Construction, Energy, EU – Baltic States, Funds, Latvia, Real Estate
International Internet Magazine. Baltic States news & analytics
Friday, 26.04.2024, 10:53
Renovation of the housing stock in Latvia is one of the top priorities
Print versionThe situation in the construction industry and in the real estate market
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One of the most essential tendencies is the Latvian residential construction escaping stagnation after the 2008-2009 crisis. The recent years have been characterized by growth with tangible local market orientation. As per the data of the Central Statistic Office the area of the apartment buildings accepted into service has been growing lately. In 2012, the total area of the newly built apartment buildings made 96,000 sq.m. compared to 143,000 sq.m. in 2014.
New housing construction lags behind due to low demand. While consumer puchasing power in Latvia is low, many local dwellers cannot afford purchasing of the newly built apartments. Foreign demand for newly built apartments is almost lacking.
Despite the increase in construction volumes in Latvia, we still go behind the neighbouring Estonia and Lithuania, where twice more new apartments have been built during the last 3 years. Low mortgage lending as well as high administrative load are the main obstacles.
The secondary housing market in Latvia is in a rather soffowful condition. 93.8% of the Latvian housing stock needs renovation. That’s the conclusion of the Housing Agency. 68% of the Latvian population or 1.4 mln of people, living in traditional housing, reside in 50-year-old buildings constructed from 1946 to 1990. The proportion of such buildings makes 67% of all housing units (674 614) in the Latvian market. Only 3-4% of the population reside in new buildings constructed from 2006 to 2014. Construction specialists point out that operational cycle of standard apartment buildings will end in 2020-2040 and an almost national safety issue will emerge.
Erik Berman, the Chairman of the Board of RenEsco LLC, whose company provides services on renovation of apartment buildings noticed: “Having evaluated the state of the Latvian housing stock we can characterize it as one of the worst in Europe. So, these issues are to be solved urgently and on the state level. It is possible to preserve the existing Latvian housing stock by financing of renovation for further saving of heat power what improves life conditions for the next two generations”.
Does it mean that in the nearest future the Latvian construction industry will be flooded with work?
Renovation is a solution for all
There are many construction companies registered in Latvia, which also provide the services on renovation. A large variety of construction materials in wide price range is also available in the Latvian market. Companies with special licenses can fulfill engineering surveys, energy audit and suggest the ways of insulation.
Residents of apartment buildings as well want to live in nice repaired buildings that are safe for living. There is only one issue – the source of financing of residential buildings renovation. Residents themselves are unable to provide full financing of building renovation due to their low income. Another solution is to draw financing from the EU and other international investment funds. The level of state co-financing varies from state to state. In Lithuania in some regions the financial support of the building insulation programme reaches up to 85% from the total cost of works!
In 2015, Latvia received from EU funds only minimal financing of its programme for improvement of the housing stock energy performance if compared to neighbouring Estonia and Lithuania. In 2015, our neighbours will demonstrate high figures in housing stock renovation. What is the cause of such low financing of Latvia from the EU funds in 2015 – bureaucracy or short-term vision of our politicians, weak interest of residents or that of construction companies? It is important that self-administrations as well as all the participants of the renovation process should work throughly in order to develop the construction industry and manufacture of construction materials, create new jobs, decrease energy consumption of the state and make the Latvian secondary housing stock safe and high-quality!
Large-scale renovations always include hard complex works that demand active participation and cooperation from all parties! Programmes on energy performance improvement demand close cooperation of residents, self-administrations, heat suppliers, construction engineers and specialists, local and state politicians. Everyone will benefit from such renovations as the price of re-developed housing will increase, heating bills will decrease as well as the level of environmental contamination and necessity of natural gas import that currently is highly important for the Latvian budget.
Latvia needs a massive information campaign for residents of apartment buildings, seminars with participation of the members of local self-administrations, specialists on renovation and energy audit, and residents of buildings that have already been re-developed. Such seminars are already being organized and interest of the residents is increasing. Every apartment building should be subject to an energy audit. Its results are to be reported to all the residents and self-administrations’ representatives. Quite often residents are not aware of the state of their building. Residents should get specific figures on renovation of their buildings with account of co-financing from the state and international funds as well as possible future bills for maintenance of their property. As it is only up to the decision of apartment building’ residents that the building will be re-developed and become safe for further residence!
Everyone from us is responsible for the future of nice insulated apartment buildings, which residents will feel warm and safe, in our state!
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