Economic Growth In Estonia Continues, But Slows In Q2 2012

According to a recent report on the Statistics Estonia site, economic growth in Estonia grew by two per cent y-o-y to Q2 2012.

However, GDP only grew by 0.4 per cent, when seasonal and work-day factors are taken into account, between Q1 and Q2.

Most of the growth came from the construction, information and communication and administrative and support service areas, whereas manufacturing, the biggest single sector, had a negligble effect on growth, according to the report.

The report stated that reductions in value added in the real estate sector, going back to Q3 of 2010, had an impact on this slowing. Normalisation after the adoption of the Euro (which saw a rise in real estate prices due to ’rounding up’ around the time of the currency’s adoption in January 2011) and the rise in construction material prices may have been two causes of this.

This is not the final word on the matter from Statistics Estonia however; figures for Q1 and Q2 2012 growth will be re-estimated and published on the site on 7th September, the report stated.

The original report is available here.

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Kanter Takes Bronze For Estonia In London Olympics

Congratulations to Gerd Kanter of Estonia who, whilst not repeating his gold medal success in Beijing in 2008, was in the medals in the men’s Olympic discus in London last night, achieving a bronze medal with a throw of 68.03 metres on his penultimate throw.

Germany’s Robert Harting won gold with a throw of 68.27 metres, with Eshan Hadadi of Iran taking the silver medal.

Congratulations are also due to Heiki Nabi who attained Estonia’s first medal (silver) of the tournament on Monday in the men’s 120kg greco-romano wrestling event.

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Real Estate Prices In Estonia See Fall In July 2012

According to a recent article in the Estonian Press Digest from News2Biz, July 2012 saw something of a fall in real estate prices in Estonia as a whole, but at the same time real purchasing power (in Tallinn) for those wishing to purchase property also fell.

Citing real estate giant Pindi Kinnisvara‘s index as falling by 5.4 per cent between June and July, the report also stated that the real purchasing power of a Tallinn resident earning an average wage would stretch to a property of 68 square metres in area.

The Pindi Index is based on the weighted average transactions across the 17 largest Estonian towns (Tallinn is of course the largest with over 400 000 inhabitants, whereas 17th placed town is Kiviõli in Ida-Virumaa with only a little over six and a half thousand souls).

The average price of apartments per square metre in June 2012 for the whole of Estonia was 886 Euros, falling to 838 Euros per square metre in July, according to the report.

Not surprisingly the lower prices were accompanied by a somewhat higher rate of transactions – 991 in July, compared with 934 the previous month (this only covers the 17 cities incorporated in the Pindi index) the report stated.

According to the article, residents of Tartu and Pärnu can stretch to apartments a little larger in size when measured by their purchasing power levels (at 73 and 84 square metres respectively).

The Pindi Index reached an all time peak in April 2007 at the height of the boom, and an all time low in July 2009 (624.2 Euros per square metre).

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Where To Buy In Tallinn, Estonia?

First published on this blog on July 21, 2012.

People often ask us what the up and coming areas in Tallinn are. What’s going to be the next hot spot to buy an investment property with a potential for strong growth and consistent cashflow from rentals?

We don’t have a crystal ball of course – and nobody does, not one that is effective anyway – but based on the empirical evidence of what has been happening in the couple of years of recovery since the slump we can make a sensible forecast.

City Centre and Old Town

First, the Old Town (see map 2 below) will continue to hold its value. It is a UNESCO world heritage site, hugely popular with tourists, well supplied with a variety of good quality restaurants, cafes, bars, craft shops, high end clothes shops and other amenities, and is close to the harbour not to mention the seat of Governmental power. What’s more people actually live and work there.

The ‘Kesklinn’ (City Centre, also called the ‘Südalinn’) similarly will retain its prominence and, whilst prices took a greater bashing here during the 2008-2010 slump than in the Old Town, is of key significance, containing as it does not only Tallinn’s Central Business District, but more entertainment outlets, foreign embassies and a large number of residents.

Add to that the district of Kadriorg, to the east of the Kesklinn, with its leafy, evocative streets, fine old housing, and the Palace built for Catherine the Great, not to mention the President’s residence, and you already have a large, contiguous area of desirable housing with strong rental potential. In fact, the three areas noted above come under the one administrative area as far south as the Ülemiste Järv (see map 2) which is the Tallinn city lake, and cover 28 square kilometres in total.

But these areas have already arrived, so to speak. Whilst developments in the Kesklinn in particular look set to continue, such as the new Finance Ministry as reported in a previous post, and there is plenty of scope for refurbishment work in all areas, it seems unlikely that there is to be any radical transformation here. That process has already happened, stretching back the 20 years since Estonia’s independence.

Emerging Districts

Now to the districts of Tallinn showing promising signs for investors. Again, these are largely adjacent to one another and can thus be treated as a single entity for our purposes. Essentially they comprise the ‘Sadam’ harbour area (see map 1 below) stretching westward along the waterfront along the ‘Culture Kilometre’ (a popular cycling and jogging route) to Kalamaja. This stretch is set for a lot of exciting development in the coming years, both residential (that process has already started with the quality new housing in the Jahu and Suur-/Väike-Paterei streets) and commercial. One recent development which has already happened is the newly refurbished Seaplane Harbour, which includes dry docks, Seaplane Hangars dating back to the late Tsarist time which hold a museum, and vessels of historical interest.

Kalamaja itself is similarly already experiencing a renaissance. It largely comprises character wooden houses, mostly around a century old but here have been some tasteful new builds constructed along the same lines, as well as new, more modern builds. The Kalamaja effect is spreading southwards to neighbouring Pelgulinn, which has similar housing stock and is quiet and family friendly, yet still a stone’s throw from the Old Town, eventually dovetailing into the borders of the more-established Kristiine suburb. The Kassisaba district (close to the British embassy) has seen construction and refurbishment activity aplenty recently as well (e.g. at Adamsoni 33).

Returning to Kalamaja, the border that separates it from Pelgulinn, demarcated by the goods rail line to Kopli, host what is really the hub of this new revival – the so called bohemian quarter. This comprises three of the hippest restaurants in town, Kukeke, run by the same people who are behind the successful Komeet restaurant in the Solaris centre, F-Hoone (literally ‘building F’) which are both in former light industrial buildings, and the more established Boheem cafe close to the station.

Other good quality refreshment outlets abound, and we have to mention the nearby Asian Cafe  on Kopli 4c close to the central train station, which offers tasty Indian, Chinese and Thai-style food for those in a hurry and at good prices.

Moreover this area is set to be the new alternative theatreland, with a theatre accomodating a good couple of hundred seats slated for construction next year.

Lastly, this effect may well spread Northwards throughout the Kopli peninsular (see map 1) over the longer term. The Kopli peninsular, once the site of aristocratic hunting forests, today displays very mixed use, with various commercial docks including the Bekker port, the HQ of BLRT, a shipbuilding company, plenty of old wooden workers cottages, office space, parkland and the magnificent Estonian Maritime Academy building. Beyond this at the tip of the peninsular lies the Paljassaare nature reserve, which is excellent for birdwatching and its natural environment in general, all year round.

Rough per square metre price of districts

As regards prices, a rough breakdown for average buying prices of the districts mentioned is as follows:

Old Town: 2 000 – 3 000 Euros/Square metre.

Kesklinn (excluding Old Town), Kadriorg: 1 800 Euros/Square metre.

Kristiine: 1 300 Euros/Square metre.

Kalamaja, Pelgulinn: 1 100 Euros/Square metre.

Kopli: 800 Euros/Square metre.

Naturally these are just ballpark figures at the time of writing and prices will vary with street, type of building, state of refurbishment etc.

As a rule of thumb, rentals will be at least 10 Euros/Square metre in the Old Town (and somewhat more than that for well-appointed properties) falling to around 6 or 7 Euros/Square metre further from the centre.

We hope that this gives a good overview of the state of play with the districts in central Tallinn to watch out for; naturally we welcome your questions, comments and feedback!

 

Maps (click to enlarge).

 

Map 1: Area to Northwest of Central  Tallinn,

including Kalamaja and Kopli peninsular.

 

 

Map 2: Old Town (Vanalinn), City Centre,

Pelgulinn and Kristiine (Lillekülla).

 

 

 

 

 

 

 

 

Map 3: Tallinn City.

 

 

 

 

 

 

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.

 

 

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Delays In Platform Construction At Tallinn Central Train Station Hoped Not To Drag

As recently reported on this blog, the area surrounding the central rail station in Tallinn and the market there is to be extensively redeveloped.

In addition to this, new platforms are still being constructed; the initial deadline for completion was the end of July but it is now looking like being delayed for a few more weeks, according to a report by Robin Ilves on the Estonian Public Broadcasting site.

The disruption has led to the station operating at about half its normal capacity since April, with local electric routes run by Elekrtiraudtee the most affected, with replacement bus services often running instead, according to the report (most of the longer routes in Estonia employ diesel locomotives).

Private construction company Leonhard Weiss RTE is building the platforms, which range between 150 and 400 metres in length, two at a time and aims to have them done soon, with other work being carried out on suburban stations completing by September 2013, the report stated.

The original article is here.

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Estonia’s National Air Carrier Sees An Increase In Passenger Numbers to July 2012

Notwithstanding national air carrier Estonian Air’s muhc-publicised financial problems, according to a recent report on the Baltic Busines News site, the airline has carried 52 per cent more passengers as of the end of July 2012 than at the same stage during the preceding year.

At the same time, the number of passengers taking regular flights from Tallinn increased 78.6 per cent y-o-y, according to the report.

92 136 passengers flew from Tallinn on regular flights, 91 983 of whom were on regular flights, the report continued, with 515 721 passengers travelling with Estonian Air through the first seven months.

The occupancy rate of flights not surprisingly increased y-o-y to July 2012 too, by 9.2 per cent y-o-y to 98.9 per cent occupancy, the report stated, whilst

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Statistics: Real Estate Investment In Estonia Increases 24 Per Cent Y-o-Y

According to a report by Tõnu Toompark on his adaur blog, investment in real estate in Estonia has increased by 24 per cent y-o-y to the first quarter of 2012.

Citing figures from the Estonian Statistics office, investments from  Estonian companies into plant and equipment fixed assets came to a value of 506 million Euros in the first quarter of 2012, writes Tõnu.

A bit less than a third of this total came in the real estate sector, including buildings and facilities acquisition, construction, repair work and the acquisition of land, Tõnu continues.

After a three year fall in investment in the real estate sector, the last five consecutive quarters have seen growth in investment, Tõnu writes.

The original article (in Estonian) together with diagrams illustrating investment levels in fixed assets including buildings, facilities, and land, and changes thereof, is here.

 

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Apartments For Rent In Tallinn Increase Y-o-Y Slightly In Number, Greater By Rent Price

There has been a y-o-y increase in rental prices in Tallinn of 18 per cent, to July 2012, according to Tõnu Toompark on his adaur blog.

This undoubtedly is connected with the short supply of rental properties in Tallinn at the moment.

According to Tõnu and citing data from real estate portal kv.ee, the volume of rental apartments on the market has increased y-o-y, but not by much, which may put a downward pressure on residential rental prices through the summer and autumn – as noted there has been a rise up to now.

Tõnu cites more data from kv.ee which states that there were 1 996 apartments up for rent on the portal in June, which is only a two per cent increase y-o-y.

However, the shortage in availablility of rental items is not as perceptible today as was the case a year ago, Tõnu continues.

This will be predominant in those areas of Tallinn where more apartments have come on to the rental market, which has happened in all districts. writes Tõnu, except North Tallinn (which includes Kalamaja and Kopli) the Soviet-era residential district of Mustamäe and the leafy, sought-after outer suburb of Nõmme. These three areas have seen a fall in the volume of rental apartments available (by as much as -37 per cent in the case of Nõmme).

Fallinn demand may be the result of rising rental asking prices (as well as the latter being the result of falling supply). The average rental asking price in Tallinn was a 6.10 Euros per square metre in July 2011; a year later that figure had risen to 7.20 Euros per square metre.

In any event this makes the rental market attractive for investors; a shortage of supply and rising rental levels mean a property could be let out very quickly and at higher prices, ensuring good cashflow.

The district of Tallinn with the highest rise in number of rental apartments available y-o-y to July 2012 was the residential suburb of Kristiine, according to Tõnu’s data, at 23 per cent. The city centre (which includes the Old Town) saw a 10 per cent rise in number of available apartments over the same period, from 736 to 806 items (also by far the highest total number of items of any region, as might be expected).

Outside of Tallinn, Pärnu saw an 18 per cent rise in apartments available for rent, whereas Tartu saw the opposite trend with a -26 per cent fall over the same period.

The figure for the whole of Estonia was a -4 per cent fall.

The original article (in Estonian) and data is here.

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Redevelopment Of Train Station Area In Tallinn, Estonia Up For Tender

As recently reported on this blog, one of the up and coming areas of Tallinn is the area surrounding the train station, merging into the Kalamaja and Pelgulinn neighbourhoods.

Our faith in this seems to be bearing fruit; according to a recent report by Ott Tammik on the Estonian Public Broadcasting (ERR) English language site, the City of Tallinn is drafting the very terms and conditions for the tender of architectural plans that will make this long yearned-for development become a reality.

The project has been in the offing for some 11 years, and will replace the existing Balti Jaama Turg (Train Station Market). Not surprisingly the developments are not unopposed – one point of contention is the reassigning of Reisijate Street, currently closed to traffic and taken up by much of the marketplace itself, as a traffic street, and the existing Kopli Steet to become a four lane thoroughfare, the report stated.

Currently traffic is undoubtedly congested, particularly at rush hour, since Kopli Street is a one way street along the stretch that passes the train station. New developments would require better road access.

Other dissenting or at least questioning voices, as well as market traders, include national rail carrier Eesti Raudtee who wish to preserve some rail sidings and have space for additional platforms in future, according to the report.

Previous architectural plans had met with objections due to apartment developments blocking the view of Toompea, the seat of the Estonian government and the highest point of the old town.

As noted on this blog the area where Telliskivi Street crosses train tracks adjacent to the station is already something of a bohemian quarter, with two or three successful restaurants and various other businesses.

The original report is available here.

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