SJSC "State Real Estate” (SRE) has alienated 117 state real estates in 2024 for the total amount of EUR 14.48 million. From the proceeds of the disposals, EUR 4.12 million have been earmarked for the improvement of other state-owned real estate. The most significant investments were made in the reconstruction of Riga Makerspace (EUR 1.4 million) and in the construction of the extension to the Pauls Stradiņš Museum of the History of Medicine (PSMVM) (EUR 385 thousand). In 2025, it is planned to invest around EUR 1.5 million in state real estate from the proceeds of the alienation of state real estate.
"At the moment, the state's ability to finance various real estate development projects is significantly decreasing, so the importance of attracting alternative sources of financing is growing. One of the tools SRE can use to find the necessary funding for the improvement of the state real estate is alienation of properties that have no future use and development plans for the public sector and the transfer of the proceeds to the adaptation and development of the properties in the core portfolio. The alienated properties acquire new owners who provide them with development opportunities, clean up the city environment and make them available for business and the public again," says Andris Vārna, the Member of the Board of SRE.
With the centralisation of the public sector, an increasing number of properties are being diverted for alienation, incl. in Old Town. Analysing the SRE transactions over the last two years, it can be concluded that the transaction price for Old Riga properties is still falling: depending on the location and size of the property, the trend is more positive for small and compact properties. For example, the real estate at 24 Kaļķu Street was sold only in the seventh auction for EUR 1.84 million, by EUR 1.82 million less than the starting price of the first auction.
For properties in the centre of Riga, which can be developed for the residential segment, the average bidding price was 30% higher than the appraisal price, e.g., the historical house at 68 Brīvības Street, Riga, was bid for EUR 4.19 million, which is by EUR 1.49 million higher than the starting price of the auction (EUR 2.7 million). This points to future plans to develop and profit directly from the residential property market. In these transactions, the number of participants in the auctions has been remarkable and the activity prior to the auction already gives indications of overbidding. This still indicates opportunities to implement business plans in the residential segment sales process, interest in the purchase of renovated apartments.
Overall, the Latvian real estate market in 2024 continued to stabilise since the 2022 downturn. Currently, the real estate market is showing interest in residential properties and investors are cautious about purchasing commercial space. The latter has seen a slight increase in the number of transactions and prices, especially in the segment of new office projects. However, despite the difficult geopolitical situation, challenges in the construction sector and interest rates, many people still believe that investing in real estate is still the safest way to preserve or increase the value of their money. The main factors influencing sales activity in 2025 will be interest rate changes and the stabilisation of the economic situation.
In accordance with the strategy of SRE, one of the objectives of the capital company is to increase the share of valuable and actively used properties in the state property portfolio, while reducing the share of properties that have no future use and development plans for public use.
One of the mechanisms to achieve this is to dispose of unwanted real estates and to take over dormant or unwanted real estates, or heirless assets, from other public administrations and dispose of them, thus providing opportunities for development.
