Chinese investors forced out of Latvian property market over residence permits

Chinese investors are being forced out of Latvian property market because they are required to pay a hefty price to get the residence permit for a foreigner to invest in the country's property market, local media reported on Wednesday.

Mihails Parinovs, head of Latvia's Padva, Parinov un Partneri law firm, told LETA that the cost for applying for Latvian residence permits in return for investment in real estate has been raised to 250,000 euros, which they find too high.

Before September 1, 2014, when the amendments to the Latvian immigration law raising the price threshold came into effect, most Chinese investors had been buying properties in Latvia for 70,000 euros apiece, which was the lowest price at which they could also obtain the residence permits.

Some 80 percent of the Chinese investors' transactions in Latvia fell into that price category, Parinovs said, adding that Chinese would not buy properties in Latvia at a cost of 250,000 euros for residence permit if they could obtain residence permits in Cyprus for the same price, which means that Latvia is going to lose the Chinese investors to Cyprus.

"They made up a significant group of investors, because during the past year they had become the second biggest group after Russian citizens, although the Chinese bought properties in Latvia in order to rent them out, and only a small number of them actually settled in Latvia. We may have lost the Chinese investors for good," said Parinovs.

Asked about other effects of the legislative amendments, Parinovs said that for many developers they spelled disaster.

"Those who have been developing residential projects in the price range between 145,000 and 170,000 euros will not know what to do with them now. For local residents these projects are too expensive, but non-residents no longer find them attractive," Parinovs said.

On September 1, 2014, amendments to the Latvian immigration law came into effect, raising the minimum price foreigners must pay for properties to obtain temporary residence permits to 250,000 euros.