Retail Sales In Estonia Continuing To Grow

More hopeful signs of economic recovery in Estonia comes with a recent report on the Statistics Estonia site which states that retail sales in Estonia increased by seven per cent y-o-y to June 2012.

Furthermore this trend has been continuing since March 2012; every month between March and June saw an increase in retail sales of between six and eight per cent, according to the report.

The total retail sales of goods of retail trade enterprises, to give the retail sector its full name, came to a value of 384.8 million Euros in June 2012, which represented about 80 per cent of the total revenues from sales of retail trade enterprises (484.9 million euros)* the report stated.

There was an apparent growth in all areas, but the sector with the biggest increase was pharmaceuticals and cosmetics (17 per cent) together with ‘non-specialized stores selling predominantly industrial goods’ (16 per cent) and ‘retail sales via mail order or the internet’ (15 per cent).

Retail sales in grocery stores grew six per cent y-o-y which was actually a lower figure than had been the case over the previous two months, but this was largely due to that sector starting from a higher reference base in June 2011 than some other sectors, the report stated.

The overall retail sales in retail trade enterprises month-on-month increase in June 2012 was three per cent at constant prices, and one per cent by seasonally and working-day adjusted data. 

Over the six month period January-June 2012 the report said that retail sales in retail trade enterprises increased by nine per cent at constant prices compared y-o-y.

The original report is available here.

Goodson & Red Tallinn Property Consultancy is a premier real estate service in Estonia, specialising in residential and commercial Tallinn real estate, with a strong focus on consultancy services for overseas property investors in Estonia. Our recent media accolades include mentions in both the UK quality newspaper the Daily Telegraph, and the New York Times.

*Revenues from sales increased by fourteen per cent at current prices y-o-y to June 2012, and by two per cent month-on-month, the report stated.

Read More

Estonia’s Credit Rating Affirmed At A1 By Moody’s

Bond credit raters Moody’s Investor Services have affirmed Estonia’s A1 government bond rating and stable outlook.

As reported on this blog, Fitch had already upped Estonia’s rating to A+, so this is more good news.

The rating was based on factors including the Estonian government’s budgetary rigour and financial strength during the continuing crises of the 2008-10 downturn and the Eurozone (Estonia joined the Euro in January 2011) the low level of public debt, healthy banks and Estonia’s ability to withstand external shocks.

The rating could change over time of course, with both up- and downgrades possible. If Estonia had a long-term track record of steady growth (GDP has of course been growing since the downturn) and a strengthening and diversification of its economic base (recovery has largely been export driven) an upgrade might be on the cards, according to Moody’s.

Conversely, if an intensification of the Eurozone crisis had a negative impact on the public debt situation, or if foreign bank owners (the bulk of the successful banks in Estonia are Scandinavian owned) wavered on their commitments, which could have a similar effect, a downgrade could result.

In Any event, A1 it is! More information from Moody’s is here.

 

The principal methodology used in this rating was Sovereign Bond Ratings published in September 2008. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

Read More

Estonia Vs Slovenia

An item first published on this blog on 6th July, 2012.

An interesting and detailed post here, from the redoubtable Edward Hugh, about one of the two other CEE countries, apart from Estonia, that have acceded to the Eurozone, namely Slovenia (the third country is Slovakia).

Having consistently outperformed Estonia and even ‘older’ Eurozone countries like Portugal, it seems not all is well with Slovenia.

Like Estonia, a small country (with a population of around 2 million) which was formerly a part of Yugoslavia and in fact the first constituent state to gain independence in 1991, Slovenia now seems to be drifting towards joining Spain, Greece, Ireland et al in an IMF or similar bailout, according to the article.

Moreover, in some areas where Estonia has seen an improvement over the last year or so, for example in GDP levels and construction volumes, Slovenia has seen a decline. Unemployment, whilst at a somewhat lower rate than Estonia’s (over eight per cent in Slovenia as compared with a little over 11 per cent in Estonia) has been consistently growing in Slovenia since 2008, whereas the trend in Estonia has been for a fall since mid-2010 (though with small recent increases).

Furthermore, Estonia has leapfrogged Slovenia in the credit ratings stakes, at least as Fitch sees it. As reported on this blog, Estonia currently holds a Fitch rating of A+ whereas Slovenia is now rated at A.

Goodson & Red Tallinn Property Consultancy is a premier residential and commercial property service based in Tallinn, Estonia, with a strong focus on consultancy services for overseas property investors. Our recent media accolades include mentions in both the UK quality newspaper the Daily Telegraph, and the New York Times.

 

Read More

Statistics: 96 Per Cent Of Residential Dwelling Space In Estonia Is In Private Sector

According to Tõnu Toompark on his adaur blog, 96 per cent of residential dwelling space in Estonia is in private hands.

The total number of residential items comes to 657 800 units, only a small increase on the last 12 years, with only three per cent of dwellings owned by local governments and one per cent by the state, writes Tõnu.

Given the upheaval of the collapse of the USSR 20 years ago and the wholesale transferral of ownership from state to private sector this is perhaps unsurprising, and is no doubt a factor in the somewhat active real estate market here, compared with some neighbouring countries (e.g. the Scandinavian nations) where public sector housing will account for a much higher proportion.

The original article (in Estonian) is available here.

 

Read More

Tallinn Property Wishes All Estonian Athletes Good Luck In the London Olympics

The 30th Olympic Summer Games commence today in London, with the opening ceremony a little over eight hours away at the time of writing, and some events (e.g. football) already underway.

There are several Estonian athletes taking part, and we at Tallinn Property will be supporting all of them.

Most noteworthy is discus thrower Gert Kanter, who won the Gold medal at the Beijing Olympics four years ago.

Others include fencer Nikolai Novosjolov and Judoka Martin Padar.

 

Read More

National Conservation Strategy Developed For Estonia

According to a recent report by Robin Ilves on the Estonian Public Broadcasting English language site, the Estonian government has announced plans for a nationwide scheme for nature conservation and protection.

The new plan, to be carried out by the Ministry of the Environment, appropriately enough, spans until 2020, the report said.

Estimated at a cost of 582.2 million Euros, the scheme aims to educate the public about nature conservation and the natural environment, including environmentally-friendly nature tourism, preservation work and financial incentives for creating conservation areas, the report continued.

Estonians value their natural environment; the country boasts several unspoilt national parks and vast areas of bog land hosting a plethora of species, as well as approximately half the country being covered by forest. As noted on this blog the quality of bathing water in freshwater rivers and lakes is amongst the best in Europe.

Thus it comes as no surprise that conservation would be on the agenda; even during the Soviet era there were environmental protests against the proposed strip mining of phosphorus (which thankfully never came to fruition).

However such efforts at conservation hitherto have largely been conducted on a regional or ad hoc basis – this is the first comprehensive national plan of its kind.

The original article is here.

Read More

Many In Estonia Still Unaware Of Imminent Electricity Market Liberalisation

An article first published on this blog on 11th July, 2012.

As we previously blogged about, the electricity market in Estonia, hitherto having been a state monopoly, is due to be open to the market come January 2013, with all the pros and cons that this entails (our previous article lists some of these if you’re interested, or perhaps you already have a view one way or another!).

Nonetheless it seems many Estonians themselves don’t have a strong view on developments, or even worse than that, they’re not even aware it’s happening in the first place!

According to a report by Kristopher Rikken on the esteemed Estonian Public Broadcasting (ERR) site, over 20 per cent of people here are unaware of the prospective privatisation and many more believe there should be more info out there on this subject.

Speaking as a blogger who remembers the fanfare which surrounded the various privatisations of State energy (and other) enterprises under the Thatcher years in the UK, I find this surprising and a real missed opportunity on the part of those companies waiting in the wings to supply electricity to the Estonian people come next January (if in fact they are able to do anything at this stage).

Nevertheless this is the case. Mr Rikken derives his info from a TNS ENOR Poll (we were unable to track down the original poll but here is their Estonian site – TNS is global insight, information and consultancy group) which states that the exact figure of those who are completely unaware of the electricity market liberalisation is 21 per cent, according to the report.

The level of awareness amongst ‘lower income 25 to 34 year olds in small towns’ has risen according to the report, although only 17 per cent of all respondents correctly identified that the changes will affect the price component of their bills (probably adversely in that price increases are likely, although at least consumers are likely to be able to shop around for a better deal from competitors).

Another strange irony is that lack of awareness was particularly high in Ida-Virumaa, the very region of North Eastern Estonia where the bulk of the country’s electricity is generated (in oil-shale burning plants). Moreover ‘non-Estonians’ scored poorly in the awareness stakes, according to the report; this in practice is likely to mean Russian-speaking persons who again predominate in Ida-Virumaa, making up over 70 per cent of the population (and over 90 per cent in some individual towns). Evidently information has either not been provided adequately, or at least disseminated, in Russian.

Furthermore, Eesti Energia as already noted has been particularly helpful in providing information, in Estonian, Russian and English, on what privatisation will mean, presumably anxious to steal a march on its competitors before they enter the market (its Latvian equivalent, Latvenergo, is also poised to enter the market according to the ERR report).

There is still of course plenty of time, it is mid-July and the changeover doesn’t take place until January 2013. However it might be worthwhile for landlords and investors to make a note of the date now and put in place plans for possible savings on energy utilities if they are liable for them.

Read More

Dos And Don’ts When Letting Out Rental Property In Tallinn And Estonia: Part Two-The Don’ts

Following on from our article yesterday in which we outlined what you should do when letting out property in Estonia, here as promised is part two, in which we detail the ‘don’ts’…

1) Don’t wait to secure the highest rental rate possible. Profits can be washed out by the additional vacancy time; in addition, market conditions can change rapidly. By the same token, don’t keep rental rates high and accept a high vacancy rate while waiting for market conditions to improve. High levels of vacancy can lead to high tenant improvement costs and free rent as additional concessions due to the market being a tenant’s market. At the time of writing, the rental market is quite buoyant and so obtaining the market rate for your property without a long wait should be viable.

2) Don’t rule out proposedtenant improvements-losing a potential tenant by refusing to make improvements could lead to additional vacancy time.

3) Don’t make the mistake of cutting out promotional work on your apartment as well as search feesas the market tightens again. If you are not competitive in these areas, you risk fewer tours, which will mean less qualified tenants, which could lead to longer vacancy times.

4) Don’t halt refurbishment and improvement plans in a hot market. These plans can take months to develop and come to fruition. Tenants want the level of service and quality of appearance to be maintained over the life span of their lease. This may attract them to stay for another lease term, saving you money. That being said, you should keep your tenant improvement costs as low as possible. It’s a good idea to stay on top of the repair and maintenance needs of your property by repairing or replacing any item that is not functioning as soon after being notified as possible to prevent further damages or tenant dissatisfaction.

5) Don’t impinge on your tenant’s privacy: inform them about any potential visit well in advance and certainly at least 24 hours.

6) Do not leave anything of great financial or sentimental value in a property which you are letting out.

And that’s it! We hope you have found this advice helpful, and we’re waiting to hear your comments, questions or experiences!

Goodson & Red Tallinn Property Consultancy is a premier real estate service in Estonia, specialising in residential and commercial Tallinn real estate, with a strong focus on consultancy services for overseas property investors in Estonia. Our recent media accolades include mentions in both the UK quality newspaper the Daily Telegraph, and the New York Times.

 

Read More

Dos And Don’ts When Letting Out Rental Property In Tallinn And Estonia: Part One – The Dos

Following hot on the heels of our recent posts on where to buy in Tallinn, Estonian real estate terminology getting lost in translation, and top tips when buying in Estonia, all of which we hope you’ve found helpful, we thought we’d continue on that trajectory.

This time, the topic is letting out properties. So here are the main ‘dos’ when letting out an apartment here or, for the most part, anywhere:

Many people become a ‘landlord’ in Estonia or elsewhere for that matter with little knowledge of the realities of what the process involves.

Even if you are an existing landlord already, you can never have too much advice, and there may be some differences between Estonia and wherever you hold your other properties.

A lack of knowledge about being a landlord can lead to such unwanted scenarios as unexpected expenses, void periods or problem tenants.

To help you avoid any of these undesirable situations, here are some of the most significant do’s and don’ts when letting out property in Estonia.

Do…

1) Make your property as appealing as possible to potential tenants (neat and clean, in order, decorated). If the property was formerly your personal home or part time home, or contains fixtures and fittings left over from a former occupant, be prepared to make the necessary internal alterations in order to successfully attract a tenant. One’s own personal tastes may not match with those of other people. Experience has shown that tenants on the whole prefer light, neutral colours and modern, contemporary (but not too extreme) fixtures and fittings. Time to get rid of that lime-green ceiling or novelty lampshade! ‘Minimal is king’, is a useful watchword here. At the same time, thoughtfully-located and attractive pictures which are in keeping with the overall design of the apartment can make all the difference, as can a few well-placed mirrors. Plants also make a huge difference, although naturally there is the issue of getting tenants to water them once an agreement has begun. The property should also be wisely furnished (e.g. take away unnecessary furniture pieces, have modern and clean furniture which is in keeping with the property etc.)

2) Steer clear of void periods at all costs, even if this means being flexible about rental levels. This also means you should be flexible in terms of rental periods, for example having a short term let for part of the year and longer terms during the remainder, to maximise profits and minimize void periods. This can have the effect of earning 10-15 per cent more per year. Naturally having a fully-managed service will mean that the hassle of organising this is out of your hands.

3) Consider letting the property out as a part-furnished property. Whilst many tenants may be travelling light or interested in short term lets and therefore more likely to choose a fully-furnished property, some scope for their own additions to the furniture can be attractive. What constitutes essential furniture in a part-furnished property? Naturally beds should be provided in the primary bedrooms at the very least; mattresses should be included only if they are relatively new (ie no more than 4-5 years old) and clean. Sofas and chairs should also be included where necessary, and substantial storage space in particular for clothes (wardrobes, walk in wardrobes, chests of drawers etc) is also a must. Kitchen fixtures and fittings should natrually be included and utensils, cutlery, crockery etc can also be provided inexpensively.

4) Provide as much detailed description of your property as possible. There are two very good real estate portals (kv.ee and city24.ee) which list properties available under quite detailed search parameters, in English and with plenty of photos. Your real estate broker will also be able to advise and guide you through the process of marketing your property.

5) Once you have a tenant, make sure that you have a proper lease agreement in place (certainly ask for a tenant’s documentation; get all the important terms of the tenancy in writing). You should also check the potential tenant’s background if possible (credit info, personal info, family, pets, smoking etc). An agent can advise you on this. It is worth having a detailed inventory compiled. This will be signed by both landlord and tenant, thus avoiding any unpleasant disputes arising surrounding any damage at the end of a tenancy. It should cover not only major items such as any furniture, but also details of the overall qualities of the walls, painted areas, flooring etc to account for any damage that might occur. You might also consider obtaining property insurance to cover for damage, and a security deposit, usually of one month, is also worth getting. It’s worth having an inventory taken (even in unfurnished properties).

6) Consider getting a property professionally cleaned at the end of a tenancy period. This can work wonders in attracting a new tenant, breathing new life into worn carpets and making grubby tiles sparkling again. First impressions last and it would be a shame to put off a potential tenant simply because of an unpleasant odour or dirty bathroom.

7) A certain amount of reasonable wear and tear should of course be expected, so expect it! Over time items will need to be replaced. As a general rule, fridges and other white goods will need to be replaced as they become outdated or cease to work over the years, and a property will need small redecoration works and maintenance works approximately every four years. Wooden parquet flooring also requires attention from time to time.

8) If you are living outside Estonia, it is well worth arranging for a managing agent who will not only find and reference tenants for you, but also draw up contracts, manage the collection of rents, bill payments, see to any maintenance or emergency repairs which may arise, advise you on any refurbishments that may need doing etc. Keep in touch: your managing agents can advise you about developments at the property, maintenance issues etc, but always respond to emails and queries on this promptly. This will lead to a better relationship with a tenant and an increased likelihood that they will want to stay on.

….and the ‘don’ts’ will follow in a later installment!

Goodson & Red Tallinn Property Consultancy is a premier real estate service in Estonia, specialising in residential and commercial Tallinn real estate, with a strong focus on consultancy services for overseas property investors in Estonia. Our recent media accolades include mentions in both the UK quality newspaper the Daily Telegraph, and the New York Times.

 

Read More

Increase In Number Of Houses On The Property Market In Estonia

According to Tõnu Toompark on his adaur blog, although the kv.ee index* of property prices in Estonia has seen only scant changes over the past year (a 0.98 per cent y-o-y fall to June 2012) this does not tell the whole story as regards the market here.

For one thing, the index has been fairly stable over the past couple of years (the index is based on asking prices rather than transaction prices**) which means that vendors have not had unrealistic expectations. On the other hand, transaction prices (which are naturally lower than asking prices) have at least in some areas been creeping up towards the levels of asking prices, which has led to a quite active property market over the last few quarters, writes Tõnu.

One area where the statistics bear this out is in the number of houses which have appeared on the market recently – 409 in the year to June 2012. Now, 409 may not sound like a lot of items, but it is worth taking a look at the number of houses on the market at any one time. At the time of writing (13.00 on 25th July) there were, on the kv.ee portal itself, 14 516 apartments for sale in the whole of Estonia (5 646 in Tallinn) as against 8 000 houses (621 in Tallinn). In other words the property market in Estonia, and in Tallinn in particular, is dominated by apartments. The city24.ee portal paints a similar picture, with 14 115 apartments for sale across Estonia versus 6 101 houses.

It needs to be pointed out here that the two portals’ statistics are likely to represent a figure for items on the market which is higher than the actual figure (due in part to the same property being listed by multiple agents and so counted more than once, or ‘dead’ properties which have been listed for several years); nonetheless Tõnu cites 5 654 houses being on the market in Estonia in June 2012.

This increase in supply of houses on the market has not been uniform throughout the country, although in all but two counties (Maakond) in Estonia, there have been increases, some of them substantial. For example in the county of Läänemaa there was a 58 per cent increase in numbers of houses on the market, according to Tõnu’s data.

The two exceptions were Viljandimaa which saw a -24 per cent fall in supply, and Lääne-Virumaa which saw a -6 per cent fall (there are 15 counties in Estonia).

In addition to that, no data was available for changes in supply of houses in Põlvamaa (though only 15 houses were listed as for sale in June 2012 here).

The figure for Estonia as a whole was an increase of 8 per cent in the supply of houses on the market (409 items as noted).

As regards prices of houses, changes were more variable. As might be expected from microeconomic theory, an increase in supply led to a fall in asking prices in a lot of counties (as much as -27 per cent in Järvamaa in central Estonia). However five counties actually saw an increase in asking prices, including the key counties of   Tartumaa, Harjumaa (where Tallinn is located) and Pärnumaa (increases of six, two and one per cent respectively). Reasons for this are largely speculative, although it is worth noting that when taken as a whole, Estonia saw no change in asking prices.

In summary: both asking prices and transaction prices remaining pretty static in the market for houses in Estonia, but there is an increasing availability of houses to buy nonetheless.

The original article by Tõnu Toompark (in Estonian) is here.

*The KV.ee index, which commenced on 18th February, 2008 (i.e. this is the date on which the value of the index is calibrated at 100) measures the week on week change in residential real estate prices in Estonia. The data has been measured back anachronistically to 1 January, 2005, when the index stood at an “all time” low of 49.9. The “all time” high came on 7th May, 2007, when it stood at 108. Following the economic downturn of 2008 onwards, the index reached a low point (to date) of 61.4 on two occasions, on 5th September and 27th October, 2010.

**Please see our recent article on the translation of the Estonian words ‘pakkumine’ and ‘pakkumushind’.

 

Read More