The value of real estate in the suburbs is increasing every year

Traditionally, the most valuable real estate is considered to be apartments in city centers, where there is an intensive flow of people, developed infrastructure and high demand. Last year, almost every fourth transaction with bank financing took place in the regions of Latvia, and trends show that more and more people are choosing not only city centers, but also suburbs to purchase housing.

Does this mean that suburban properties are also becoming a valuable long-term investment? Luminor housing lending expert Kaspars Sausais explains.

The advantage of real estate in the suburbs is most often its affordable price, but this is not the only benefit, as the suburbs have become an ideal balance point, combining the opportunity to live in a greener and quieter environment, while maintaining access to the labor market, education and cultural life. Interest in housing outside the capital is also growing – Luminor Bank data shows that families with children are more likely to buy or build houses, and the most sought-after property locations are within a 35-kilometer radius of Riga. Last year, 18% of all transactions were in Mārupe, 17% in Ropaži and the same in Ķekava. It is important that these municipalities have well-developed infrastructure, such as schools, kindergartens, sports centers, medical institutions and other amenities, which is a determining factor for families with children.

Although developers are working closely with local governments to attract new homeowners, wanting to make real estate more attractive to buyers, it is clear that over the years, along with the growing interest in living outside the city, the mindset of buyers is also changing. If in the past the decision to purchase a home was made based solely on price and visual appeal, now people are becoming much more informed. They are interested in local government development plans, proximity to schools, access to public transport and even details such as street lighting or sidewalks for the safety of children. This is also a signal to real estate developers that it is no longer enough to have a quality building, but it is also necessary to ensure quality of life, including convenient access to services, a safe environment, public space and opportunities for active recreation.

It is common for properties located in sought-after and densely populated neighborhoods to be easier to sell. On the other hand, if you want to rent out an apartment or house later rather than sell it, the rental market will be much more active in city centers, where there are entertainment and educational opportunities within a short distance, and private transportation is not required. However, suburban areas also retain their high value. While ten years ago, obtaining a mortgage for a house in the countryside could have been more difficult, today such properties are often considered stable. Financing risks are higher for homesteads or homes in remote rural regions. If the property is located far from a settlement, where there are no houses or neighbors in the immediate vicinity, the potential risk associated with the loan should be taken into account – in such cases, it is assessed how easy it will be to find a buyer if the property were to be sold.