, Lara Batova, talks about how the Jūrmala real estate market is developing ahead of the summer season.

Buying and selling: half of Jūrmala for €200,000

Given the relatively low level of non-resident activity, the interest of local buyers in purchasing real estate in Jūrmala has become particularly noticeable. However, the behaviour of potential local buyers has one unusual characteristic. Whereas some time ago potential buyers believed they were entitled to a reasonable discount, this season they immediately offer to purchase a property for a price 50% lower than the asking price.

Judging by the enquiries received, buyers display such ‘boldness’ not only when it comes to the price, but also regarding the quality and location of the property. In their view, if an apartment costs €150,000–200,000, it should have at least two bedrooms, while the building in which it is located should be on the first line by the sea. If a real estate agent says that no such offers are currently available on the market, clients respond: “For that kind of money, surely we can buy half of Jūrmala.”

Such bold assertions do not reflect today’s market, even though real estate developers are prepared to consider buyers’ offers.

There are projects with a good reputation whose clients are generally satisfied. For this reason, high prices are set, with no tendency to decrease. Yet, despite all the realities of today’s market, a new, completely exclusive project has emerged in Jūrmala, offering apartments at prices starting from €10,000 per square metre. However, this is a unique example with no equivalent.

Renting: all or nothing

Jūrmala property owners, inspired by last year’s hot summer, are now often choosing to rent out their properties only for the full three summer months. It should be noted that this applies not only to expensive options, but also to more affordable ones.

This situation has once again led to an atypical trend: clients are increasingly booking hotel rooms for extended periods. This trend was more characteristic of the time when the “New Wave” festival was held in Jūrmala, but after the festival left, such client behaviour became quite rare.

Therefore, let us not forget about other factors! Nowadays, potential tenants prefer to spend the summer in other countries, given that summers in Latvia can be cold. For property landlords, the current situation can mean only one thing: many properties will not be rented out by summer.

During the summer season, the greatest demand is for properties renting for €3,000–5,000 per month. In the long-term rental segment, where houses and apartments are rented for at least one year, the situation is somewhat different: clients are prepared to pay up to €10,000 per month. However, in this case, clients have very high requirements concerning the quality of the housing. There is demand for good, new, modern properties, but very few such offers are available on the market.

Houses: playing by the wrong marketing rules

Demand for houses has not changed; it has always existed and continues to exist today. As usual, both local clients and non-residents are looking for properties with an appropriate market value. The greatest demand is for houses costing up to €350,000, as well as houses priced from €1 million upwards. Potential buyers are interested not only in the price, but also in the quality. New or renovated houses in a modern style are the most popular.

The interaction between buyers and sellers increasingly resembles a kind of game. Buyers often wait, spend a long time looking for suitable options and then take just as long to make a decision. Sellers, meanwhile, initially publish advertisements offering properties at an inflated price, but later reduce the price several times. By the way, when selling expensive properties, such a marketing plan is not effective. If an owner sets an excessively high price for such a property, it simply disappears from potential buyers’ field of vision.

To sum up the above, the following can be noted: at present, the situation has become somewhat more difficult for tenants and more attractive for buyers.