Changes in the trends of the Premium real estate segment: fewer emotional purchases, more rational investment decisions

New trends in the Premium real estate segment: A significant decrease in the number of housing (apartment) transactions has been observed in Latvia, but there is a growing demand for investment projects. Premium real estate is mainly purchased as an investment object also on a global scale, and in recent years the Asian business region has been particularly active. The following trend is becoming more and more explicit – clients’ wishes are individual and properties are being matched to the client's lifestyle.

Latvian and worldwide real estate trends and novelties were revealed by Vestards Rozenbergs, Chairman of the Board of Baltic Sotheby’s International Realty (BALSIR) and David Russell, Director of International Marketing of Sotheby’s International Realty Affiliates, during an informal meeting with the partners. 

Both Baltic Sotheby’s International Realty and Land Registry statistics confirm that, from 2012 to autumn 2014, high demand in the Latvian segment of expensive apartments (with the value of up to 200 thousand euro) was maintained by non-residents (both with temporary residence permits (TRP) and without them). For example, there were 353 such transactions in 2013, but, after Saeima's 2014 decision to change the conditions of the TRP programme by repeatedly raising the threshold for investment in real estate, there have been only 15-20 such transactions a month. Over the course of two years, the value of 65% of all Baltic Sotheby’s International Realty transactions was below 350 thousand euro each, but the amount of expensive transactions (from 700 thousand euro, one million euro) has been in the 5-7% range in the last years, confirming that this segment is small, but steady, taking into account that the particular field of the Latvian real estate market has to compete with the global metropolitan areas, where the premium estate transactions start from one million euro and even larger amounts. 

“The domestic market has been gradually coming to life, and new trends can be observed. Transactions with apartment values exceeding 250 thousand euro are being replaced with a growing interest in investment opportunities: housing estates, properties with land, commercial property that can be further developed. Clients are looking for high-quality properties in which to invest their capital and which will give a steady, reliable income in the future. Investors have not forgotten about the Latvian market, but the market is undergoing a shift: purchases are no longer emotional decisions, but rational investment decisions instead,” says Vestards Rozenbergs on the trends in Latvia. 

Trends are also changing in the premium estate market. It has been observed that investors in other parts of the world think of this segment as a good way to increase their income in the future. Trends are outlined by David Russell: “79% of our clients own two or more properties, while the most active investors are women who invest their free funds in their children's well-being. For some time now, housing in the exclusive segment has been fulfilling not only living or recreational functions, but has also been purchased according to one's life-style principles: some clients are interested in a property to which they can fly on a private plane, with a golf course nearby. Other clients are interested in rural life (including an ecological rural lifestyle or properties with wineries etc.) or a more secluded life on a private island, etc.

Russian investors for some time now have been less active not only in Latvia, but also throughout the world, therefore Sotheby’s International Realty are looking for new investment opportunities. At the moment, the Asian market (China, Arab countries, India, etc.) is growing fast and its inhabitants are looking for luxurious properties elsewhere in the world and willing to invest in the local market.” It is planned that in 4 years (in 2019) the amount of Sotheby’s International Realty transactions in the so-called EMEA countries (Europe, the Middle East and Africa) will have grown 20%.

D. Russell also elaborated on the vision of the world-famous brand:  “Nearly 40 years of our company's experience in dealing with high-value, high-quality and expensive properties around the world has given our clients the confidence that we can help add value to their property and it will bear fruit in the future.  For many centuries, the Sotheby’s name has been related to high-quality works of art objects, and, by continuing to provide our clients with exquisite property offers on a global scale, our goal is to be well-known and to be the first choice in the global segment of luxurious property.” 

Sotheby’s International Realty uses many different platforms to deliver information to their existing and potential clients. For example, we make active use out of Sotheby’s International Realty's website – database (containing information on various premium property units throughout the world and video tours of properties that are becoming more and more popular), blogs, social networks, as well as journalistic content in collaboration with the world's leading business media (Wall Street Journal, Financial Times, Bloomberg etc.). 

Baltic Sotheby’s International Realty is a franchisee of the first-class real estate company Sotheby’s International Realty, which was founded by the world-famous auction house in 1976, in the Baltic states. Baltic Sotheby’s International Realty acquired the opportunity to exclusively represent the Sotheby’s International Realty brand in the Baltic states in April 2010. The company opened its central office in Riga, but later expanded to Tallinn and Vilnius.  In total, 25 people are employed in the three Baltic offices. 

Thanks to the franchise opportunities and cooperation with the international agency network of Sotheby’s International Realty, Baltic Sotheby’s International Realty guarantees its clients the best and most extensive selection of real estate not only in the Baltic states, but also worldwide. 

Baltic Sotheby’s International Realty website http://balsir.com provides access to an extensive real estate database, information about the real estate market in the Baltic states, legal information and information on the range of services. In total, there are 1,300 active entries of real estate units in the Baltic Sotheby’s International Realty database with the total value of 1.15 billion euro. Also available on the website are high-quality real estate units for a wide variety of tastes and living situations from the extensive Sotheby’s International Realty network.  

The famous Sotheby's auction house is one of the world's oldest companies and well-known brands and was founded in in London in 1744. In response to its clientele's demand for not only high-quality artwork, but also high-class real estate, an international network of real estate agencies – Sotheby’s International Realty – was created in 1976. Currently, the Sotheby’s International Realty brand is represented in the field of real estate by 760 offices in 60 countries employing more than 16,500 sales professionals.

 

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