Saaremaa Real Estate Transactions Most Active In 2010

Here at Tallinn Property we tend to focus on the real estate market in the capital. After all that is where our name derives from! Nevertheless, just to show we don’t completely overlook the rest of the country, we are delighted to report that Saaremaa proved to have the most active property market in Estonia in the admittedly recession-hit year of 2010.

Saaremaa, literally ‘Island’s land’, is by far the largest of Estonia’s offshore islands; at 2 673 square kilometres it covers an area almost as large as the entire Outer Hebrides archipelago off the West coast of Scotland, albeit with a somewhat different terrain, and is larger than any individual offshore UK island. It’s population is 39,000, of whom 15,000 live in the capital, Kuressaare. The island is particularly popular with tourists, both domestic and foreign, especially from Finland and Sweden.

According to Tõnu Toompark’s real estate blog, whereas an for the whole of Estonia an average of 31 properties per 1000 were the subject of the conclusion of a real estate deal in 2010 (up slightly from 29.5 in the previous year) where Saaremaa  is concerned that figure was more than twice as high at 68 per 1000.

The second largest Estonian island, Hiiumaa, also saw an above average level of property transaction activity at 43 concluded transactions per 1000 properties.

As regards figures for real estate transaction value per capita, however, the situation is somewhat different. As might be expected, the district in which Tallinn is located, Harjumaa, being the priciest region for real estate, had the highest figure for turnover per capita (1 849 Euros, or 28 928 Kroons) as against 1 104 Euros (17 273 Kroons) average for the whole country. However the number of concluded deals per 1000 properties in Harjumaa was almost the same as the national average at 32 properties per 1000. Naturally other factors come into play here, and the value of real estate turnover does not necessarily directly correlate to how active the real estate market is.

Using the same criteria, whereas the district with the lowest rate of activity, at the other end of the country from Saaremaa, Tartu county (Tartumaa) revealed a figure of 26 concluded transactions per 1000 properties, the figure for transaction value per capita was almost the same as for the far more active Saaremaa district (988 and 972 Euros (15 643 and 15 204 Kroons) for Saaremaa and Tartumaa respectively).

More information (in Estonian) including graphs of both sets of figures, broken down for all regions of Estonia, can be found on Tõnu’s blog post.

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No Signs That Euro Adoption In Estonia Has Led To Surge In Property Prices – Yet

The recent adoption of the Euro in Estonia has not led to an immediate rise in residential real estate prices, according to Tõnu Toompark’s blog, (in Estonian). Citing real estate portal’s own index for residential real estate prices, which yesterday settled at a figure of 61.9, a mere 3 per cent lower than the value for the same time last year, Tõnu states that this shows that real estate has been immune to the previously-feared upward pressure on prices, as people ’round up’ figures directly converted from Kroons to Euros.

Both offer prices and number of offers show that nothing significant happened during recent weeks. The total number of offers on real estate has increased slightly, to 18 879 offers on the site, which represents minor changes, says Tõnu.

Put simply, it could be said that apartment prices both in Tallinn and the whole of Estonia are at a somewhat higher level than the previous month and the previous year in general, he writes.

Nevertheless, as Tõnu points out this is rather preliminary and scanty data. Indeed, the adoption of the euro could later result in some more far reaching impact on real estate transactions, and the number of bids and transactions might be more active in a month or two, he says.

The index, which began on 18 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 js  measured  back retrospectively to 1 January 2005, when the index stood at an all time low of 49.9. The all time high came on 7 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 5 September and 27 October, 2010..

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Goodbye Kroon, Hello Euro – Practical Info On Estonia’s New Currency

The introduction of the Euro to Estonia on 1 January took place quite smoothly and with no major mishaps. Cash machines were closed from midday on 31 December, 2010 until the stroke of the new year 12 hours later, which may have left visitors and those unprepared for the new currency at a loose end for cash, but debit and credit cards could still be used to make transactions in the outgoing currency.

According to the European Central Bank site, Estonian Kroons could in fact be used as legal tender in cash transactions until 15 January. Retail outlets however gave change in Euros in such cases, and payment in Kroons seems to have been the exception almost from the beginning, as people use up all the spare cash they had at home.

All is  not lost if you should find some forgotten Kroons in a biscuit tin under the bed however; until 30 June 2011, all banks that offer cash services (i.e. all the highstreet banks) will exchange Kroons (both notes and coins) for Euros, and at a limited number of branches this service will continue to the end of 2011. Should a year not prove enough time to rid yourself of the former currency, the National Bank (Eesti Pank) will continue to accept Kroon notes and coins in exhange for euros indefinitely, according to the ECB site.

The Estonian Kroon (EEK), introduced on 20 June, 1992 to replace the Soviet Rouble, had been pegged to the Euro since 27 June, 2004 after Estonia’s accession to the EU. The rate of exchange was 1 EUR : 15.64664 EEK – this rate remained constant despite the threat of devaluation during the recent economic crisis, and remains the basis on which Kroons will be exchanged for Euros.

We hope to keep you updated in the near future about further effects of the Euro (for example concerning company share capital) so please be sure to check the blog regularly!

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