Latio: Demand for high-quality apartments for rent is growing, offer – limited
07 April 2010
Riga
Demand for renting high-quality, modernly furnished apartments is currently growing, but the offer is limited and continues to shrink, shows Latio’s market report for March.
“During the last half-year, demand has increased for good, well-renovated, modernly furnished apartments both in the historical buildings in the city center and in the new projects. The demand is growing because the financial means to purchase an apartment are limited. Even those who could afford a new home are currently remaining cautious and often decide in favor of renting. The offer corresponding to the tenants’ requirements has a tendency of shrinking, as the existing apartments are quickly rented out, while an insufficient amount of new ones is made available to the market,” explains Ģirts Krūmiņš, head of Latio’s rent department.
In March, compared to February, the apartment rental prices have not significantly changed. The average monthly rental price in March for apartments in the new buildings of Riga’s neighborhoods, without utilities, was 4.5–6.5 euros per square meter, while the price of apartments in the city center was 5.5–8.5 euros per square meter.
The average rental price of one- and two-bedroom apartments in new buildings outside the center of Riga is currently 150–200 lats without utilities;for apartments in good buildings in the city center it can reach 350–450 lats.
“Apartment rental prices have reached a very low level, and most likely won’t continue to fall. The decline of offer meeting the tenants’ requirements is more likely to actually increase the rental prices in certain segments of housing. High-quality apartments in good, new buildings can be rented out quickly and at a higher-than-average price,” points out Krūmiņš.
The average rental price in March for apartments in average condition in the neighborhoods of Riga was 2.5 euros per square meter, without utilities. Last month, the average rental price increased only for three-bedroom apartments, approaching the rental price of four-bedroom apartments. However, the demand in the apartment segment is greatest for furnished one- and two-bedroom apartments in good condition.
“Many landlords should think about a small renovation or more modern furniture in the apartments offered for rent. This does not require a major investment, and the benefit will be the possibility to receive a larger rental payment for an apartment meeting the tenants’ requirements,” suggests Krūmiņš.
The offered rental price of private houses is from 500 to 1500 euros per month, depending on the size of the house, its finishing and location. The rental price of private houses in good condition can reach 3000 euros per month, for instance, in Mežaparks and Jūrmala.
In Jūrmala, the amounts needed to rent a good-quality private house for a year start at 500 lats per month, while renting only for the summer season costs 1000 lats per month. Interest in renting private houses in Jūrmala for the summer season is rather large, and the owners are not lowering their demanded rental prices. Houses near the seaside are in the greatest demand. Interest in long-term rent of houses is low.
A general trend in the whole housing rent market: instead of the one-year term common in the past, lately some tenants wish to conclude a rent agreement for only half a year. If the rented apartment or house satisfies them, the agreement is extended. The reason for such caution on the part of tenants is both the shaky economy and lack of confidence about their income, as well as certain doubts about the quality of new buildings.
