The European Investment Bank (EIB) has signed an agreement with Ernst&Young (EY), an international advisory service provider, to carry out the necessary financial and economic calculations for the implementation of the private-public partnership programme “Rental Housing for Latvian Professionals” in municipalities across Latvia, offering an implementation model that is most suitable for local circumstances, informs Renārs Griškevičs, the Chairperson of the Board of SJSC “State Real Estate”.
The European Investment Bank, which is the advisory partner in the project and the contracting party of the agreement signed by the SRE this September, has set up a high-level team of international and local experts from Europe to effectively promote the programme in Latvia. Last week, the first expert meeting was held in Rīga, where the programme promoters, i.e. the SRE, representatives of the Ministry of Finance, the Central Finance and Contracting Agency, the EIB and Ernst&Young experts from Belgium, Denmark, Ireland and Poland with significant experience in implementing private-public partnership programmes met in person to decide on the next steps for effective implementation of the programme in Latvia.
“The construction of affordable rental housing as part of public-private partnerships represents a new approach to housing policy. Cooperation with the team of international experts set up by the European Investment Bank presents an opportunity to combine best European practices with the needs of the country and the people of Latvia. We are delighted by the high level of interest from municipalities, which has already exceeded the number of 13 municipalities that signed the letter of intent to participate in the programme in October. This moment marks the beginning of a very important project phase where financial and economic calculations for each municipality will be developed and assessed in order to ensure that the programme contributes both to sustainable regional development in Latvia and solving the problem of housing affordability,” said the Minister for Finance Arvils Ašeradens.
“From now on, we are starting an active phase of work in close cooperation with experts so that, based on specific calculations, we can sign agreements with municipalities next summer and submit the informative report to the Cabinet of Ministers for approval. The experts will analyse the existing models for implementing the relevant housing programmes in Europe in order to find the most suitable model for Latvia and develop specific financial and economic calculations for the implementation of the programme, where we take notice that in Latvia the situation is different in each municipality and the amount of co-financing required by municipalities will be different,” says Renārs Griškevičs, the Chairperson of the Board of the SRE.
The expert group will be led by EY Belgium Partner Tristan Dhondt, who has more than 20 years of experience in provision of advisory services, including specific expertise in private-public housing programmes, procurement and attracting of financing.
“Our experienced team is committed to promoting affordable and sustainable housing in Latvia, which currently is a very topical subject at worldwide level. With the support of the EU and the EIB, this project aims to set the standard for high quality housing in under-resourced areas, serving as a model for other Member States,” says Tristan Dhondt. The advisory support is provided free of charge to Latvia and financed by the European Commission.
The goal of the programme “Rental Housing for Latvian Professionals” is to create modern, energy-efficient and affordable housing tailored for young professionals and their families in sectors of national and regional importance in Latvia. The programme foresees the construction of at least 1000 housing units. The exact number of apartments will be determined after the financial calculations in the summer of 2025. Local governments will have to allocate land and co-finance rental apartments after they are available, taking into account the paying capacity of the population and the market situation.
The project is developed according to the ‘design-build-finance-maintain-operate by private partner’ model and starting from 2030 the public sector availability payment will be included in the national and municipal budgets alongside the availability of housing to residents. In addition, the programme provides that at the end of the project, municipalities acquire ownership of the land and the constructed housing units.
A study conducted earlier this year covered interviews of 19 local governments and also an analysis of statistical data, resulting in an estimate of future demand for affordable rental apartments in each of the mentioned local governments. The study confirms that poor housing quality, overcrowded housing, low market activity are among the challenges of Latvian housing policy, and also there is an additional challenge of the lack of access to mortgages by part of the population.
According to the decision of the Cabinet of Ministers adopted this July, SJSC “State Real Estate” has been entrusted with the implementation of the programme in Latvia.
In September this year, the Minister for Finance set up a monitoring group for the implementation of the programme “Rental Housing for Latvian Professionals” in Latvia. The group consists of representatives from the Ministry of Finance, the Central Finance and Contracting Agency, the Ministry of Economics, the Ministry of Smart Administration and Regional Development, the Development Finance Institution “ALTUM”, the Alliance of Real Estate Developers, SJSC “State Real Estate”, SLLC “Latvian State Roads”, the Latvian Association of Large Cities, the Latvian Association of Local and Regional Governments, as well as representatives from the Public Administration and Local Government Committee of the Saeima.
About SRE
Currently, 110 projects with a total investment of EUR 410 million are being implemented under the guidance of SJSC “State Real Estate”. The SRE provides professional real estate management and maintenance for 427 building and structure properties, comprising 1089 buildings with a total area of 0.996 million m2, as well as land beneath structures with a total area of 591 ha, and 3261 land properties with a total area of 895 ha. SRE is one of 17 Latvian companies that in 2023 received the highest platinum award as part of the Sustainability Index of the Institute of Corporate Responsibility and Sustainability, confirming the good governance and sustainability of its operations. The company was founded in 1996, the State of Latvia holds 100% ownership and the Ministry of Finance is the holder of State capital shares.
