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Property Investment Guide to investing in property in Latvia and Lithuania
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© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Property Investment Guide
Your Guide to Property Investment in Latvia & Lithuania
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Meet George
• George would like toinvest for the future
• What’s important to George?– High Capital Growth– Good Return on his Investment– Tax Efficient Investment– Peace of mind by avoiding any high risks
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Where should he invest?• George has read that investing in property in the Baltic
States is providing good returns
• But:– How good is it?– How can he find out more?– Who should he talk to?
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
George is right!• Lithuania and Latvia are the top two countries, in the
world, for property price growth• Top 3 worldwide Growth Rates in Property Values for
2007* are:– Lithuania 20.0%– Latvia 17.5%– Slovenia 17.5%
• Return on Investment of 300% + is not uncommon
* Source – Frank Knight Estate Agents - Jan 2007
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Why Latvia & Lithuania?• Having emerged from The Soviet Union• Joined the European Union & NATO• Governments have invested in growth with GDP growth
in the 6-9% p.a. range• Currencies linked to the Euro €• The capital cities of Riga & Vilnius are particularly high
growth areas as they are they focus for investment and people migrate towards the capitals in search of “a better life”
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
George doesn’t want to miss out
But:• He’s not too sure exactly where Latvia is• He certainly doesn’t know anyone in Latvia or Lithuania • So, how can he invest his money and minimise the
risks?
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Where are the Baltic States?
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Where is Riga?
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Where’s where in Riga?
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Latvia – Key Facts• Capital: Riga
• Area: 64,590 km2
(Slightly smaller than Ireland)
• Population: 2.3m
• Membership: EU, WTO, NATO
• Currency: Lats (Pegged to €)
• GDP Growth:8.5%
• Inflation: 7%
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Where is Vilnius?
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Where’s where in Vilnius
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Lithuania – Key Facts• Capital: Vilnius• Area: 65,300 km2
(Slightly Smaller than Ireland)
• Population: 3.4m• Membership: EU, WTO, NATO• Currency: Litas(Pegged to €)• GDP Growth:8.4%• Inflation: 6%
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
George is introduced to Tucana
• Who are Tucana?
– Tucana are Property Investmentspecialists based in Latvia, with offices in Lithuania and London
– Tucana help prospective investors find the right property and guide them through the full investment lifecycle
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
What can Tucana do for George?• Tucana spend much of their time sourcing prime
investment opportunities
• They have close relationships with many developers
• Built up over their 10 years experience in the region
• Tucana can find the rightproperty for George to invest in
• And guide him through the investment lifecycle
Sounds good to me!
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
What ROI can George expect?• A Capital Growth of between 15% and 25% per annum is quite realistic
• Some existing clients have gained over 80% p.a.
• With just 15% deposit as the investment
• And if rental incomes cover the mortgage payments (which they mainly do)
Purchase Deposit Other Expenses
Value After 3 years
Gross ROIAfter 3 years *
100K 15K 6k 170K 445%
* Figures are for illustrative purposes only Tucana Investment Property Ltd do not guarantee any potential returns on your investment.
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Will George make that on any property?• In a country with high property growth, you should make
money on most properties, but like any investment, the more you know the better your choice.
• With an average growth in property prices of 17.5% to 20% some will grow faster and others will grow much slower
• “Guess who?” knows which are the best ones
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
How do Tucana know which is best?• Tucana are on the spot, they live there!
• Tucana understand the markets
• Tucana focus on smaller apartments, which are in high demand as younger people migrate to the capitals
• Tucana advise individual clients on individual purchases
• Tucana don’t block reserve and mass market apartments to investors
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
How much does George need to invest?• A typical One bedroom flat costs between
£60K to £100K
• 15% to 25% deposit will secure an off-plan property (sometimes 5% is enough)
• Full payment required on completion
• Up to 80% mortgages available
• Rental income should cover at least the majority of the mortgage payments and monthly outgoings
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Why Buy Off-Plan?• Lower prices
• Deposit secures investment
• Benefit from price inflation of full value by only paying small % deposit
• Get ahead of the market
• Reduces Capital Expenditure
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
How did George find the right property?• He started by searching the Tucana web site:
– www.tucana-property.com
• Then called Tucanaon a local number:– UK +44 207 096 1247– Ireland +353 1657 1621
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
What did Tucana do?• Tucana took the time to understand what
type of investment George was looking for
• Then they emailed him detailed property investment packs for a number of properties
• Each of which contained the Tucana Investment Index
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
What is the Tucana Investment Index?• Measure of investment
potential• Based on:
– Capital Growth– Income– Location & Infrastructure– Quality & Delivery
• Each scored out of 25• 60+ is considered a good
investment
XX
CapitalGrowth
IncomeInfra-
structure
Quality
24
2220
20
86
e.g.
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Tucana Investment Index• Capital Growth
– ROI over 5 years– Re-Saleability– Capital Growth
• Rental Income– Rental Demand in Area– Potential Rental Return– Proportion of Local Owners– Rental Management Value
• Location & Infrastructure– Catchments Area– Up and Coming Area– Synchronisation with Area– Local Amenities– Transport Links
• Quality & Delivery– Developer’s Record– Quality of Development– Time to Completion– Mortgage Availability/Rate
• Each category is scored out of a maximum of 25
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Using the Tucana Index• George liked The Tucana Investment Index because it
enabled him to rank individual properties in line with his investment needs
• The Tucana Investment Packs clearly show how the Index is calculatedfor each property
• Any property with a TucanaIndex of 60 or more is likely to be a good investment
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Property Chosen – What Next?• George soon found a
property he liked• But thought it was all too
easy• What about:
– Taxes– The Legal Side– Finding a mortgage– Renting it out– Selling it on
?
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Tax Effective•No Capital Gains Tax after 1 year (Latvia) or 3 years
(Lithuania)
•Only 25% or 27% Income Tax
•Generous Allowances on costs of “buy to let”
•Latvia - 2% stamp duty (up to 2 properties) 3% (3 or more
properties) and 1.5% pa cadestra
•Lithuania – No stamp duty Figures correct when this presentation was created. Tucana Invest Property can not be held liable for any change in government regulations, property values, taxes or the level of investment gains or losses.
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
The Legal Side• No restrictions on foreign ownership of property
• Local currency pegged to the Euro, minimises currency fluctuations
• Friendly local lawyers fluent in English
• Fixed rates
• “Power of Attorney” means no need to visit
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Finding a mortgage• Tucana partners with a number of local banks who are
willing to lend between 60% & 80% of Loan to Value
• Mortgage terms of up to 30 years, depending on your
age
• Euro based with competitive interest rates
• Re-mortgaging of UK property can also be arranged
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Renting it out & Selling it on• Both Riga and Vilnius are capital cities in growth
countries• People are moving to the capitals in search of a better
future, creating a high demand for property and rentals• Tucana can handle the rental in-house and also partner
with several well respected rental management agencies• They look after all aspects of renting the property from
finding tenants to collecting payment• Choosing a well situated and well appointed apartment
will make renting and the eventual sale even easier
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
“OK I’m ready to invest”
• Just talk me through the process
with pleasure, first ….
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
The Investment ProcessCheck
Available
PassportUtility Bill
Pay Deposit & fees
International Bank
Transfer
Arrange mortgage
(if applicable)
Watch your
Capital Grow
Pay reservation
fee
Sign Preliminary Contracts
Arrange Power of Attorney
Arrange To Visit
Complete purchase
Internal Layout Build
Arrange letting
Wait while it is built
Choose Property
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
Does George need to visit?• Its up to George:
• Others prefer to see things first hand, experience the culture and view a selectionof different properties
• Some people rely on our comprehensive investment information and use our “power of attorney” service to purchase their properties without visiting
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
How can George get there?
Let Tucana know you are coming and we can arrange
transport and hotels.*summer only
UK-Latvia UK – Lithuania
Ireland- Latvia
Ireland-Lithuania
Fly LAL
www.flylal.lt
Air Baltic www.airbaltic.com Ryan Air www.ryanair.com Aer Linguswww.aerlingus.com *
© 2007 Tucana Investment Property – All Rights Reserved www.tucana-property.com
What are you waiting for?•Don’t let George have all the best investments
•Go to www.tucana-property.com today
•Then gives us a call on:
–UK +44 207 096 1247
–Ireland +353 1657 1621
•Or drop us an email at [email protected] outlining your investment needs
Every effort has been made to ensure that the information contained within this document is accurate and correct. However, all information provided by Tucana Investment Property Limited is given on an “as is” basis and Tucana
Investment Property Limited or its staff cannot be held responsible for omissions or the accuracy of the information contained in this document.
This document is protected by international copyright law, copying or replication either in part or in full is strictly prohibited.