NARVA - Real estate experts believe that the stagnate real estate market in Ida-Viru county, Estonia's northeastern and most economically depressed region, could see a flood of new investments once the country joins the EU.
A combination of new jobs and a resurgence of interest on the part of neighboring Russians might give the property market in the region, in recent years characterized by disparate prices, the boost it has been long waiting for.
Today, for instance, a three-bedroom apartment in Narva, the largest town in the Ida-Viru region, costs roughly 20,000 euros, or 10 times more than a flat of the same size in Kohtla-Jarve, a small oil-shale mining town 50 kilometers west of Narva.
High unemployment and an abundance of residential property have contributed to the dearth of demand in Kohtla-Jarve, as well as the fact that banks are not active in the town, says Viktor Veevo, a real estate expert at Ober-Haus in Narva.
Demand in Kohtla-Jarve, which has a population of 50,000, won't appear until new jobs are created, and that won't happen until the city offers investors something attractive, he said.
"The overall image of the town is also important. Kohtla-Jarve can't offer anything but oil-shale shafts," says Veevo.
Regarding Narva, which has a population of 70,000, he says that unlike Tallinn, property prices are not inflated and that there is room for significant growth on the local market.
Experts say that overall demand on the Narva residential property market has been in the medium segment, namely recently renovated tidy apartments. Customers prefer to buy a renovated apartment instead of investing into renovation and redecoration.
As the average price of top-level renovated apartment makes only 5,000 kroons (320 euros) per square meter, it is unprofitable to build a new apartment house because it will be much more expensive, according to Veevo.
A third town in the region, by contrast, has different growth prospects altogether, says Veevo. In the small town of Narva-Joesuu, located on the seashore next to the Russian border, real estate developers are anticipating a bona fide boom.
With only 3,500 residents this old resort town set 10 kilometers from Narva is slowly reacquiring its erstwhile popularity. If in recent years demand for residential property in Narva-Joesuu has been low due to heating problems, today more people would like to live in Narva-Joesuu rather than in Narva, says Veevo.
The amazing part is that the local market of Narva-Joesuu is embryonic, and prices are still quite low.
That, however, should not last long.
Estonia's upcoming accession to the European Union will affect real estate prices throughout Estonia but especially in Ida-Viru, since many Russians may choose to buy property in the Baltic country in order to overcome travel restrictions imposed by the EU.
Narva-Joesuu would be first to feel the influx of Russian money, as the town was popular during Soviet times as a quality resort with affordable prices.
