Increase In Construction Licences Not Necessarily A Good Thing

According to a recent post by Tõnu Toompark on his adaur blog, third quarter statistics show a growth in licences issued for the construction of new properties of some 43 per cent. This was accounted for by applications for building licences for 526 new units, covering a total area of 64,000 square metres.

However, the total area of newly-built property has only increased by 10 per cent. Tõnu suggests that this is because the new licence applications have largely been taken up by smaller apartment units.

Tõnu goes on to warn against getting too excited about the figures, since they are merely one general market indicator, which can fluctuate somewhat. Furthermore he fears that the issuing of too many new building licenses could lead to the market becoming overloaded again at a later date.

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Residential Prices In Estonia: Index Shows Fall, Many Agents Favour Rise

The index for residential prices in Estonia, which has stayed with the range of 61-65 points through the course of this year, yesterday settled at a figure of 61.8, thus  falling by 4.3 per cent through the course of the year, according to a report by Tõnu Toompark on (in Estonian).

The average price for the whole of Estonia stands at 12 686 EEK per square metre at the time of writing, down from 13 272 per square metre exactly a year ago.

This is hard to believe, given the fact that the residential property market is becoming increasingly active, Tõnu argues, and could in fact be due to the fact that the index lags behind actual prices by as much as a year. Actual transaction prices are probably stable and not falling at the moment.

Looking at the three major Estonian towns (Tallinn, Tartu and Pärnu) it appears that the gap between asking  prices and the corresponding actual transaction prices has narrowed somewhat, to below 4600 EEK and 4200 EEK per square metere  in Tallinn and Tartu respectively, and just 2200 EEK per square metre in Pärnu.

However Tõnu predicts that this trend will not continue indefinitely, and it seems likely that transaction prices will start to rise slightly in the near future. He goes on to explain that most of the difference between asking and final transaction prices does not represent a growing market but rather reflects the differing expectations of buyers and sellers. He also speculates that estate agents are wanting to return to pre-crisis price levels and are thus influencing prices upwards to a certain extent – this could mean that the disparity between asking and transaction prices will rise…

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Slight Fall In Tallinn Property Transactions For October

Tallinn property transactions fell in October in comparison with the previous month, according to Tõnu Toompark’s blog (available in Estonian only).

Citing figures compiled by Tallinn real estate agents 1Partner Kinnisvara, transactions fell by 12 per cent, from a figure of 482 million Kroons (c. 30.8 million Euros)  in September to 423 million Kroons (c. 27 million Euros) in October. 1Partner’s executive director Martin Vahteri said that activity was particularly noteworthy in the Vanalinn (Old Town) and City Centre areas, where the highest real estate prices are generally to be found. He further remarked that a significant proportion of transactions involved overseas nationals, most notably Finns and Russians. 17 per cent of transactions, a total of 112 objects, comprised foreign investors, he said.

Average price per square metre stood at 15,546 Kroons (c. 994 Euros). The value of transactions of apartments varied hugely, from a reported highest price of 6.225 million Kroons (a little less than 400,000  Euros) to a low of 10,000 Kroons (c. 640 Euros)!  The most expensive transaction on a whole housing unit stood at 11.5 million Kroons ( c. 735,000 Euros). There were foreclosures on 31 buildings in October.

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Hopeful Signs For Estonia’s Economy

More encouraging signs for the future of Estonia’s economy can be gleaned from a report from Edward Lucas’ blog on the Economist website. The article focuses on the rapid growth in industrial production, citing lastest figures of 31.1 % year on year growth in industrial production as being particularly noteworthy.

This is of course an important indicator; however Estonia’s recovery to date has largely been export-driven. A report by Maris Lauri and Annika Paabut from Swedbank, which the Economist blog also links to, sets out forecasts for the economy in a broader context. Their predictions are, it has to be said, encouraging, and include a GDP growth rate of as much as 4.5 per cent for 2011 and 2012, a gradual fall in unemployment to 12.5 per cent in 2012 (currently just under 18 per cent) growth in investments, growth in household consumption in single percentage points (this actually fell by 18.4 per cent in 2009 according to Swedbank’s figures!) and a possible governmental balanced budget by 2014. Inflation is forecast to hover around the 3-3.5 per cent mark over the next couple of years, probably as much as 4 per cent over the coming winter, the report says.

Naturally as adoption of the Euro draws closer the implications of this are on the minds of many. It seems likely that the new currency will bring with it some benefits; part of the criteria for joining are the reduced bank reserves required by the Euro Zone, from 15 per cent to two per cent (this process is to be carried out in stages and has in fact already begun). This additional liquidity however is mostly likely to be absorbed by the banks redeeming loans or building up some reserves of their own.

But perhaps most perspicacious is Mr Lucas’ observation that of all the member states of both the EU and NATO, there is only one which as of January 2011 seemingly actually adheres to all the rules of both organisations – Estonia!

The full report from Maris Lauri and Annika Paabut is here. See also Swedbank’s publications page here.

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Tallinn Then and Now – 12 Years of Change in Photos

We wanted to share a great series of impressions of Tallinn in May 1998 and now in 2010. Some changes are amazing, but it is also amazing that some places still look exactly the same :)

Twelve years ago, in May 1998, my friend designer Dan Mikkin decided to have a walk in his hometown of Tallinn along with his no-name camera and take few snapshots. No specific method or locations, just random, but the plan was to visit the same places again after twelve years, happen what may.

Now it’s 2010 and Dan really did take his camera and Tallinn photoalbum and searched the places he had photographed. As a result we have a great snapshot of history of Tallinn. In my opinion the change is mostly for the better, but see for yourself.

Above is just a selection of Dan’s photogallery. Look for more on his Facebook Group Dozen or his Flickr album Tallinn Dozen

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