The Hidden Gems of Tallinn

It’s no surprise that both foreign investors and local business people looking into purchasing a residential property or an office space first plump for the prestigious and historic Vanalinn, or Old Town, for a taste of late-Medieval charm. The old town’s castle-like masonry architecture, with its partly-exposed stone walls, pale coloured stucco, deep window sills, exposed raw timber beams and heavy wooden doors replete with hammered iron hardware are all features that will take you right back to the fourteenth and fifteenth centuries.

As the secondary choice for many, and in fact the primary choice for more than a few IT and telecoms companies, small business owners and sometimes students, the area immediately outside the old town (called the Kesklinn, or town centre) is also attractive in terms of available residential and office buildings. Such buildings vary greatly in quality, style and facilities – starting with the inter-war period masonry buildings which are almost as robust as their Old Town counterparts and which can be anything from fascinatingly detailed to utterly minimalist, through to the sombre early Soviet era concrete pseudo-classic style blocks. The range continues all the way up to the glass and metal post-independence boom-period “new” buildings which nonetheless seem to age quite quickly, with their glory fading away much faster than the older adjacent buildings.

Recently the eyes of investors as well as the “new locals” have shifted their focus to the district of Kalamaja – an area which is also situated immediately next to the Old Town, where both masonry Art Deco and traditionally detailed weatherboard-clad multifamily houses stand side by side in harmony. The area is characterised by its calm, airy feel, where residents enjoy the ever-changing colours of light shining through the mature leafy trees in summer as much as the warm, amber light from the living rooms and kitchens escaping onto the thick layer of snow in winter.

Some landowners who have clearly been misguided by the false sense of “per square meter” economy have constructed an array of concrete panel “imitation” apartments in Kalamaja, replacing the empty lots and dilapidated or even burnt down old buildings. However, some wise land owners have constructed new buildings using mostly traditional methods and the original blueprints combined with more functional thermal insulation and heating technologies, offering more comfort yet an aesthetic typical to the area and matching the surroundings. Such phenomena as unoccupied quality apartments are becoming scarcer, unless they are ridiculously overpriced, and more and more young families are relocating to Kalamaja.

This also meant that the residents of older generations are slowly being pushed out of the area due to increasing rent and maintenance costs of old buildings, meaning that the area is very young and becoming more “cultural”. A local former industrial complex now hosts a restaurant, bars, cafes, weekly flea-markets and other attractions to meet the young families’ needs for a meeting place as well as economical ways to get much-needed children’s supplies as well as kitsch vintage decor items.

There is another adjacent area, Pelgulinn, not yet deeply explored by either foreign buyers or local developers. Pelgulinn offers a much greater variety of building age, styles, sizes, finishes and prices than does Kalamaja. If Kalamaja is geographically separated from the Old Town by the railway station and the tracks, Pelgulinn is further separated from Kalamaja by more railway tracks and a marked lack of commercial activities. It lies sandwiched between the industrial railway depot and the main thoroughfare in North Tallinn, Sõle Street, with many more compact lower-income housings at the Northern end of the district close to or actually on Sõle, while more beautiful yet not overly elaborate buildings can be found at the Southern end towards Telliskivi street. There are numerous cul-de-sacs and shortcuts for pedestrians compared with Kalamaja, making an almost ideal neighbourhood structure according to urban planning textbooks on what constitutes a liveable neighbourhood. Even though most buildings share the same periodic influence as of those in Kalamaja, Pelgulinn has a markedly different atmosphere. Pelgulinn is an area where a good mix of buildings in various states await an injection of financial investments and new generation of residents to raise the quality of the streets.

Pelgulinn does not share the feel of a seaside town which Kalamaja hints at. For some strange reason the Old Town appears far more elevated when viewed from Heina Street in Pelgulinn, where it looks almost like a Medieval castle town situated in more mountainous country such as that surrounding Salzburg or Prague. This makes you wonder whether a great river divides the Old Town and your standing point – in no such river runs through Tallinn. Pelgulinn is an area which offers a very different feel from other parts of Tallinn. The district features former workers’ wooden terraces, railway tracks, idiosyncratic house number discs and street names in both Estonian and Russian, and garages and disused factories the area lacks of cold industrial feel. The streets are slightly narrower than those of Kalamaja and the lack of pastel-colour houses found in the latter gives a more authentic look of a residential suburb which the Western European countries lost back in the seventies. There is something of a nostalgic feel to the area yet it is not left undeveloped either. Brand new apartments cleverly blend into the surroundings, and although some old buildings look well-worn from outside their interiors can be very contemporary.

Pelgulinn is best explored on foot, even without a map. There are so many things to be discovered every day throughout the year. It may even offer the perfect excuse to walk or ride a bike in order to go shopping for groceries at Jaama Turg – the Railway Station Market – rather than driving to a hypermarket.

text by: Satoshi Joshua Ogawa
The author is a Tallinn-based architect recently moved from Brussels and specialising in residential building designs.

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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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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.

 

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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’.

 

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Statistics: Volume Of Residential Space In Tallinn Has Increased 0.29 Per Cent Y-o-Y

The volume of residential space in Estonia, according to data from the Estonian Statistics Office, stood at 657 800 items with a total area of 40.53 million square metres, as reported by Tõnu Toompark on his adaur blog.

This represents an increase in the number of residential items of 0.29 per cent y-o-y, and an increase in area of residential space of 0.52 per cent, writes Tõnu.

A typical residential property according to the data will be around 30.3 square metres in area; 10 years ago it stood at 27.5 square metres, Tõnu continues.

There are currently 491 residential units per 1 000 people in Estonia, or 2.04 people per unit. In 2002 that figure stood at 457 units per 1 000 people or 2.19 people per unit, Tõnu continues.

The original article (in Estonian) with diagrams showing changes in numbers of residential units and total living space area, plus changes in average living space area and number of residential units per 1 000 inhabitants, is available here.

 

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Demand For Office Space Outstripping Supply In Tallinn, Estonia

Demand for good quality (A class plus) in Tallinn is currently outstripping supply, according to a report on the Estonian Press Digest from News2Biz.

Whilst the period from late 2010 well into 2011 saw an upsurge in construction, including office space, rising construction costs have since dampened down this phenomenon, the report stated.

Quoting sources at Uusmaa real estate firm, the report went on to explain that whilst many of the developments during the more frenetic period of construction were of good quality and in prime locations in the centre of Tallinn, since then the lack of modern, high class office space has become ‘acute’.

 

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“Why You Should Be Investing In Tallinn Real Estate – Your Essential Guide to the Tallinn Property Market”: Available Soon!

We haven’t forgotten about our promise to launch the new Guide “”Why You Should Be Investing In Tallinn Real Estate – Your Essential Guide to the Tallinn Property Market”: Available Soon!”.

Our team are putting the finishing touches to the publication and it will be out very soon so watch this space!.

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.

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Apartment Prices Showing Slight Y-o-Y Rise in Tallinn, Estonia

Most of the major newspapers in Tallinn are taking a break today after Jaanipäev but here at Tallinn Property we don’t want to take a break from bringing you up to speed on all that is happening in real estate in Tallinn and Estonia in general!

According to a report on Tõnu Toompark’s adaur blog, signs of very slight price increases in property prices in Tallinn and Estonia as a whole can be gleaned from the latest kv.ee index. The kv.ee index currently stands at 61 points which is all of a 0.5 per cent y-o-y increase. Offer prices statistics for both Tallinn and some of the provincial towns show more concrete evidence of modest increases.

Meanwhile the volume of apartment offers remains at about the same level it was a year ago, though in Tallinn the level is about one per cent lower with 8 700 apartments currently under offer, writes Tõnu.  Average offer prices for the whole of Tallinn (apartments) currently stands at 1 317 Euros/square metre.

That said, agents have shown some optimisim in reporting a slight rise in offer prices on Tallinn flats, Tõnu continues. At the same time it needs to be pointed out that offer price rises remain below the growth in actual deal prices. Whereas the offer price on Tallinn apartments has seen a five per cent rise y-o-y, actual deal prices have seen a seven per cent rise over the same period, Tõnu says.

According to the data, within Tallinn, the district to have seen the highest rise in offer prices is Kristiine with an eight per cent increase from 9 May, 2011 to 9 May, 2012 (average price of 1 316 Euros/square metre). The Old Town actually saw a decrease of one per cent in offer prices over the same period (average price of 2 792 Euros/square metre). The greatest increase in volume of offers over the same period was in North Tallinn with an increase of 13 per cent (to 1 418 offers) though many areas saw a fall y-o-y, as high as -18 per cent in Pirita (278 offers). Outside of Tallinn, Tartu has also seen a fall in the volume of offers (-22 per cent) whilst simultaneously experiencing an increase in offer prices of eight per cent (average of 1 051 Euros/square metre).

Estonia as a whole has seen only small increases in both number of apartment offers at two per cent (18 511 currently) and an increase in average offer prices of three per cent (1 004 Euros/square metre).

The full article and statistics (in Estonian) can be viewed here.

The kv.ee index, which commenced 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 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 7 May, 2007, when it stood at 108.

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.

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Statistics: Number Of Residential Occupancy Permissions In Estonia Healthy, But Declining

The beginning of 2012 has demonstrated a successful rate of issue of residential permits, according to Tõnu Toompark on his adaur blog. The first quarter of 2012 saw 707 permits being issued, which was a rise of as much as 86 per cent y-o-y, Tõnu goes on.

Nevertheless caution should be of the essence, Tõnu explains, and no real estate or construction boom should be inferred from these figures. In fact, these permissions often have their roots dating back to the beginning of 2011 when several new developments were commenced which are only now being finished, writes Tõnu.

Taking this fact into account, the number of residential permits has in real terms in fact been declining, and new projects over the last two to three quarters have only been added to at a very slow rate.

Thus we can conclude that the number of completed dwellings will start to contract after a couple of months.

For the original article (in Estonian) together with graphs plotting changes in volume of new residential living space and permissions thereof, over the last ten years or so, visit Tõnu Toompark’s adaur blog.

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