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Ledurgas apartments renovation
100% Funded

100%
Need:0.00€
Interest rate:16.5%
Period:12 months
Target: 250 000€
Opens: 2019/08/28
Expires: 2019/09/16
Type: Real Estate
Location: Riga, Latvia
Investments: 755

Summary


The current investment opportunity offers CROWDESTOR investors to make a secured loan to Developer of project Ledurgas apartments renovation.
Funds will be used to build a brand new building on the property and renovate the property (337,9 m2) that includes a parcel of land with a total area of 7 817 m2 with a cadaster number 0100 068 0212 and is located in the Riga town, Milgravja neighborhood.
Current investment opportunity offers CROWDESTOR investors to make a loan with 16.5% annual interest rate. The minimal targeted amount is 180’000 EUR and maximal amount is 250’000 EUR.
 

Loan 

Maximal amount: EUR 250'000
Minimal amount: EUR 180'000
Loan term: 12 months.
Interest rate: 16.5 %
Interest payments: paid monthly
Loan repayment: In full at the end of the Loan Term.
Crowdestor BuyBack fund: Yes
Location: Latvia, Riga
Security: The loan is secured by commercial pledge on assets and agreements
 
Remember - interest rate payments start calculating from the day you make your investment!
 
 
 

CHARACTERISTICS OF THE PROPERTY

Property: Real estate located in Riga city, Ledurgas street 9.
Composition of the property:
Land with a total area of 7 817 m2.
Residential house 0100 068 0212 003 with a total area of 337.9 m2.
Current usage: Rational planning and area apartment building in the renovation stage, land under courtyards and apartment buildings.
Planned / authorized use according to development plan: According to the Riga Spatial Plan from 2006 to 2018, the property to be assessed is located in the residential area (Dz).
According to Riga Spatial Plan from 2019 to 2030, the property to be assessed is located in the multi-storey residential building area (DzD1).
Best use of property: Rational layout and area, 4-apartment apartment house with attached part of the plot to be repaired, Land for rent under apartment houses (forced lease).
The property is assumed to be free of the following encumbrances: 
- leases, persons declared.
- mortgages, mortgages, debts, or other encumbrances which have the effect of restricting the rights in rem.

Location


The property is located in the Riga town - Milgravja neighborhood, a block surrounded by Viesturs' prospectus, Ostas Prospectus, Ledurgas and Mores streets.
Up to the city centre of Riga (central Riga station) there is a distance of approximately 12 km or 25 min with a passenger car. Public transport movements to the city centre of Riga and other areas are provided by passenger train, bus and van routes. The nearest route staging point is situated at a distance of ~ 300 m on the Viesturs' prospectus. Up to the railway station, “Mangali” is about 400 m.
Within walking distance of the property are the popular stroll and rest areas - Mežaparks, Ozo Golf Club.
 

  Excellent   Good   Medium   Poor   Bad
§ Employment of the population           X            
§ Availability of jobs            X            
§ Availability of shopping places          X            
§ Accessibility of schools         X                
§ Access to public transport          X            
§ Availability of rest facilities          X            
§ Relevance of facilities                 X        
§ §The closest property is matched to the property type          X            
 Exposure to adverse conditions (low = excellent)                 X        
§ Safety                 X        
§ Property appearance                   X    
§ Attractiveness of the market                 X        


 
 

Surrounding buildings and infrastructure


Access to the land plot on Viestura avenue along Lēdurgas and Mores streets, which are covered with asphalt concrete pavement, pedestrian paths are covered with asphalt concrete pavement. Road traffic and pedestrian traffic along the Lēdurgas and Mores streets along the property are not intensive. Overall, access to the property by private cars are convenient.
Adjacent plots of land include private houses, multi-apartment houses, business building, trading facilities and public buildings.
 

Description of the residential house


The building was built in 1940, with no information on recruitment. According to www.kadastrs.lv information, the building has 4 apartments (on each floor 2), with areas 56-86 m2. The building is in need of renovation. Renovation of the facade (including window aisles) and roof, change of roof covering, construction of engineering networks, indoor repair is required.
 
Position of building relative to street – patio.
 
Position of the building on the ground - free-standing.
 

Real estate market share characteristics

Description of the residential house


The building was built in 1940, with no information on recruitment. According to www.kadastrs.lv information, the building has 4 apartments (on each floor 2), with areas 56-86 m2. The building is in need of renovation. Renovation of the facade (including window aisles) and roof, change of roof covering, construction of engineering networks, indoor repair is required.
Position of building relative to street – patio.
Position of the building on the ground - free-standing.
 

Real estate market share characteristics


In the year 2019, an active land market remains in Latvia and Riga - buyers are looking for and buying parcels for retail, logistics, office and apartment buildings. The focus of investors is the Riga centre, the suburbs and Pierīga, in places with good infrastructure.
Average prices for parcels for building new projects in Riga suburbs are, depending on a number of indicators, in the range of 50-90 EUR/m2, but closer to the centre or on the outskirts of the centre in the range of 150-200 EUR/m2, where the business in the suburbs is more frequent.
 

Best use of property


According to the Latvian Standard “Evaluation of Properties”, the best and most efficient use of the property in LVS 401: 2013 is an active use of such property, where the maximum benefit is obtained, and which is realistic, legal and financially justified.
According to the territorial planning of the city of Riga in force and development, the valued property is located in the residential building area.
Taking into account the location and composition of the property (existing buildings, including buildings belonging to other persons), as well as the market situation which financially justify and justify the use of the parcel for long-term leasing, the best use of the property is accepted:
- a four-apartment residential house with its attached, functionally necessary part of a parcel of land with an area of 758 m2 (according to the parcel allocation plan submitted to the assessors). Repair of the residential house, disposal of apartments after completion of repair work.
- the remaining part of the territory of the property to be assessed: taking into account the use permitted by the spatial plan, the evaluators conclude that the best use of the area functionally necessary for the building is a parcel of land for the maintenance of multi-apartment residential buildings. The existing type of use of the assessment facility formally corresponds to the best use, but the location of land owned by other persons constitutes a serious burden on the plot of land to be assessed, and cannot be used by the land owner. Therefore, in view of the forced leasing relationship between land and building owners, the market value calculation is carried out in accordance with the current legal situation, with the existing burden, as a parcel of land for income from its rental.
The market value calculation is performed according to the best use.

 

Characterization / analysis of the real estate market share to which the building belongs

 

Building land


In the 1 st half of 2019, an active land market remains in Latvia and Riga - buyers are looking for and buying parcels for retail, logistics, office and apartment buildings. The focus of investors is the Riga centre, the suburbs and Pieriga, in places with good infrastructure. The largest deals in Riga show this:
- purchase of land on Lucavsala Street 1, near the Neste DUS and Senukai shop, EUR 912 160 purchased at 3315 m2, representing a price of EUR 275/k.a.;
- next to the supermarket SKY, Bikernieku Street 124 (access from Hipokrata Street), the purchase of 9,8 ha of land for EUR 700 000 in the forest area and the associated 1 ha of land in the building area for EUR 600 000. Total transaction amount: EUR 1 300 000. It is expected that a useful commercial parcel of 1 ha is used effectively, and the effective one-square-meter price is therefore EUR 130.;
- a parcel of land on Pildas Street, Moscow suburb, 10 929 m2, purchased at EUR 598 000, or 55 EUR/m2.
Average prices for parcels for building new projects in Riga suburbs are, depending on a number of indicators, in the range of 50-90 EUR/m2, but closer to the centre or on the outskirts of the centre in the range of 150-200 EUR/m2, where the business in the suburbs is more frequent.
This field mainly operates the three most familiar construction firms, YIT Construction, Merks and NCC.
The volume of investment in commercial areas in Latvia over the last few years shows that our market is still interesting for both local and foreign investors. The investment still comes from eastern neighbors, albeit significantly less, also from Western funds and private investors.
In forecasting further activity, it should be acknowledged that the situation is quite unpredictable, since the activity of potential investors is very linked to a variety of factors - both the turbulence of the world economy and geopolitical events. At the moment, however, there is no reason why interest in Latvia may be decreasing.
The number of land sites exposed to the market (residential buildings, mixed buildings with residential function) in the districts of Aplokciema, Milgravja, Ciekurkalna is small. At the time of valuation, only 3 properties have been exposed on the market. The asking prices range from EUR 20 to EUR 35/kv.m.
Land sites or parts of residential dwellings have not been requested, which is due to the fact that the development of new buildings often requires a lengthy and unpredictable public consultation procedure, or to the fact that parcels are burdened with highway underground engineering networks, the relocation of which makes construction considerably more expensive. The price-lowering factor for apartments projected in the inner districts of the suburbs is, undeniably, relatively dense buildings (the windows of the “new project” residential house often show a view of the mortally obsolete serial residential buildings built during the “Soviets”, which are located at a minimum distance allowed by construction standards), of the land (often only when crossing a neighbouring property), the shape of a plot of land.
 

With the landowner non-residential housing encumbered plots of land


Such properties – parcels under residential houses belonging to other persons, both multi-apartment and single family – do not mainly come into free sale. As a general rule, land and building owners deal with the issue of land and building mergers by mutual agreement. The business conditions are not disclosed.
Mostly, apartment owners buy land under homes with a small number of apartments.
It is therefore difficult to set a specific price level for parcels on which other party-owned buildings are located.
In cases where buildings and land properties are combined, the price range for which transactions are being made can be discussed, this would be 50-70% of the market value of the parcel, as relatively unconstructed. This is mainly the case with the purchase of State or local government parcels on which commercial properties are located, such as storage, production facilities. Although rents on the use of these parcels are not burdensome for building owners, they are nevertheless seeking to purchase parcels of property so that they can further develop their core business smoothly.
When purchasing parcels under other party-owned buildings on the free market, the prospective buyer shall, firstly, assess the potential cash flows that can be generated by a parcel of land from leasing, with a very careful assessment of the risks involved.
An analysis of the leasing contracts and other sources of information available to the evaluators shows that the municipal housing management organization, which is mainly entrusted with the transfer of land parcel rental contracts, offers the parcel owners a rental fee of less than 6% of the cadastral value. Landowners, knowing how heavy and protracted today's litigation is, are forced to agree to lower rents than the “compromise” rate of 6% enshrined in the laws.
According to the representatives of the local government management body, years 5-7 of the rent rate calculations were based on “unwritten” considerations, so that apartment owners should pay rentals no higher than one lats (later 1.4 EUR) per 1 m2 of apartment area per year. It also takes into account the discipline of paying people, which at other times varies significantly at home in different areas with different social levels.
The evaluators are aware that there are some cases where a court judgment resulted in a rental charge of 6% of the cadastral value per year, in other cases, with the agreement of the parties, rentals usually vary between 4% and 5.8% per annum. In some cases, when the parcel of land attached to the house is large and with very high cadastral value, as it is in the centre of Riga and around it, but the house on the parcel is in poor condition and with a small area, it is possible to obtain a rental fee of not more than 2% of the cadastral value.
The purchase of parcels under multi-apartment residential houses was a good business for some time, as these parcels generated a stable cash flow. However, political “games” around this issue have resumed in recent years, which significantly raised risks in terms of potential proceeds from leasing.
 

Apartments


In the first half of 2019, the largest demand is for apartments in serial projects in Riga suburbs with high quality finishing, which does not require any additional investments for Buyers. The most demanding areas are Teika, Purvciems, Agenskkalns, Imanta. For this type of apartment, sales prices are above EUR 1000 per m2. Given that supply is well below demand, price increases are observed for all serial apartment offers, both complete finishing and unrepaired apartments, with a sales price of around EUR 900/m2.
The average price of new apartments in Riga is 1000 to 2200 euro per square meter.
Serial apartment prices, thanks to good bank financing, continue to rise and, according to real estate professionals, supply has fallen significantly during the year, apartments in good condition are sold very quickly at an adequate price. It has been found that prices of 2-3 rooms in good house, in good condition, are already above 1000EUR/m2. A major role in this phenomenon is the Altum program, which allows young families to buy housing.
There has been an increased interest in large 4 – 5 room apartments (from 100 m2) in the active centre of Riga, which require capital repair. The selling prices range from 1000 to 1500 EUR/m2, which depends mainly on the location of the building and its overall technical and visual position. On the other hand, for large apartments (above 100 m2) with capital repairs and an ordered building, Buyers are prepared to pay up to EUR 2200/m2.
There is great interest in the renovated buildings of small newly renovated apartments outside the usual “close downtown of Riga”. Above all, a great deal of interest can be justified by the fact that Buyers increasingly prefer buildings arranged by the Riga Centre, since the sale price of m2 for this type of apartment is similar to the price of m2 in the new project in one of the Riga suburbs, ranging from 1700 to 2000 EUR/m2.
The selling price of one square metre apartment at the centre, mainly in pre-war buildings, ranges from EUR 700 to EUR 3500, depending on the technical state and location of the building and apartment. In the remote centre, apartment prices range from EUR 1000 to EUR 1600 per square metre for properties in good technical condition, from EUR 650 to EUR 1100 per square metre for properties in a satisfactory state.
 

Factors influencing the market value of the property


 

Factors influencing market value How the marked value is influenced
Positive Not important Negative
1. Location in the city district...        x    
2. Location in the district...        x    
3. Architectural image of the building...    
            x
 
4. Quality of construction materials used...               x  
5. Technical condition of the building...             x
6. Size of the building...        x    
7. Room layout of the building...        x    
8. Access options...        x    
9. Size of the plot in proportion to the size of the building...        x    
10. Plot configuration...        x    
11. Land relief...        x    
12. Territory improvement...                 x  
13. Communication provision...        x    
14. Obstructions (red lines, security bands, co-ownership, etc.)...             x
15. Property development potential...                 x  


 

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