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Tuesday 26.03.2019 | Name days: Eiženija, Ženija
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Bonava president: there is potential to sell 450-500 apartments a year in Riga

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvian housing market property developer SIA Bonava sees the potential for selling 450-500 average price apartments a year, according to the company’s regional president in Baltics and St Petersburg Michael Björklund.

Last year, Bonava sold a little less than 200 apartments. Still, Latvia’s market is considered one of the most promising ones. There are already plans to sell apartments in eight or nine new apartment buildings.

«Our goal is maintaining property prices on an affordable level for the middle class. For example, apartments are sold for 1,900-2,200 EUR/m2 in Estonia and 1,500-1,800 EUR/m2 in Lithuania. Most apartments in Latvia are sold for 1,500-1,600 m2. If we manage to maintain such a price level, it will do well for is in this market. If we were to increase the average price to 1,800 EUR/m2, our market share would reduce,» explains Björklund.

Considering the company’s estimates, Bonava could potentially sell 450-500 apartments a year in Latvia – the potential exists. Currently Bonava builds slightly more than 200 apartments a year in Latvia. Björklund believes it is possible to double this number.

As for Estonia – mostly Tallinn and its outskirts – the potential exists to build and sell 300-400 apartments a year, said Björklund.

«It is important to pay attention to price-forming factors, which are related to the value of land. Land in Latvia is up to two times cheaper than it is in Tallinn. With that, the potential to increase volumes in Tallinn is lower than it is in Riga. This is because there is a great deal of competition among developers in Estonia. Competition is milder in Riga. In Tallinn, on the other hand, it can be considered unreasonable, because there are too many market participants. Competition is high in Vilnius, higher than it is in Riga, but not nearly as intense as it is in Tallinn. There are fewer developers in Riga than there are in Tallinn and Vilnius,» explained Björklund.

He said that the price level is well-balanced in Riga region, and Bonava wants to work in an affordable price category.

«If we go outside this price level, our risks will become higher. We are not the only developer on the market. Experience in Tallinn shows that once other project developers increase prices and manage to sell properties for this increased price, it becomes hard for other developers to not raise prices in response. Every company aims to make a profit. Because of that, we’ve had to increase prices in Tallinn and take on bigger risks that we usually did,» said Björklund.

After that, Bonava made certain conclusions – that time and number of objects should be considered more valuable than turnover profitability. «In Riga we have a healthy and balanced development plan. We have to work very carefully to avoid raising prices,» said Björklund.

He added that Bonava constantly works on new projects. There are four projects in the company’s hands. It is planned that eight or nine more will appear closer to the end of the year.

Ref: 224.109.109.4247


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