TALLINN - Finland's Realia Group has announced that would purchase the Ober-Haus real estate company, for years a leading force in the Baltic property market.
According to the deal, Realia Group will take over Ober-Haus' operations in the three Baltic states, Poland and Ukraine, which will help it to become the largest real estate company in Central and Eastern Europe.
The sum of the transaction, which was announced June 27, was not disclosed.
"The timing of the agency sale is reflective of our individual personal interests and my desire to focus on development," said Paul Oberschneider, who founded Ober-Haus in 1994.
"We have built a great company and have great employee loyalty, and teaming up with Realia Group and their financial shareholders will help the business expand into other markets and grow. Realia Group can take it further than we could at this stage," he said.
Oberschneider and other top managers of Ober-Haus will become shareholders of Realia, which has said it would continue to use the Ober-Haus brand throughout Central and Eastern Europe, as well as in Scandinavia.
"We see great possibility for strong growth in those countries, which [together] have over 100 million people," said Risto Kyhala, managing director of the Realia Group. "The middle class segment is becoming more prosperous and is quickly upgrading their living standards. This creates more business opportunities for us."
Realia, which owns real estate firms Huoneistokeskus, SKV and Huoneistomarkkinointi, posted sales of 120 million euros in 2006 and has projected sales of 140 million this year.
Ober-Haus brings to the deal 35 offices in five countries and a staff of some 350 brokers.
Ober-Haus owns and administers four shopping malls in Tallinn: Norde Centrum in the downtown area, two malls in Lasnamae and Tammsaare Selver in Mustakivi.
"There is huge demand for Realia Group's know-how, especially in housing management but also in real estate management in general," said Peter Gage Morris, managing director of Ober-Haus.
Realia Group, which is owned by Sponsor Capital, Nordea Pank, Varma and Finnish Industry Investment, wants to use its purchase of Ober-Haus as a springboard into the Russian market.
Kyhala told a press conference in Tallinn on June 27 that the company had been observing the St. Petersburg market for a couple years and was planning to enter Russia.
"Naturally we will go to Russia 's we are now building a bridge for it," he said.
Morris said there was still room for prices to grow despite sentiment that the market was overheated. "There is still a lot of room for development to the West European price level," said Morris, who will head Realia's international operations.
"The real estate prices will remain the same during the next 12 months, but the construction prices, which have gone up very much, will fall during the next 18 months," Obserschneider added.
Oberschneider will now focus on real estate development. His development company, Hauser-Oberschneider, will continue to build malls in Estonia and is planning new residential developments in the Baltic states, according to the press release.
Oberschneider also created the Schlossle Hotel Group and built the five-star Schlossle Hotel in Tallinn together with its sister hotels, The Grand Palace in Riga and the St. Petersburg Hotel in Tallinn. The chain was sold last year to a Spanish hotel group.
Hauser-Oberschneider has previously announced it would build a new retail center in Parnu together with Vilniaus Prekyba, owner of Maxima and the Baltics' largest grocer.