Estonia Cuts Carbon Emissions by Planting Bogs

In Estonia, dried-out peat bogs emit a great deal of carbon. The government desires to reverse that.


TUDU, ESTONIA – What looks like a typical Northern European forest of scrubby Scotch pine, blueberry bushes, and ferns, about 15 miles inland from the Baltic Sea, turns out on closer inspection to be a peat bog—one that’s been drained and mined. A 10-foot-deep drainage ditch, now covered in foliage, still fills every time it rains. Furrows reveal where heavy equipment cut the peat into rectangular blocks, about the size of toaster ovens, which were dried and later burned in homes throughout the former Soviet Union.


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The Land Of Organic Forests

Lonely Planet, the largest travel guidebook publisher in the world, has ranked Estonia as the number one best value destination for 2016. The guide recommends going into the forest as a worthwhile experience. Estonia has a lot of forests. 40% of them are certified organic!

Whereas the tiny country of Bhutan, nestling in the Himalayas, aims to become the happiest country in the world, equally tiny Estonia, on the shores of the Baltic Sea, is going for the title of most organic country. Indeed, there is potential – plenty of fresh air, forests, land and sea. We have tranquillity and space, untouched nature and a variety of clean, raw materials close at hand.

On the other hand, we are a smart IT-country with our e-state, e-Residency and startup culture. These two sides – natural and innovative – could prove to be a match made in heaven. (more…)

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Smaller Forest Land Interesting To Domestic Investors In Estonia

Whilst the focus of this blog is on Tallinn, we sometimes like to focus on the rest of Estonia, both in terms of residential real estate and in other sectors, or related areas. This article is a translation of an item about the market for forest land in Estonia which first appeared on Tõnu Toompark’s adaur blog.

When considering the market for forest land in Estonia, it soon becomes apparent that the greater part of buyers are domestic investors who undoubtedly view their investments in the short term, but are nonetheless willing to pay more for forest land, since the price of timber has risen when compared with other forms of real estate.

The most pressing question in the forest land market currently is without doubt, is investor interest still increasing?

Uusmaa property consultant Vivika Simmo has answered this question unambiguously: the interest is there again. Investors are once more considereing the prospective growth in forest land.

She points out that the increasing use of timber contributes to the quick sale of forest land by the state’s reserve to those who ae interested. “The greater part of this is from owners who have the advantage of borderland forest land” she said.

Another interesting question is whether there are regional variations. Simmo thinks not, and that this interest is widespread throughout the country. “It is well known that forests in Läänemaa (a county in Northwest Estonia) are of a lower quality, but ultimately everything is price-dependent” she said. “If the forest for sale is offered at a reasonable price, then the interest will follow in every case” she went on.

However, when approached from an investor perspective, then what will the the investor see that will above all make forest land appear attractive? Ms. Simmo identifies three key attributes: good land, strong prospects and the opportunity for expanding the area.

According to the consultant, this is not related to larger investors, but small scale forest owners have seen the forest land sales surge during summer and autumn, when children return to school or free money will be used for other outgoings, but she doesn’t recommend taking out a loan.

Pindi Kinnisvara managing director Peep Sooman was unable to say precisely what the current market trend in forest land was. He did however acknowledge that the market is somewhat in turmoil and that clear indicators of either rising or falling trends were largely absent.

However Mr. Sooman pointed out one important aspect, that buyers will continue to be found amongst both those companies whose goal is within a short space of time to produce the maximum amount of timber and from institutional investors with an interest in larger forest properties and investment horizons stretching to decades; these two differing approaches have been divided betweem elites. Due to the differences in perspectives, investors have very different demands on land in the region and thus the composition of the forest.

Real estate Arco Vara broker Margus Põld pointed out that forest is, next to the food sector, one of the largest in Estonian industry.

There are more than a thousand businesses involved in timber and timber processing in Estonia, employing about 16 000 people.

Mr. Põld has pointed out three trends arising from this which affect the timber industry and consequently the forest land market. First, growth in the European timber market has been directly affected by the global financial crisis. The second phenomenon is that of growing demand for timber from China and Japan, and the third is a growth in demand for wood chippings, which should take place in 2012.

He illustrated this third point by stating that the energy consumption yielded by two million cubic metres of wood chips would require 800 000 cubic metres of timber to produce.

In the light of these factors we can capture the essence of the most important question, according to Mr. Põld, namely, what is investor interest in Estonian forest land and what specifically are they seeking?

It is clear that foresting rights for existing stock are purchased by the domestic market, since overseas investors have virtually no logging rights in Estonia.

Mr Põld emphasised that investor interest is in the long-term perspective and the desire is for forest together with any land purchased. It should be noted, Mr Põld goes on, that larger investor interest starts with land at an area of 600 hectares or more.

Another important fact, according to Mr Põld, is that with forest land purchase investors are primarily interested in fresh inventory, in other words the existence of a forest management plan.

Põld admitted that a local investor buying forest land will do so with a 10 year felling perspective. “Foreign investors tend to invest for the long term and are looking more for fertile forest land with good growth potential”. He pointed out. This brings an interesting situation, where for example a smaller area of land used for forest can provide better value to a local investor than to an overseas one.

It is clear that Estonia is small and that we are affected primarily by world trends, and as a result it could be said that price volatility over the past couple of years has been low.

Mr Põld concluded by pointing out that in comparison with other sectors of real estate, the price of forest land has been rising, which is an important fact for investors.

The original article (in Estonian) can be viewed here.

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Statistics: Growth In Volume Of Land Transactions In Estonia

Both built up and raw land in Estonia has seen a significant increase in the number of deals in the second quarter of 2011, according to Tõnu Toompark on his adaur blog. This is in direct contrast to apartment deals which over the same period have seen a decline in frequency.

The second quarter of 2011 saw 2710 transactions involving undeveloped land, which is almost one fifth higher than a year ago, writes Tõnu. This at the same time represented an increase in value of sales of 62 per cent. Total growth in sales of undeveloped land over the same time period came to a value of 66 million euros, Tõnu goes on.

The majority (80 per cent) of land deals have involved undeveloped land, but only 66 per cent comprised profit-yielding land, Tõnu explains.

1351 deals involving developed land were concluded in the second quarter of 2011, writes Tõnu. Whilst the number of deals of this type as a whole rose by 10 per cent year-on-year, their corresponding value only rose by 2 per cent over the same period, he says.

According to Tõnu, the total value of sales of built-on land came to 109 million euros.

Developed land transactions made up the majority (60 per cent) of all residential deals, Tõnu continues.

Both developed and undeveloped land transactions are still a long way off the peak levels in 2006, when the total number of undeveloped land transactions stood at over 4000 in the second quarter of the year, to a value of over 300 million Euros, and developed land transactions stood at around 3000 during the same period, naturally with a higher total value (peaking at just under 450 million Euros in the final quarter of 2006).

See here for the full report (in Estonian) plus graphs illustrating the changes in value and total number of developed and undeveloped land transactions since 2004.

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