Estonia, Latvia and Lithuania are being closely watched by serious investors for the potential of their emerging property markets. The promise of high capital returns under the backdrop of strong economic growth and foreign investment is becoming increasingly attractive, say experts preparing to attend the Property Investor Show later this week.  

Over the past six years, the three Baltic States have undergone extensive economic reform, attracting foreign investment and leading to the highest economic growth rates in Europe between 2000 and 2004.

Property prices are still low in some cities in the Baltics but are rising rapidly, providing excellent opportunities for strong capital growth. Demand is high among citizens looking to move to better quality residential property as their means and aspirations increase, and also tourists who are travelling to the countries in escalating numbers.

Investors’ ease of access to the property markets has been facilitated by the countries’ entry to the European Union in 2004, which brought increased investment and removed restrictions for foreigners on purchasing property. 

Estonia

The smallest of the former Soviet Baltic States, Estonia has developed the perfect conditions for property investment. The economy saw a tremendous 9.1% growth in GDP in 2005 and is projected to remain strong, growing 6.8% this year.

The country benefits from a continued influx of foreign and EU investment, falling unemployment levels and low inflation.

Prices of new build apartments in 2005 rose by up to 50% in the centre of the capital, Tallinn, as demand continues to outpace supply. Real wage growth in Estonia was over 8% annually from 2001 to 2005, creating an increase in demand for property and pushing up prices.

Latvia

Riga, the cosmopolitan capital city of Latvia, is a popular city break destination with a rapidly growing tourist industry. Investors benefited from property price increases of between 70% and 90% in 2005, while new builds in the regions grew by up to 30%.

Mortgage loan rates start as low as 1.8% in Latvia. The constant rise in demand for new apartments and houses means that demand is greater than supply, a trend that is likely to continue due to deteriorating housing stock combined with changing aspirations of the local citizens.

Lithuania

Lithuania, the largest of the Baltic States is one of the fastest growing economies in Europe with annual growth of 7.5% since 2001. Prices of new build and older Vilinus apartments increased between 40% and 65% in the suburban districts last year. In some cases, prices in the centre and old town have already reached 5,000 Euros per square metre. Tourism is already on the increase and is set to pick up pace as Vilinus prepares to be named European Capital of Culture 2009. 

Toby Stone, director of Bristol and Stone, who will be exhibiting at the Property Investor Show commented on the benefits of investing in the Baltic States:

“Conditions for property investment in Estonia, Latvia and Lithuania are strong and good returns can be obtained if you know which are the best areas,” he said. “However, over the past few years the markets have become increasingly sophisticated and investors would be best advised to buy through a company that has presence in the country and fully understands the fast-moving market.”

“By the time tourists have discovered a place, it is probably a little late to invest, so in order to stay ahead of the bandwagon, investors should be looking at the secondary cities such as Tartu in Estonia where entry prices are still lower than in the capital city, Tallinn,” Toby adds.

Nick Clark, managing director of The Property Investor Show commented: “Investors face a huge choice when deciding which markets to invest in. The Baltic States have a lot to offer at the moment but a lot of research into the market conditions is needed before going ahead, to ensure that the investment is a success.”

“There will be experts on hand at the show to give advice on property investment in the Baltic States, as well as in the rest of Central and Eastern Europe to help investors make the most of the opportunities available.”

The show will be running from this Friday 22 to Sunday 24 September, and will feature over 250 exhibitors specialising in all areas of property investment both in the UK and abroad. Entry to the show is free of charge, with the majority of seminars costing £5 each.  For further details visit http://www.propertyinvestor.co.uk