Strengthening our position in the Baltic States and also looking towards Poland

You have just completed the construction of the first phase of the Mārupe logistics park. What other projects are planned in Latvia this year?

All our projects in Riga embody the company’s vision of modern, sustainable logistics parks in prime locations, designed to meet future industry demands with a focus on workplace quality and genuine sustainability. Businesses are interested in exclusive location, cost-effectiveness and being part of a sustainable logistics ecosystem.

Our aim is to offer companies operating in older warehouses the opportunity to relocate to a modern logistics park with 30% lower operating costs, environmentally friendly solutions and better conditions for employees. Projects of this level are lacking in Riga today.

SIRIN PARK MĀRUPE, with 27,000 sqm of space, has opened its doors to tenants near Riga Airport – potentially a very attractive location. We have invested EUR 18 million in the first phase of this project. This year, the company will invest EUR 10 million in the second phase of the park, which will develop a further 16,000 sqm of warehouse space.

In addition to Mārupe, our company is expanding the SIRIN PARK RUMBULA project, which already features 80,000 sqm of warehouse space in Riga, on the right bank of the Daugava River, near the city center.

If the municipality grants the necessary permits, SIRIN Development is ready to invest EUR 20 million in the first phases of multifunctional business park SIRIN PARK DREILINI this year, offering 27,000 sqm of modern warehouses to tenants.

This project is designed as a multifunctional business and service park, catering to a diverse range of commercial needs. Our goal is to attract not only retail companies but also a wide variety of service providers. We aim to offer adaptable spaces that can be customized to suit different business requirements and commercial purposes based on customer demand. The buildings will accommodate companies of various profiles and sizes, including fitness and sports centers, exhibition halls, goods receiving points, and more.

In this business park, we will focus on sustainability, energy efficiency, and improving the environment. This area lacks infrastructure, so we will invest €1 million to improve roads and access, making traffic flow better and reducing congestion.

Next to Dreiliņi is IKEA, making this an excellent location. Once constructed, cargo transport will not need to drive through the city. Currently, the only things delaying and hindering this project and our investments are bureaucratic obstacles.

Riga is a strategic city where we plan to actively expand, with investments ranging from EUR 50 to 90 million over the next few years, depending on institutional attitudes and efficiency. This year, we are prepared to invest between EUR 20 and 40 million in Latvia, provided the investment environment is favorable.

How large are Sirin Development's investment plans in the Baltic region this year in general - what are the largest projects?

We intend to invest between EUR 70 and 100 million in logistics real estate across the Baltic region in 2025, with confidence that we will lease out the modern and sustainable warehouse spaces offered to the market. Most of our investment will focus on expanding in Latvia, Riga, if the investment environment is favorable.

We continue to invest in the Latvian market and maintain our strategy of establishing three logistics parks in each key city across the Baltics – at prime locations, near the most important roads for logistics.

We invest where it matters to our clients, and our investments follow the client. Therefore, we are now turning to Latvia, Riga, as it is strategically located for logistics – in the middle of the Baltic countries, with both a seaport and an airport. We also expect that the Rail Baltica project will open new opportunities for logistics, and we believe it will be successfully implemented.

We firmly believe that Latvia's economy will soon be back on the growth track, accompanied by a rising need for modern warehouse space.

From our side, we are ready to invest; however, the pace of our investments depends on stakeholders, municipalities and state institutions. Our investment volumes depend on the investment environment and the efficiency of bureaucratic mechanisms: how quickly building permits are issued, how fast land can be acquired, and what infrastructure is available. If we encounter bureaucratic obstacles, we may invest less than we are capable of.

Do you continue to search for new land plots in the Riga airport area to develop other logistics park projects?

How are negotiations with the Riga City Council going regarding the development of the airport area, where the Riga City Council previously canceled privatization?

Disputes bring no value to either side. We have already built the first phase of the logistics park, but if we had reached an agreement five years ago, today, a 100,000 sqm logistics hub would already be standing near the airport, serving its needs.

What happened has happened, but today we are pleased that all parties now want to reach an agreement and share a common interest – both the municipality and the ministry.

If the process continues not only with goodwill but also with speed, we are ready for the rapid expansion of the logistics park. As the park develops, the airport will also benefit – with the growth of the logistic hub, the airport's infrastructure will also be strengthened.

You mentioned earlier about plans to develop a multifunctional business park in Dreiliņi – at what stage of development is this project currently?

If the municipality grants the necessary permits, SIRIN Development is ready to invest EUR 20 million in the first phases of SIRIN PARK DREILINI this year, offering 27,000 sqm of modern warehouses to tenants.

How do you assess the current investment climate in the Baltic States, and how much investment do you plan to make in the Baltics this year? Are there any plans to expand beyond the Baltic market?

Our success comes from staying true to our strategy. Since the beginning of our company, we have remained focused and made calculated decisions with a resilient outlook on external challenges such as geopolitical tensions, fluctuating interest rates, or economic uncertainties.

Two years ago, we decided to stay focused and concentrate on growing our presence in our home market – the Baltic States – without letting ourselves get sidetracked.

Looking back, we can see that this approach has been successful. Having solidified our position in the Baltic region, secured land plots, and laid out plans for future developments and investments, we are now beginning to explore opportunities for expansion into Poland. While we do have plans to initiate a project in Poland, it is still too early to share specific details at this time.

It is no secret that new investments from foreign investors are currently coming into the Baltic States quite slowly. Has this in any way affected regional competition in the logistics sector – has it become fiercer, or perhaps, on the contrary, decreased?

Foreign investors come and go. We have clearly observed how foreign investors withdraw to their home markets when new opportunities arise there. We have seen examples with German, Spanish, and Swedish investors who chose their home markets when conditions changed and became more favorable for operations there.

That is why local investors and their investments are crucial in every market.

Although formally we may be considered foreign investors in Latvia, we see ourselves as local investors in all the Baltic countries because this is our home market. We are a Baltic company, and we are not leaving – we dedicate our biggest investments to this market.

There must be flexibility and efficiency from municipalities and state institutions. The more bureaucratic obstacles there are and the longer the logistics project development period is extended, the more expensive projects become – increasing investment costs and, consequently, rental prices for tenants.

This reduces the market's attractiveness for investments, weakens the competitive advantage, and makes us lose to other countries, such as Poland, where projects can be developed faster and cheaper today.

Also, the vast sums of people's funds and deposits currently locked in bank accounts could be redirected to stimulate local investment. The government should actively support the mobilization of private capital and encourage entrepreneurship by establishing favorable conditions and investment platforms. By facilitating investment in industries and modern logistics infrastructure, the country can significantly enhance its economic growth.

In which Baltic country is the logistics sector the most developed and why?

The strength of the logistics sector is heavily influenced by domestic consumption volumes. Currently, Lithuania has the largest population and domestic consumption, making its logistics sector the most developed. Latvia ranks second in this regard.

To what extent has the war in Ukraine affected the logistics sector in the Baltic States, including Latvia?

Geopolitical processes certainly impact the region's development. As one famous political scientist said, the Baltic States are excellent for living and business, but they have very bad neighborhood.

Businesses are deciding whether to stay or leave. Our position and strategy are clear – we are staying, investing, and continuing to operate in the Baltic States.

There is a lot of speculation on how the end of the war, that is supposedly at hand, might also impact the economy and lead to rising costs in construction. However, I recommend that we don't get caught up in these uncertainties. Instead, we should focus on our own work and invest our energy in developing our projects and strengthening our economy.