Estonia Vs Slovenia

An item first published on this blog on 6th July, 2012.

An interesting and detailed post here, from the redoubtable Edward Hugh, about one of the two other CEE countries, apart from Estonia, that have acceded to the Eurozone, namely Slovenia (the third country is Slovakia).

Having consistently outperformed Estonia and even ‘older’ Eurozone countries like Portugal, it seems not all is well with Slovenia.

Like Estonia, a small country (with a population of around 2 million) which was formerly a part of Yugoslavia and in fact the first constituent state to gain independence in 1991, Slovenia now seems to be drifting towards joining Spain, Greece, Ireland et al in an IMF or similar bailout, according to the article.

Moreover, in some areas where Estonia has seen an improvement over the last year or so, for example in GDP levels and construction volumes, Slovenia has seen a decline. Unemployment, whilst at a somewhat lower rate than Estonia’s (over eight per cent in Slovenia as compared with a little over 11 per cent in Estonia) has been consistently growing in Slovenia since 2008, whereas the trend in Estonia has been for a fall since mid-2010 (though with small recent increases).

Furthermore, Estonia has leapfrogged Slovenia in the credit ratings stakes, at least as Fitch sees it. As reported on this blog, Estonia currently holds a Fitch rating of A+ whereas Slovenia is now rated at A.

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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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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