Baltic States – CIS, China, Good for Business, Investments, Latvia, Real Estate

The "new blood" in Latvia's property market has followed property buyers from Russia and other former Soviet republics who buy property in Latvia to receive Latvia's temporary residence permits. Now Chinese nationals are also becoming increasingly active, as real estate dealers informed the newspaper, writes LETA.

Li Bijian, political counselor to the Chinese ambassador to Latvia, confirmed to the newspaper that China's interest about Latvia had been growing following several campaigns popularizing Latvia in China and the Shanghai "Expo". Many Chinese nationals wish to receive Latvia's residence permit in exchange for buying real estate here, which will give them an opportunity to freely travel in the European Union. However, the comparatively low property prices in Latvia is also an important factor, as is the possibility to swiftly settle all the formalities and the stable economic environment in Latvia.

Law office BDO Zelmenis&Liberte informs the newspaper that it has received 46 applications for Latvia's residence permits the past few weeks. Moreover, several Chinese nationals have already bought properties in Riga, said BDO Zelmenis&Liberte partner Janis Zelmenis.

Zelmenis admits that the applications were received thanks to the law office's partners in Beijing and Shanghai. "The wealthy Chinese know Paris, Rome, London and Berlin, but they do not know anything about Riga, which is just 1,000 kilometers from Berlin," explains Zelmenis.

Free travel is not a problem for the heads of large Chinese companies, however, Latvia's residence permits, available against property bought here, might be interesting for medium-sized businesses of China. "It is the simplest, and also the first, step to buy a home here, especially now that property market has grown much smaller," explains Zelmenis. With the help of the residence permits, the Chinese have an opportunity to send their children to study in Europe.

"We see Chinese nationals buy first properties in Latvia, but it would be too soon to talk about a steady trend. The number of properties the Chinese buy in Latvia is nowhere near to that acquired by buyers from Russia or other former Soviet republics," said Latio CEO Edgars Sins. The Chinese have become interested in Latvia over the past year, he added.

"The reasons and the motivation why the Chinese buy properties in Latvia may vary – residence permits for one, as well as the fact that the Chinese, just like our Eastern neighbors, have much disposable funds to invest in various parts of the world. Most of those who buy properties here intend to develop a business in Latvia," says Sins, adding that the Chinese are mostly interested in properties located near transit infrastructure.

Baltic Sotheby's International Realty owner Vestards Rozenbergs says, "I have heard about properties being sold to the Chinese at comparatively low prices – mostly apartments. But if the goal is to attract a significant number of Chinese investors, work must continue on a national level – advertisements must be placed in international media, and Latvia must be represented at fairs and forums."

"Although the Chinese have become more active in Latvia, the Chinese investors' interest in Latvian apartments is just a drop in the bucket, given how much they can invest. For instance, in St. Petersburg the Chinese are building a quarter meant for 350,000 people. The Chinese have enormous currency reserves, and they are making investments all over the world. Latvia is in fact too small of a market for the Chinese, but if there is an opportunity to invest in major strategic projects, such as the airport, ports and suchlike, the Chinese investors will certainly be able to participate in such projects, said Nira fondi President Vadims Markovs.

As reported, since July 1 this year foreigners who buy a property in Riga for at least LVL 100,000, or elsewhere in Latvia for at least LVL 50,000, may apply for Latvia's temporary residence permits.

It is estimated that more than LVL 100 million has already been invested in Latvia this way.