TALLINN – The Estonian property rental market has largely recovered from the crisis, and using the coronavirus as an argument in price trading no longer brings success, real estate agency Uus Maa says.
"As we can remember, rental prices fell sharply in 2020, by an average of 25 percent, and the situation was particularly bad with one- and two-room apartments, of which there's much more in supply," Gerli Asmer, agent at Uus Maa, writes in the August real estate newsletter.
According to the agent, rents are now recovering and are returning to pre-coronavirus levels. At the same time, the numbers of transactions are increasing, and foreigners, students, and workers mobile within Estonia have also returned to the market.
"While in the meantime the portals were flooded with micro-apartments with a price range of between 200 to 300 euros, we are now seeing a decrease in supply in this sector as students and workforce from elsewhere have started renting these apartments again," Asmer noted.
At the same time, there is still a deficit in the segment of exclusive rental properties. There are few apartments with a monthly rent of 2,000 euros or more and houses with a monthly rent of 2,500 euros or more available, although the demand for rental real estate of this class is high, according to the agent.
At the same time, rental investors are in a difficult situation because rental yields are poor.
"As dwelling prices continue to rise, one has to reckon with ever lower rental yields in Tallinn," she said.
Asmer said that investors who want a higher rental yield would do well looking to areas situated at some distance from Tallinn, where the price increase has been slower so far.