Riga, Oct 13 (LETA) - The return on investment in commercial real estate in the Baltic states is higher than in the so-called old Europe by at least two percentage points, said Maris Smiltenieks, head of real estate investment company East Capital Real Estate (ECRE) in Latvia, in an interview with LETA.

"We have always looked at the Baltics very positively, because it is no secret that the return on investment in commercial real estate in the Baltic states is higher than in the so-called old Europe - by at least two percentage points. Of course, this is due to the fact that the market here is less developed and carries more risk for the investor," said Smiltenieks.

Smiltenieks is also positive about future developments. He explained that the European Central Bank's (ECB) earlier decisions to cut interest rates have significantly improved sentiment. At the moment, there is a pause in this reduction, but in Smiltenieks' opinion it is logical, as EURIBOR rates are currently quite adequate and in line with the market situation and consumer regulation.

"Of course, there should always be a balance, but we still look at the Baltic market as a developing market," Smiltenieks said.

Asked how investors from old Europe and Scandinavia view the region in the light of geopolitics, Smiltenieks said that investors are different.

"There are, of course, those who are more concerned about geolocation and our border with the aggressor country. We also invest a lot of work and time in educating investors. They are interested in higher returns anyway, that is the core. We explain, we justify with facts, why investing here is still a smart choice," Smiltenieks said.

He stressed that compared to old Europe, we have a greater "appetite" to do more to get to where they are, to be more dynamic, and the end product is often more attractive to investors than the domestic product. At the same time, Smiltenieks acknowledged that the Baltics are limited in terms of market size, the market is not large and is subject to various economic influences, but at the same time it is also a very interesting market.

Smiltenieks also added that there are several active real estate investment funds in the Baltic market with a similar strategy as East Capital Real Estate. "There is competition, but each fund has its own specifics. It is the case that there are overlapping interests with some of our colleagues, but there are differences, and these differences often play a role in why a particular investor gets a particular property," Smiltenieks added.