A house by the sea
By Aleksey Syarky
Three main resort cities in the Baltic states – Jurmala, Palanga and Pï¿½rnu – have one feature in common: quite a developed real estate market with high price levels.
Regardless of the specific character of development and different situations in the real estate market of all three Baltic state resort cities, they remain Latvia, Lithuania and Estonia’s holiday centers. Each year Jurmala, Palanga and Pï¿½rnu attract thousands of tourists; most of them find their own reason for returning there next summer to be by the sea. But some even think of buying real property there.
Photo: Fortuna Travel
Jurmala: quiet residential area for those with thick wallets
The fashion of living in this Latvian resort today can be felt practically in each corner of Jurmala, but the abundance of new buildings or qualitative reconstructions prove that people’s interest to be here is still unchanged. Walking along the streets, one can’t help wandering about all the architectural changes: new or renovated houses have emerged everywhere, in some places even whole blocks of modern houses.
The so called “new residents of Jurmala” have already assessed the value of their real estate. To buy such property in a resort environment positively affects one’s health and helps to secure savings as the dynamics of the price growth provides owners with a good surplus alongside enjoying all advantages of relaxation in a resort. Regardless of any estimates, the price of property trend in Jurmala has not been “frozen” and will not stop. The number of available land lots in the dune zone is rather limited and it is almost impossible to buy anything good for less than 100 US dollars per square meter. Even places quite distant from the coastal territory can not be bought for less than 120 – 130 US dollars per square meter, not mentioning valuable places with a view to the sea.
Unfortunately, not all interested to live in Jurmala can afford buying real property there although the range of financial possibilities of receiving mortgage credits in Latvian banks can meet most of the social groups’ demand. The potential buyer of a resort property has only to decide what is it he wants to buy. That often seems to be a serious problem. Finding a place of accommodation, starting from individual wishes and financial possibilities, very often provide evidences of disparities. Thus, a typical apartment here costs less than a new house, but this perspective for a “summer” residence is rarely attractive. For a rather decent amount it is possible to buy a piece of “architectural heritage”, i.e. an old almost demolished wooden house. But it means further investments into reconstruction and renovation, as well as endless struggles with Jurmala City Council’s Construction Committee. It is rather hard to explain to Council clerks that the construction design of 1900s will be rather weird and do not actually fit into a modern city. Due to similar reasons, the building of “a dream house” on an empty land lot can be an endless project. Sometimes it is easier to assign all work of the project, as well as construction supervision to experts, but nobody will guarantee that the end result will fit with the intended idea.
A more optimal solution could be the purchasing of a recently built house or a turn-key completed project. In the first case, total price of the building and land is known already beforehand, and one doesn’t have to wait. When visiting an already completed house a buyer can estimate whether this real estate corresponds to his aspirations and requirements as to comfort, location and other important emotional aspects. The second option differs from the previous one: from the commissioning to moving in the house, there will be a certain period, during which the details of the building and the territory improvement can be corrected with the future buyer.
However, the choice of type and price of the estate depends completely on the potential owner. And it does not matter whether it is an old house or apartment, empty land lot or a newly built house – only one issue is at stake, i.e. a decision about it should be taken quite quick. At present rate of sales and demand for real property in Jurmala, the possibility of a complete “drying out” of the offers in the next few years should not be ruled out. Along with artificially high prices, a possible situation will be a complete lost of interesting and appropriate land lots, and so far hesitant buyers will be forced forever to be a visitor in his dream place called Jurmala.
Palanga: the season factor is king
The situation in the Lithuanian real estate market of the “resort capital city” is totally different. Palanga’s main idea is in the development of tourism and creating necessary infrastructure to attract foreign visitors. The price level, having formed a few years ago, continues to retain its position with some insignificant fluctuations in spite of expert forecasts.
The market of commercial areas, mainly those for restaurants, cafes and hotels, actively operates only in two main streets of the city, where prices are extremely high. All other city areas have practically no dynamics, what explains how the season factor strongly influences the sales.
The residential segment in Palanga is divided in qualitative segments according to geographical factor. On the South of the city, there is the “exclusive” section with rather high prices for land lots (650 – 1350 US dollars per square meter). Nevertheless, the price of real estate decreases proportionally to the distance from the sea. Apartments in a “classic” suburb of concrete-panel apartment buildings on the Eastern part of the resort city can be bought already for 430 – 800 US dollars per square meters.
The central part of the city (near the pier) is an area of commercial buildings, with practically no apartments for sale. The Northern part of Palanga is a huge park area with its specific regime that doesn’t allow for any construction. “Potential residents” in the resort city have one last possibility, i. e. to buy nearby land lots for 40 – 80 US dollars per square meter.
Pï¿½rnu: in spite of existing stereotypes
Unlike its southern neighbors, Pï¿½rnu goes beyond the already known “resort” stereotype. As a result of successful implementation of the city’s long-term development plan (drawn up already in the 90s), a relatively small territory with the population of only 50 thousand people has turned into one of the leading centers of multi-planned activity of Estonia. Sandy beaches lie hand in hand with office buildings, recreation infrastructure is situated across the river from the industrial territory and even factory complexes don’t disturb the general view of the city-resort.
The construction of the Pï¿½rnu Concert hall worth about 90 million kroons was accomplished in 2002. It can be considered the main event of the year in Pï¿½rnu. The 1st construction stage of the city library has been accomplished, as well as extensions of several hotels and sanatoriums (Strand, Tervis and Estonia); the construction of the aqua centre on Papli Street has been started. Such objects increase the attractiveness of the city and give a push to the whole real estate market.
About 74% of the houses in Pï¿½rnu were built in 1961, and only just a few were built after 1991. There are about 4,200 private houses in the city. In the large part of residential areas, there are small family houses that constitute about 520 hectares or 85% of the accommodation territory and ï¿½ of the whole territory of the city.
There are about 5,000 apartment houses in Pï¿½rnu with approximately 19,000 separate flats. In the apartment market, the year 2002 was the period of the highest record of prices during the past five years. The growth was about 20%.
It is an interesting fact that there is a high demand in land lots with communication facilities, although there is a very limited offer. The reason for this is the fact that it is actually impossible to build a private house near the beach in Pï¿½rnu itself. In one case, the industrial sector has come near the sea, in another – municipal authorities have their own plans concerning the territory, but in some places – swampy land doesn’t allow to build even a small wooden house. The only option for lovers of the sea view are the land lots that are situated by the city from the South-East direction (road to Riga), although the location of land lots don’t give their owners the rights to call themselves Pï¿½rnu residents.
Preferences of real estate buyers form some kind of exclusiveness of Ranna district. Although its expansion is burdened by disputes about detail planning, prices of land reach 110 US dollars per square meter. For a short period in 2001 on Seedri Street, seven land lots with an area of 1,000 square meters were sold for 100 US dollars per square meters. In 2002, Pï¿½rnu City Council offered 8 allotments along Papli Street with area of 1,000 square meters each for the announced value of 62,000 dollars. Today all these land lots have been sold.
Prises for land lots in other parts of the city remain in the range of 6 – 15 dollars per square meter, depending on the location of the land lot and existence of infrastructure facilities. As soon as the areas appropriate and attractive for building apartment houses in Pï¿½rnu are limited, some construction projects for new buildings are executed in the adjacent city districts. In Sauga, Tammiste village, already for the third year, there are construction works under way of the residential area “Uuemetsa”. Selling of apartments started in 2000. Prices of the land lots fluctuate in the range of 7.5 – 22 dollars per square meter, depending on the location (more expensive – by the river side) and the land lot size. Some land lots have been already registered on the “second” real estate market.
Consultations in the preparation of texts were rendered by experts of the following companies: Vigvam (Latvia), Arco Vara (Estonia) and OberHaus (Lithuania).