Increase in rents in Estonia overwhelmingly fastest in EU

TALLINN - According to Eurostat data, Estonia has seen the highest increase in rents in the European Union over the last 15 years.

From the beginning of 2010 to the end of 2024, rents in Estonia increased by 212 percent, the fastest growth in the EU. Estonia is followed by Lithuania, with an increase of 175 percent, and Hungary, with 114 percent. Greece is the only EU member state to have seen rents fall, by 13 percent. The average increase in rents across the EU was almost eight times slower than in Estonia, at 27 percent.

Helina Kikas, head of home loans at Luminor, said there is a trend among property investors in Estonia now to buy properties that are not in very good condition outside of the major centers. The buyers then use reasonably priced workforce to renovate the property or spruce it up themselves and then rent it out. This trend was triggered by the rising property prices and the past rise in Euribor.

Euribor peaked nearly a year and a half ago, rising above 4 percent, after which it has gradually declined. According to Kikas, the returns of investors who bought real estate with bank loans were under very strong pressure during the period when Euribor was above 3 percent. Over the past year, Euribor has fallen by nearly 43 percent, currently standing at 2.15 percent.

"The Euribor level has normalized, but rents have not fallen, which is why investors' returns have also improved. However, it is worth noting that returns have not increased dramatically, and at least in the near future, it is not expected that they will reach the levels seen in the previous decade," Kikas added.