The advantages of Riga will clearly manifest themselves if you`ll take a walk down its streets

"The advantages of Riga will clearly manifest themselves if you`ll take a walk down its streets"

The owner of R.Evolution, Alexei Zagrebelny, is one of the most well respected and creative developers in Latvia. Our colleagues from the M2 magazine and website had a conversation with the expert about his favourite projects, the prospects of the Latvian market and addressed the question, “What is good about Riga and does it have enough foreign purchasers?”

Alexey, this summer apartments from seven projects in Riga and Jurmala were brought to the market by R.Evolution. Do you have any favourites amongst them? 

We love and adore all the projects in which we have participated. That is just how it is – at one point we are putting all our team`s focus on one development, at another one – on another. It depends on the stage of their completion. Recently, most of our time has been devoted to the high-rise complex Philosophers Residence, both towers of which (22 and 23 stories) have recently been commissioned.
R.Evolution has set completely new business-class housing standards for Latvia with this residential complex. Even though it already had had high design standards, guided by the principle that perfection lies the details, we found a way to improve this product during the course of its construction. For example, we changed the colour of all aluminium and metal parts of the buildings. We chose a more expensive and more visually attractive finish for them, as a result their coating is much more durable and scratch-resistant.
The ceramic facade of our towers is a special topic. It is self-cleaning, and with proper care, it may as well be eternal. Plus, when heated by sunlight, it produces oxygen. Some sceptics smile, they say that it`s a fantasy. But in that case it must be a fantasy of a group of engineers at one of the largest German ceramic coating plants. There is an official declaration on this material, as well as scientific conclusions. So there is every reason to believe that this process is, in fact, quite real…
Generally, a house should bring positive emotions. That is our credo. Therefore, in the lobby of the Philosophers Residence, which has a ceiling height of 12 meters, we created a library of 5,000 books in each of the buildings. This is how we see the world, and we hope that the environment we offer will resonate with the residents, and that these books will be useful.

Philosophers Residence – the first high-rise project of R.Evolution. How are the purchasers reacting to it? 

By the time of its commissioning, 35% of the apartments of the first house had their owners. We anticipate that, starting from July, interest and the sales will intensify. In order to sell a real estate, the ability to bring a client over and show the living area without having active construction works in the background is of utmost importance. I usually say that real beauty enters a new building when a small vase is placed on the windowsill.
The big picture consists of small details. If you show an apartment, but meanwhile construction works are buzzing everywhere around you, or if the object is not properly cleaned after the builders have left, it is difficult to understand how the apartment will look when it is finished. You will get a completely different feel and attitude towards the apartment and the whole house when you coming to a finished project, you will feel its fresh and pleasant smell, and the light music in the background, then you will see the quality of the materials used...

What about completion of two other R.Evolution projects in Riga - on Strelnieku street 5 and 8?

Project Loft & Rosegold [this is Strelnieku Street 8] has reached its final stage of construction. The construction company has contractually undertaken to finish the job by December 2019. 70 apartments are planned in this complex, which is a symbiosis of an old historical building and a new building. Their main focus group is local purchasers. At Loft & Rosegold apartments are sold without finish at prices starting from 2,000 Euro per sq. m. 30% of the building is already reserved.
In the summer of 2020 we expect completion of another project of R.Evolution, which is located on Strelnieku Street 5 and named HOFT (House Of The Flying Trees). This is a higher-class project, although it also offers living area for 2,800 euros per sq. m. There will be 43 apartments in this complex, of which a quarter are already taken.

Some say that the market of the Riga centre apartments is oversaturated. And your company is implementing two, one might say, competing projects.

If you put it that way, I must say that in all three metropolitan R.Evolution projects you will really find apartments that are close to one another in terms of price. At the same time, we offer a very wide variety of new and high-quality living space in the centre of Riga in the price range from EUR 1,870 per sq. m to 7,000. The price differentials in all of our apartments are the floor (level), the area and the view.
A person should be enjoying an equal quality of life in any apartment of our company. But then other factors come into play. For example, what kind of window view does the person want? On which floor should the apartment be located? How important is the status of the complex? Everyone is free to choose what is the most important to them in the particular period in their life. Someone will select a more spacious apartment, but on the second floor. Someone will opt for higher, but smaller. Everyone makes a choice based on their priorities

What is your take on the current state of the housing market in Riga? Is there a demand for high-class apartments?

I think that the amount of high quality apartments on offer in the centre of Riga is insufficient. If you only look at the statistics of newly built apartments, it may seem that there are quite a lot of them. But if you had recently looked for one on sale for a reasonable price and with full finish, you would have found none. Talking about new projects worth mentioning, I should probably name Magdelēnas kvartāls, in which a third of the apartments were sold within a year. That is a good result. I am convinced that there is a demand for affordable and high quality living space in the centre of Riga.
I must emphasize that a specific of our product is that a person can truly appreciate it only in a completely finished form. How would you buy a car? You would chose a model, but then you would definitely need to sit in it, feel it, and decide whether you like it or not, do a test drive. When touching it with your hands, you can feel the level of quality, reliability, and comfort.
It is way more difficult to put into words all the information about the finish level of the object while the construction works are ongoing. Many of the unique qualities of R.Evolution projects are often intangible. For example, in Loft & Rosegold we are instigating communication between the house and its residents according to the hygge principle. There will be many moments that will motivate and moments of social interaction in the hall. As you enter the house, you are greeted by a cheerful motto. Then you see a live flame, candles. You are engulfed by a pleasant smell and pleasant music. The main thing here is to not overcomplicate anything. Everything should be simple, and the energy of good and light should be pouring over the edge. It should be understandable to everyone.

You managed to sign agreements with your general contractors two or three years ago, securing reasonable prices. Tell me honestly, would you have undertaken the implementation of these projects if you had to pay today's labour costs of the Latvian builders?

Definitely not in Riga, purely because of economic reasons. Given the real purchasing power, there would be no business case for us. I can say for sure that the prices of construction companies in Latvia are higher than in Poland and Estonia. Therefore my advice to those who are planning to implement apartment building projects and are looking for contractors is to look for builders elsewhere, look towards our neighbours in the European Union.

How to attract foreign purchasers to Latvia in the current circumstances?

I know very few cities in the world that are as comfortable to live in and that have environment as attractive as Riga has. Our advantages clearly manifest themselves when you walk down the streets of the capital of Latvia. It is a clean and reputable city, very convenient in terms of logistics, convenient for living with children and, moreover, multicultural.
Sorry, but the living environment in Stockholm is less comfortable than ours. And that must be communicated to the foreigners. It`s a challenge. For example, it would be worth reminding the Germans a bit more that Riga is a Hanseatic city, and that it is very civilized and calm here. You can live and relax here quite cheaply. Various interesting activities are available. And you can comfortably, quickly and conveniently fly where you need at any time thanks to a wonderful and continuously developing local airport.
But in order to communicate this to the people, communication investments, investments in marketing are required. And we do not have many large players in Latvia who would be ready to work in this direction. And the state itself is either unwilling or unable.

Does the Latvian real estate market and our economy have anything to fear from in the light of the expected global economic crisis?

[After contemplation] I myself have asked the same question to those people, whose opinion I take into consideration. The estimates differ. I have come to a conclusion that we have a sufficient safety margin to survive the fluctuations in the world economy. It is known that the crisis of more than a decade ago arose due to money printing machines being stopped. A chronic illness was “cured” with antibiotics. If we look at the real estate sector, then the demand is stable and the prices are steadily rising in the vast majority of the countries.
When the money printing machines are rolling and a crisis hits the banking sector, paper assets can turn into a pile of ashes. To me it seems that real estate is a more stable asset in the long term. Plus, the fact that there is no feeling that there was a bubble or a rapid growth somewhere reassures me. It is also important to note that, due to rising construction costs, developers launching new projects will not be able to offer the price that is currently available in the completed projects that were launched earlier. They will have to set higher prices in order to maintain profitability.

Will the consumer accept it?

We'll see. The average salary is growing. Even if we anticipate that there will be some sort of a shock to the economy, then it will last for a year and a half, not more than that. If the crisis will affect Riga, then, I think, only slightly. Today, the capital of Latvia is the centre of attraction for buyers from all over the country.
We already have five clients from the regions of Latvia in the Philosophers Residence. They are financially successful people purchasing apartments for their children, who will study or work here. There are also those who buy to rent. Moreover, we offer apartment management and provide stable income. We will start talking about this product a bit louder in the fall.