Looking ahead to the new year of 2025, which the United Nations has declared the International Year of Quantum Science and Technology, and anticipating new technological discoveries, we have prepared an overview of the main challenges and tasks facing the real estate industry this year.
- The competitiveness of Latvia’s real estate market in the Baltic region and Latvia’s attractiveness index in the eyes of foreign investors.
- The overall legislative and tax policy affecting the investment climate, its predictability, and the confidence that it will remain largely unchanged for at least the next 5-10 years. The recent changes in tax policy and legislation are not a positive signal for investors.
- The predictability of taxation, especially the reform of the property tax, which cannot be postponed. It is necessary to clearly define the principles and the value base on which property tax will be calculated over the next 10 years to ensure it is fair, proportional, and objective.
- Reducing bureaucratic burdens and inadequate requirements in land development, construction, and adopting a mindset focused on solutions rather than normative dogma in the approach to investors – real estate developers.
- The financial sector and a more active credit policy. Expanding credit access for properties outside of Riga and in other urban centers. The financial sector as a whole needs to critically review current anti-money laundering (AML) requirements to ensure that Latvia’s financial sector remains attractive and competitive for foreign investors.
- Increasing overall societal welfare and household income growth in the country so that most Latvian households can afford to purchase new homes and build savings.
- Ensuring a service-oriented approach from state and municipal institutions rather than a supervisory attitude, especially in their interactions with residents and, particularly, taxpayers.
- Latvia must, despite the current geopolitical situation, find and clearly define what makes it unique and attractive to foreign investors. Perhaps the answer lies in climate change and the increasing frequency of climate-induced disasters around the world, which could point to Latvia as a potential “safe haven” and could be used to attract investments and interest from regions affected by climate change, while simultaneously addressing issues such as labor shortages, population aging, and demographic balance.
At present day, there are still many other questions and challenges not only for Latvia but for all of Europe – what changes will the U.S. elections bring, how to deal with economic stagnation after the pride in tackling inflation in Europe now grappling with economic stagnation, and how to meet rising budgets for defense. Despite all the economic and geopolitical challenges, investments in real estate remain one of the safest and most thoughtful investment options in 2025.
