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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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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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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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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Tallinn Property and Goodson and Red Present The Idyllic “Katmandu” Villa

Tallinn Property and Goodson & Red are delighted to present this truly stunning, exclusive and exquisite secluded rural Villa development, just a stone’s throw away from the beach and the peace and quiet of the Baltic Sea and yet only a short drive from the city of Tallinn.

Named ‘Katmandu’ and set in approximately three quarters of a hectare of land, the hunting lodge-style Villa is located near the small town of Keila-Joa, some 25 km from Tallinn.  The development was designed by noted Finnish architect Ilkka Salo and completed in 2000, with some subsequent minor renovation. The main building boasts four spacious bedrooms, hallway, living room, dining room, study, utility room, and both a standard and a catering kitchen.

The complex furthermore has a separate, detached garage which can hold no fewer then eight cars, and a separate summer house.

The garage has a guest annex above it with three rooms (including a bathroom). The summer house comprises kitchen with grill/barbecue facilities, sauna and changing room, bathroom, fireplace and fitted wardrobes.

There is also a stable with space for two horses, and the plot includes a paddock.

Interior features of this marvellous development includes kitchen furniture from Puustelli, kitchen appliances from Siemens and a music system by Bose. Bathrooms are equipped with luxury Villeroy and Boche fixtures. WiFi (Elion network) an alarm system and Satellite TV.

Heating options include underfloor heating, oil based or electrical possibilities. The upper floors make use of radiators.

The total land area comprises an area approaching 0.75 hectares (1.8 acres), whilst the buildings total an area of 755 square metres. A large courtyard is enclosed on three sides, whilst the garden is impressively landscaped, including attractive bridges and driveways, and set in a secluded, forested area. The territory is secured by an extensive security fence and controlled gates, along with security cameras.

The property is close to the small town of Keila Joa with its manor, and the Lohusalu Marina is also close by.

The development is constructed with Lecatern blocks, with a quality stone roof.

The Katmandu Villa would naturally be an idyllic location for a family, especially one which enjoyed equestrian and water-borne pursuits.

Naturally words can only do so much to describe this wonderful property, so be sure to check our site here for more details and plenty of photographs.

Goodson & Red Tallinn Property Consultancy is dedicated to delivering premier residential and commercial property services in Tallinn and Estonia. Through more than 8 years of consistency in one of the most active property markets in Eastern Europe we have developed an enviable reputation for our in-depth market knowledge and expert, considerate personal service. Our services include comprehensive property brokerage services for sellers, home search, long and short term lettings services and a comprehensive professional management service for landlords.

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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When Is An Offer Not An Offer? – Understanding Estonian Real Estate Jargon

Here at Tallinn Property we make it our mission to ensure you understand the Estonian property market fully, regardless of whether you speak any Estonian or not!

It has been brought to our attention that there may be some confusion about what is meant by ‘offers‘ in the real estate context here.

The word ‘offer’ in Estonian is pakkumine, or plural pakkumised (though this can change – Estonian is a notoriously complex language with 14 case endings, but no words for articles (a/the) or prepositions (in,on, at etc.) meaning that nouns will change their endings depending on where they are in the sentence – a function provided by articles and prepositions in English).

In any event, translated as ‘offer’, what pakkumine actually means is quite different from the English meaning in the context of real estate, at least in the UK.

Whereas in Britain, making an ‘offer’ is that process by which a buyer or potential buyer will suggest a price for a house or flat which is usually somewhat lower than the asking price as listed by the estate agent. The vendor can accept or reject this offer, but the most common practice would be to make a counter-offer, and this negotiation would go on until either a price acceptable to both parties was met or an impasse was met.

Thus the offer price of property in the UK and indeed, in this sense, Estonia and everywhere else, will generally be lower than the asking price.

However in Estonia, ‘offer’ actually means an item on the market. In other words offers are the supply of items, most usually apartments. Thus ‘offer price’ (pakkumishind) actually means ‘asking price’. This explains why ‘offer prices’ in Estonia are invariably higher than transaction prices (tehinguhinnad) since vendors here are no more or less generous, and buyers no more or less parsimonious, than anywhere else!

In other words pakkumishind really means ‘asking price’ i.e. what the vendor hopes to receive. And ‘offers’ in general means the supply of flats and house on the market, not the volume of people offering to buy an item.

We hope that clears everything up for all our readers, and rest assured that we will blog about any other things which might get lost in translation – or if you have your own query, just ask us!

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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Statistics: Residential Space In Estonia Has Increased 0.4 Per Cent Y-o-Y

Citing figures from the Estonain statistics office, Tõnu Toompark has reported on his Adaur blog that the total number of newly constructed residential units compared with the existing housing stock has increased by 0.4 per cent y-o-y, to 2012. The actual area of residential space versus existing stock increased by 0.68 per cent over the same period.

These may not seem like huge figures, but we are talking about increases as compared with the existing stock of course; the figures for the ‘boom’ years were much higher, with an approximately 1.1 per cent increase in numbers of units compared with stock in the peak year of 2007 (and over 1.4 per cent when measuring new developments by area) and at no point during the slump did the figures actually move into negative numbers.

That said, a one per cent increase in new housing over existing stock is required to account for depreciation in that existing housing, according to Tõnu. The magic one per cent figure will allow the maintaining of the quality of housing, or indeed an improvement through refurbishments and renovation work, Tõnu explains.

However, at best, there are only three years so far where that has happened, at least when going on area of residential stock (rather than numbers of units) namely 2007 as we have noted, and the two years either side of that. Thus in general there has been a deterioration in the overall quality of the housing stock over the last few years, when applying this rule, Tõnu notes.

That said, the situation is markedly better than was the case prior to the boom; 10 years ago in 2002 the number of new units compared with housing stock had only risen by 0.18 per cent y-o-y and the figure for area of new residential space had only increased by 0.3 per cent on the existing stock, writes Tõnu.

The original article (in Estonian) is here including a graph of y-o-y figures for ratio of new residential developments (by number and by area) to total stock.

It will be interesting to see if the mini-boom in construction which is taking place at present, and likely to be accompanied with a growth in commercial construction due to a dearth in good office space, will contribute to pushing the ratio of new housing to existing stock closer to the desired one per cent mark.

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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Ten Top Tips When Buying Residential Property In Tallinn And Estonia

In amongst all the up-to-date news and developments about the real estate market, and everything else in Tallinn and Estonia, we like to provide concrete advice to those who are thinking of buying in Tallinn. After all, property is our passion so we ought to give vent to that now and again!

To that end, here’s some advice on buying here, which we’ll provide free, ‘cos we’re like that. We might even cover the dos and don’ts of letting out property here soon as well so watch this space. Even if you have already invested here, you will find some useful tips to help you navigate the small but thriving real estate market here.

We have taken the perspective of a potential overseas investment buyer in Estonia (i.e. buy-to-let) but the following is largely also applicable to those who are thinking of buying a part-time (such as holiday home or pied à terre in Tallinn) or indeed full-time dwelling in Estonia.

Please note that this post is for information only and should not be taken as legal or financial advice. Please contact a legal or financial professional for that! (We can help get you in touch). This information is provided free of charge and, whilst we strive for accuracy in all things, Tallinn Property and Goodson & Red accepts no responsibility for any loss or other misfortune arising after acting upon this advice.

That said, we are confident that the information provides an accurate consumer-eye picture of the residential real estate climate in Tallinn and strongly advise you to bear it in mind, especially since there is unlikely to be any similar information avaiable in English, so read on..

1) Find a reliable partner who will protect the buyer’s (i.e. your!) interests. The best indicator is a good friend, acquaintance, a positive experience or a recommendation from someone in the know here. If you are not sure then visit at least a couple of estate agents/brokers to get a better idea of different work cultures and strengths.

Some of the agents here in Tallinn are large and well established, including Uusmaa and 1Partner, which have a large volume of items, a big staff, offer a range of services and have plenty of knowhow (Uusmaa was founded in 1993 not long after Estonia became independent, and is nationwide). 

Some other bigger agencies in Estonia to think about include Pindi-Eri, Arco Vara, DTZ (which is not so strong in Tallinn) and Domus.

Bigger is not necessarily better of course, and there are a plethora of smaller and middle-sized agents in Tallinn and Estonia in general (at least 300 across the country). The range and quality of services will vary, however, and it is important to understand that the estate agent sector is not so heavily regulated as it is in, say, the UK. Some agents, particularly the bigger ones, are heavily sales-driven; the very small outfits may simply be an individual registered as a company to market a couple of properties belonging to themselves or friends and relatives. In general not all agents are experts in dealing with overseas investors and focus more on the domestic market so it is important to establish their credentials here too.

2) Unless you speak Estonian it is naturally important to find an agency conversant in a language which you understand. Most of the bigger agents, indeed most professional-aged people, will speak English, and most agents will speak Russian too. It’s not hard to find Finnish speakers here either, and not unheard of for agencies who have staff conversant in German, Swedish, Spanish or Italian either.

Most of the bigger agencies will have websites in two to three of these languages (usually English is one of them, although not all of the material in Estonian is necessarily translated) and often each individual agent will list the languages he/she can speak.

3) Be sure of the current market situation. The market is relatively transparent compared with some other areas of the CEE zone; one useful source is the two big real estate portals here, www.kv.ee and www.city24.com. These hold most of the properties that are on the market in Estonia (city24 also covers Poland, Sweden, Finland, Lithuania and Latvia) are searchable (in English) by region of Estonia, district (in the case of Tallinn) number of rooms, size, price and many other variables. Listings usually come with multiple, good quality photos although you should of course visit a property in person before buying; the agent who is acting for the property will be listed. Of course some properties will be listed with multiple agents.

Please note that just because a property is listed on kv.ee or city24.ee it doesn’t mean that the asking price is necessarily going to be reasonable, and be sure to look at the date the advert commenced. If a property has been up for more than a few months it is likely there are some issues either with price or something else. At the time of writing the average price per square metre for property in Tallin was a little over 1 000 Euros/square metre, rising to around 1 800 Euros/Square metre in central Tallinn (usually somewhat more than that in the Old Town itself, with Toompea being generally the most prestigious part of the already-prestigious Old Town) and the sought-after residential district of Pirita.

The figure for the whole of Estonia was 700 Euros/Square metre at the time of writing although there are naturally regional variations, with Tartu and the resort town of Pärnu, for example, being more expensive than the towns in the eastern-most parts of the country.

A bewildering array of statistics is published every month by one of the big hitters, Pindi-Eri, although the catch is it’s all in Estonian. This includes figures for average prices, sizes, number of owners etc. for all areas of Estonia going back many years (transparency, remember!). Some more comprehensive information is available on real estate expert Tõnu Toompark’s adaur blog (again usually in Estonian) together with Goodson & Red’s quarterly Market Review (and this IS available in English!) plus of course this blog.

4) When you have found an agent, obtain from this real estate partner an accurate picture of the service they provide and the fees they charge buyers for their services. It is normal for buyer’s agents to charge something. This shouldn’t be much more than a two to three per cent commission, or a fixed fee plus commission, or purely a fixed fee, but it varies by agent and also type of property.

It would often work in the buyer’s advantage to go for a fixed fee, since with a commission, it is not in the agent’s interest to get a lower price since they would be losing out on commission in so doing. At the same time this fixed fee might be split between an initial sum and a ‘bonus’ sum payable on completion of sale. A ballpark figure fixed fee would be a around 1 000 to 2 000 Euros for the initial fee. The bonus will often be pegged to the value of the property and could be anything from around 500 Euros for a small property to 3 000 or so for a high end property. In any case the fixed fee should equate to a commission of around two to three per cent, without the disincentive noted above.

Beware of agents who promote a ‘discount’ on their fixed fee or commission if the selling price is reduced by a certain amount from the asking; this could encourage the buying agent to collude with the seller to set the initial asking price higher than it is worth to give the impression of obtaining a good price. Thankfully such practices in Tallinn are now the exception rather than the norm and not something which larger, reputable agents would be likely to fall into, but as an overseas national it is important to exercise due care and obtain the advice and assistance of a local acquaintance where possible, even simply for language issues. On the plus side, Estonians are quite flexible, if you see a property you like but the buyer’s fee structure doesn’t quite work for you, always speak up and ask how this can be negotiated.

5) Become acquainted with all factors relating to the buying process. These include notarized contract forms, state orders of magnitude, notary fees etc. In general this is quite a straightforward affair in comparison with the UK for example, and it is not necessary to hire a lawyer or obtain a full survey unless you wish to.          

Ask the partner to identify local laws related to real estate acquisition / possession / management. Depending on where you are from, there may be restrictions to buying property (if you are an EU citizen for example, there are not). Also be sure to check whether your country of origin has a double taxation agreement with Estonia; if it does not, you are not liable for taxation on rental income in your own country.

In general if you on the ground in Tallinn or Estonia it is possible to view a property in person in exactly the same way you would do in the UK or US, though you can usually (not always) expect a refreshing lack of hard-sell or ‘estate agent-ese’ in comparison. Making an offer can be done verbally although this does not make it legally binding; the seller might come back with a counter offer, although note that some sellers have little leeway in the negotiation process (due to many people borrowing during the boom time at a large loan to value rate at higher price levels than today). Naturally you should have an idea based on point 3) above plus your own reasearch as to whether you are getting a good deal even at the asking price, and there are some bargains around.*

6) Explore all options for finance. If you are able to borrow from Estonian banks (for instance an EU citizen should be able to) it is worth investigating because they are offering low rates even by present-day standards (as low as three per cent). The real estate portals kv.ee and city24.ee noted in point 3) above carry mortgage calculators which can give the monthly payments due on a property. Banks are much more stringent in their terms than the boom period of course, and 100 per cent loan to value mortgages are a thing of the past, though that is likely to be the case everywhere. In any case the mortgage application process in Estonia is quite straighforward and decisions are usually made quite quickly. If you are based in another country it may be possible to use your income there to determine how much you can borrow; with Estonian real wages still comparatively low by EU standards you may find you can borrow much more than a local Estonian could, however it is a good idea to exercise restraint and not overstretch yourself.    

7) When considering buying an investment property, do think about the type of property you are investing in. Is it likely to be suitable for a student, foreign national or young professional(s)? How old is the building? What are communal areas like? Are there likely to be any planning permission issues? Is there much storage? Is there a parking space? A garden? What are the communal charges? Is it located near to public transport links, retail outlets and other facilities? Again, your agent will be able to advise you on this.

8) Location, location, location. Something of a cliché but true nevertheless. Experience shows that the best chance of investing in a successful rental property falls within the central part of Tallinn. This incorporates the old town, the ‘Kesklinn’ (city centre) and to a certain extent the areas of Kadriorg and Kristiine, to the east and west of the centre respectively, so you should really confine your search to these areas of Tallinn. Also worth considering are areas which are “up and coming”, most notably the waterfront from the harbour westward to the Kalamaja district, fast becoming the bohemian quarter of Tallinn with restaurants, cafes as well as residential developments sprining up, and still within walking distance of the centre; your broker will be able to advise you on the current landscape.

We are not saying that properties outside this zone are necessarily going to be untenable, but the distant location together with type of property (which tends to veer between either Soviet era apartment blocks or older wooden houses which would tend to suit local families, to larger, detached houses with large gardens which would be difficult to let out and manage) make it unlikely. Outside of Tallinn the scope is somewhat more limited for investment property, but your agent will be able to advise you nevertheless.

9) When buying a newly-refurbished apartment, do not assume that the kitchen, and even the bathroom, will be fully installed. Often you will have to by the fittings separately and get them installed, so be clear as to what is and is not included in the price and the time-frame within which the property will be ready for habitation.

10) When employing the services of workmen be sure to get recommendations from your agent or other contacts that you may have in the country. Self-explanatory really, but please note that due to economic factors many of the country’s best construction workers, craftsmen, carpenters, plumbers etc. are out of the country at any given time, sometimes only on a temporary basis but often (particularly in Finland) semi-permanently at least. For this reason it is crucial you get recommendations. On the other hand don’t let this put you off any property which you see as having potential but which needs work; part of Estonia’s economic recovery at the time of writing lies in a mini-construction boom, with rising prices in construction materials ensuring that there are people willing and able to work in this field.

 

*Please note that the above info does not include the case of foreclosed properties, which are generally in the possession of the banks and are often being auctioned off. Having said that much of the excess here has already been taken up and it is difficult to find bargains today, not to mention the fact that there might be issues regarding existing tenants or former owners still inhabiting the dwelling. For this reason we do not recommend inexperienced investors in this region intentionally pursuing this route.

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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Energy Consumption Limits In Estonia To Get Stricter

According to a report by Ott Tammik on the Estonian Public Broadcasting (ERR) site, stricter energy consumption limits are to be set for buildings in Estonia for next year, 2013.

The announcement was made in a draft mandate from the Ministry of Economic Affairs, according to the report.

The ultimate goal for the state is to have ‘near zero energy buildings’ by 2021, which in practice means a limit of 50 Kilowatt hours (KwH) of energy consumption per square metre per year, for every building, the report stated, although it is believed that this target will be met two years earlier than that.

The current limit is 180 KwH per square metre per year, set to be reduced to 160 KwH per square metre per year from next year, the report said.

Presumably the limit will be reduced by small increments until the 50 KwH target is reached.

The original article (in Estonian) which ERR cites outlining the announcement is from Estonian national daily Postimees, here.

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