TALLINN - The Estonian real estate market is still recovering from the recession but is nevertheless ahead of the curve compared with the rest of the economy, according to the head of the Realtors Association, Tonis Ruutel. In the last few years, the real estate industry has grown 10 percent per year and the same is being forecast for this year, reported ERR radio.
The market is lively, with Tallinn and Harju County, which constitutes 70 percent of capital on the market, boasting 23 percent growth in transactions last year. The area saw 4.8 percent of its properties change hands.
But a major problem is that there are few new buildings coming onto the market, and old properties are rapidly aging. This is due to the weak purchasing power and relatively low demand for new properties in a country where the average gross monthly income is around 950 euros.
One of the biggest concerns for realtors is the rising cost of construction, which is currently still a reasonable 1,000 euros per square meter, according to Ruutel.
“The purchasing power and demand in this market tend to be more or less on par with construction rates,” Ruutel said. The cheapest going rate for new properties in Tallinn is around 1,300-1,400 euros per square meter. In the city center, the rate is between 2,000 to 3,000 euros.