TALLINN - Real estate experts said the record-breaking 600 million kroon (38 million euro) bid for three plots of land opposite the Olumpia Hotel in downtown Tallinn was clearly a bloated price. Meridiaane, a company of the businessman Viktor Levada, offered 596 million kroons for the three properties owned by the city. The area comprises 7,384 square meters, which boils down to a price of 80,715 kroons per square meter.
"Looking at today's market, this is an unprecedented price. As far as I know, such a per-square meter price has not been paid even in the Old Town," Ain Kivisaar, manager of the real estate investment fund EE REIT, said. "Most bidders saw the price as being considerably lower."
In his words, the buyers' business plan must envisage a high-rise building for the site.
Ardi Roosimaa, managing director of the real estate company Colliers International Eesti, said the price is definitely inflated. "The price is certainly not sustainable. To my mind, this transaction is very emotionally colored," he said.
Kivisaar said the deal would not bring in its wake any changes on the capital city's real estate market, while Roosimaa said he hopes the transaction would bring the market out of the doldrums.
"The expectations raised by the media have caused a minor slowdown. Nobody predicts continued strong growth today, but a normal small price rise should go on," Roosimaa said.
The public auction of the three properties in Juhkentali Street drew five bids in all. The starting price of the plots was 240 million kroons whereas an expert evaluation put their value at 70 million kroons.
