The Sejm Commission on Defense, Internal Affairs and Corruption Prevention last week received a report signed by Prime Minister Evika Silina (New Unity) on persons with a residence permit.
Crimean Peak
From July 1, 2010 to December 31, 2023, as part of the investment program, the Office of Citizenship and Migration Affairs issued 19,776 initial temporary residence permits for persons who fit into Article 23 of the Immigration Law – the right to settle in our country when purchasing real estate, starting business or investment activity. From January 1, 2015, the acquisition of government securities worth more than 250,000 euros was also added as a basis for a residence permit.
As is clear from the report, “in the first four years, the investments of non-residents related to obtaining a residence permit grew rapidly every year – on average by 36% per year.”
Foreigners from “third countries” began most actively buying property in Latvia in 2014, which was characterized by well-known geopolitical changes. Then they purchased real estate for 397.315 million euros – for comparison: last year for only 7.512 million. In turn, 2013 marked the peak of investments in credit institutions (34.106 million euros) and capital companies (29.3 million). A decade later, these amounts are respectively zero and 2.979 million euros.
“The significant decrease in investment is due to the changes made to the Immigration Law,” the Cabinet of Ministers document emphasizes. Interestingly, Latvian legislators sensed in advance that something was wrong, and already from January 1, 2014, that is, two months before the annexation of the Ukrainian peninsula, they raised the lowest threshold for investment in business activity: 150,000 euros of investment, or 50 employees, or 10 million euros annual turnover.
In the same year, the Immigration Law established the minimum price for the purchase of a property sufficient for a residence permit – 250,000 euros for the entire territory of Latvia (previously it was 71,150 euros for Latvia and 142,300 euros for Riga and cities of republican significance).
Covid, war, Euribor
In March 2020, another tightening of the screws began for investors: the Schengen area adopted a “significant restriction on the movement of persons” in connection with the coronavirus pandemic. “At the same time, other restrictions introduced caused a reduction in economic activity and downtime of enterprises.” However, in 2021, the number of applications for residence permits increased once more – doubling the previous year and becoming the largest since 2016.
Citizens of the Russian Federation constituted, although not the only, but very significant part of the recipients of residence permits in exchange for the purchase of apartments and houses – 55%. Therefore, the amendments to the Immigration Law introduced following the outbreak of the large-scale Russian-Ukrainian conflict turned out to be particularly targeted in their regard. Citizens of the Republic of Belarus also came under attack, who, along with Russians, “were allowed to obtain a residence permit only in special cases.”
“At the same time, the overall number of real estate transactions since autumn 2022 was also affected by the rise in the European Central Bank’s Euribor base rate, inflation and rising construction costs.”
However, despite all the measures taken once morest Russians, they still make up the majority of applicants, a significant 65%. “Applications from citizens of any other state do not exceed a share of 10%… 7.5% were received from Chinese citizens, 7.3% from Ukrainian citizens.” In general, among the states that were not previously part of the USSR, citizens of the People’s Republic of China (1595) and Vietnam (488) received the most residence permits. Rich Vietnamese buying Latvian real estate: it seems like a fantasy, but the Cabinet of Ministers statistics say that it is true.
The European Union is waiting for a visit
Latvia, of course, is not located in an airless space, and a holy place is never empty. “It should be noted,” says the document of the Cabinet of Ministers, “that similar programs for attracting foreign investment also operate in other countries of the European Union (for example, Hungary, Greece, Spain).”
Your author regularly watches the video streams of one outstanding opinion leader of the Russian emigration – and they are constantly interrupted by lengthy Russian-language advertisements describing the delights of ancient, but at the same time modern and developed Hellas. Although it is no secret to anyone who more or less follows events that in the last decade and a half the “Greek tragedy”, which unfolded first in the financial and then in the socio-economic spheres, was one of the biggest challenges for the European Union, primarily for German taxpayers called upon to help Athens.
Well, yes, Zeus is with her, with Greece. As for those brave investors from “third countries” who still rely on the rule of law and property rights in Latvia, last year they bought property mainly in Riga and the Riga region. Very few – in the Cesis, Pargau regions, Amata volost. Often the owners themselves do not live there. The Cabinet of Ministers states: “The amount of real estate that citizens of Russia and Belarus want to sell or rent out has increased.”
However, these processes did not have a significant impact on the real estate market; increased lending rates and inflation had a much greater impact on it.
In the same way, the accumulated investments of non-residents in the national economy, the government believes, “were small.” The Lursoft database determines the growth of the fixed capital of their enterprises from 2010 to 2023 by only 138.9%. “The residence permit instrument is not a determining incentive for attracting foreign capital to the real sector.” Although, on the other hand, in 2023, some growth was recorded in the capital segment – 2%, which is quite brisk for the overall stagnant situation.
Now the Latvian government is presenting our jurisdiction as a kind of picky young lady. Of course, one can hope that instead of Russians, citizens of Azerbaijan, Uzbekistan, Iraq, India, Canada and Israel will come. All these countries are on the list of investors, but there are only a few of them. And the general profile of our country in the context of that same geopolitics does not look particularly brilliant. So the “I will give it to you, but not to you” position looks at least counterproductive.
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2024-05-01 08:22:08
