Estonia: Tallinn shows encouraging signs of recovery
Prices fall down by 45% but the number of transactions increases
Tallinn is the capital and largest city of Estonia. It is located on the banks of the Gulf of Finland, 80 km south of Helsinki, and is the main seaport of the Republic. It is also one of the European towns that offer the cleanest air to breath. Medieval surroundings and modern information technology blend harmoniously in a whole environment.
After the 1991-indipendence from Soviet rule, Estonia – along with Latvia and Lithuania – had experienced a rapid economic progress thanks to the implementation of an effective programme of social and economic reforms, but the 2007-2010 global crisis hit the country heavily. However, Tallinn is showing encouraging signs of recovery for 2011.
In 2011, Estonia will adopt the euro. The exchange rate to the euro will remain at a constant figure and the single European currency is expected to have a positive effect on Estonian economy since both consumers and investors will be inspired by a positive attitude.
The Estonian capital will also be the European Capital of Culture in 2011. Its wonderful Old Town has been included in the list of World Heritage Sites by UNESCO for its cultural and historic significance. In 2005, Tallinn was defined as the Silicon Valley of Northern Europe by the New York Times due to the great development of the information technology sector.
Many areas are being revitalized. A hotel and new housing units have been built on a 2-ha area in Ilmarine neighbourhood and the largest shopping centre in Estonia opened its doors in 2009. Two big residential projects are being implemented in Tallinn: 300 housing units will be built in a 4-ha area in Kalaranna district – the project has required a 55-million-€ investment – and Tondi area will be revitalized by transforming 19th-century barracks into comfortable apartments.
Development potential is high in Tondi area; indeed, the projects are being implemented on the 15% of the total surface available. Prices in both areas hover around 2600 euros per square metre. Sellers perceive the market adequately and launch new developments on the market at reasonable prices.
Home prices in Tallinn fell by 45% in comparison with 2007, but there has been a 5% increase in sales in the latest six months.
Two-roomed and three-roomed apartments are buyers’ favourite choices. The most prestigious offers are to be found in the colourful medieval buildings around the Raekoja plats and along the Pikk tänav. Prices start from 1330 euros per sqm for apartments in need of renovation, but can reach 4500 euros per sqm for renovated luxury apartments. Outside the Old Town, prices start from 1200 euros per sqm for houses in need of renovation and reach 3000 euros for newly-built homes and renovated apartments.
Tallin rental market is expected to experience a positive performance in the near future, since improved air and sea transport links with Western Europe have made Tallin easily accessible to tourists. Renting a 50-m two-roomed flat costs 300 euros per month but the price rises up to 2000 euros and more for 200-sqm apartments.
Rental market is particularly frenetic in autumn due to the presence of foreign students who look for suitable rental premises. As regards the rental sector, it is not possible to predict any significant price changes or flactuations in vacancy at the moment.
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