The Latvian capital's real estate rollarcoaster is on the uptrack again. Photo by Nathan Greenhalgh/Baltic Reports

RIGA — Guess which city has the highest-rising property prices in the world?

If you said Riga, you’re right and the Latvian capital’s real estate rollarcoaster is on the uptrack again after a terrifying decline in 2009.

According to the real estate portal Global Property Guide’s comparison of 36 markets in the developing and developed world, Riga’s prices increased the most in the first quarter of 2010 with a 10.4 percent quarter-on-quarter gain.

However, on the list of markets that includes Hong Kong, Shanghai, Tokyo, Kiev and Athens among others, Riga still had the largest year-on-year real estate price decline in the fourth quarter, with prices down 34.4 percent.

Aleksandrs Sviridovc, the office manager of Ober Haus’ office in Riga’s Old Town, said the market turnaround is especially pronounced in the center of the city where sales prices are up significantly

“In the city center, it was €1,300 per square meter in the middle of last summer,” Sviridovc told Baltic Reports. “Now it’s €2,000 per square meter. That’s what we’re seeing when we’re closing deals now. It’s the same situation in the suburbs, prices are going up.”

Average apartment prices, Riga 2007-10

In the rest of the city, prices remain lower, averaging under €600 per square meter.

Now that the market is on the up again, real estate speculators have regained interest in purchasing in Riga but sales volumes are not likely to increase substantially as many owners are hesitant to sell at such low prices.

“The insignificant number of proposals in some way shows the unwillingness of potential sellers to sell their property at current market prices that in its turn is explainable with the forecasts of price increase in the future,” Māris Laukalējs, head of the appraisal department at Arco Real Estate, said in a press release.

Rest of Baltics still down

Riga’s increase has yet to reverberate in Vilnius or Tallinn, as property prices in the other two Baltic capitals did not increase in the first quarter, although their decline ebbed to single digits from similar plummets during the middle of last year. Development activity is increasing in Tallinn, but Vilnius especially has a glut of unused office space that will damped price increases while the lack of demand for new housing is expected to continue, according to Ober Haus.

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