In the 1st quarter of this year, compared to the 1st quarter of the previous year, the total level of construction costs has increased by 16.6%, according to the Central Statistical Bureau. In the conditions of rising prices of construction materials and energy resources, as well as delays in the supply of materials, the largest players in the Latvian real estate market are able to re-profile their partners and find new solutions.
“Everyone is suffering in the market conditions, and in order to reach an agreement with our partners, everyone has to give up something. Responsible real estate developers in this situation balance the business modules, reducing the profit indicators in order to complete all the started projects, »explains the Estonian real estate developer. Kaamos head in Latvia Guntars Cauna.
Rising prices and delays in the supply of materials created major problems for the industry as early as 2021, but the situation in Ukraine has only worsened since the war in Russia began.
especially due to rising energy prices, and labor shortages in construction remain a major problem. Therefore, the Latvian Builders’ Association (LBA) warns of the approaching emergency situation in the sector, which could delay the implementation of construction projects or postpone it indefinitely.
At the same time, a paradoxical situation has developed in the insulation support programs for apartment buildings. “On the one hand, due to energy prices and the European green exchange rate, it is necessary to increase the energy efficiency of buildings more than ever before, but on the other hand, this process is too long for the builder to plan and complete the construction material. due to rising prices and availability, ”Normunds Grinbergs, the head of the LBA, expresses concern.
As the problem of energy efficiency in old apartment buildings worsens, there is a growing demand in the market for high-quality new project housing that meets the criteria for a near-zero energy building. It is also facilitated by flexible lending conditions – some banks are ready to offer loans to buyers of energy-efficient housing on more favorable loan terms. However, even in such favorable conditions, Latvia lags behind its neighbors Estonia and Lithuania.
“Riga still has the slowest pace of new housing development in the Baltics, and therefore the competition in the real estate market is expected to intensify in the coming years, from which the buyer will benefit. Although this does not mean that the prices of new apartments will fall, the market will become more demanding and the reputation of the developer, as well as the offered energy efficiency solutions for housing will be of increasing importance, »Guntars Cauna points out.
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