Vilnius is the most competitive capital in the Baltic States for attracting large foreign investors, according to Latvia’s head of investment promotion. During a presentation of the Colliers International market survey, Linda de Putane, head of investment promotion at the Latvian Investment and Development Agency, stated that the Latvian capital Riga is being outpaced by Vilnius due to its lack of quality office space.

According to Ms de Putane “a major world-known Japanese electronics company opted not invest in Latvia last year.” She stated that the investor, which had been in talks with the Investment and Development Agency for nine months, pulled out because it was not sure whether it could find adequate offices in Riga.

The head of investment development argued that having affordable, high-quality offices that large-scale investors could move into right away was crucial, as they would never sign agreements on renting offices that have not yet been built. “This is a catch-22 situation,” she continued. “Banks are not issuing loans to developers for the construction of office buildings unless they have agreements signed on the renting of at least 50% of the given office space.”

Furthermore, while there is office space available in Riga, Latvia’s port cities, and a few other major cities, the situation is substantially worse elsewhere, for instance, in cities like Daugavpils, Cesis and Valmiera. “And office buildings under construction in Riga which are located further away from the city centre are of no interest to investors. For example, we showed investors an office building being built on Ganibu Dambis Street, and they said the area was terribly degraded and too far away from the center of the city. Investors do not want such offices,” said Ms de Putane.

Ms de Putane believes Vilnius is leading the way in the Baltic region in the attraction of foreign investors. According to her, one key advantage the city now has over Riga and Tallinn is that several global companies already have offices there, such as Western Union and Barclays. “These large, popular brands attract other companies,” she added.

It is expected that till 2017 the Vilnius office market will increase by 150,000 sq. m of modern office.