Pace of investment picks up in Riga as Baltics prep for future

Latvia’s capital Riga currently has a historically high volume of investment projects targeting the city, a result of activity targeting Latvia itself and the Baltic States more widely.

Once such scheme is infrastructure project Rail Baltica which will link all three Baltic states with the rest of Europe providing a high-speed rail service. The project is probably worth around €8 to €9 billion according to Fredis Bikovs, director, Riga Investment and Tourism Agency.

Interviewed by Real FDI editor Courtney Fingar, Bikovs said another important scheme is Riga’s Airport City project, which will provide hotels, business centre and logistics buildings around the airport in a €300 million project. The scheme benefits from Riga’s status as an important hub for both the Baltic States and northern Europe with more than 80 direct flight connections.

Since last year’s MIPIM real estate event the city has attracted an investor to the Andrejsala project in the city centre where one investor has so far committed to invest over €2 billion over the next few years to create a new waterfront neighbourhood.

At this year’s MIPIM Riga was also promoting its Central Market neighbourhood scheme. “We were also talking about this last year. It is one of UNESCO’s historical heritage places and I would say is an icon of Riga,” Bikovs said. It is the third largest market in Europe which with the proximity of the Rail Baltica connection, will make it the next big neighbourhood of Riga during the next 10 years, he added.

Riga’s next big thing

Currently it is underdeveloped and is “not as posh” as it could be given its location and infrastructure. “We’re talking to investors to look in that area. We know that a few Developers are securing land in that area because they believe that in next 10 years it’s going to be ‘the next big thing’ in Riga,” Bikovs said.

Rail Baltica is an EU project and although most funding comes from EU, the project has become significantly more expensive since inception so new sources of funding will be required.

But the significance of the project has increased too. Travel, mobility of talent and cargo movement are all vital but now there is an military element and part of the financing might come from the military budget. The project should be completed before 2030.

Bikovs describes Riga as “a big small city”: “It is big in terms of quality of life and in terms of what it can offer people with Michelin-starred restaurants, operas and everything you want in a big city, but it’s small in the sense that it takes you maybe 20 minutes to drive to the airport.”

The war in Ukraine has raised questions about Latvia’s security but, ironically, Latvia has never been as secure and as safe as it is now, he said.

“There is a lot of political commitment and there is a lot of actual commitment in the sense that more troops have been sent to the region,” Bikovs said.

“Latvians were always aware of the risks of being a neighbour to Russia, probably more aware than western countries, so when investors ask me those questions I say ‘we knew that all along, for you it’s a shock’. We were preparing all of our lives for this event.”