Demand for apartments in Estonia is being fueled by overseas buyers, according to a series of property experts. Taavi Reidmets, head of housing at Ober-Haus Kinnisvara, explained Russian investors are proving to be particularly interested in Estonian real estate. However, Scandinavians are also becoming more active in the region.
Narva-Joesuu has found itself in high demand among Russians, with property out of the price bracket of locals, Rando Vanaveski, head of the northerns Estonian region of Domus Kinnisvara, said. Figures have shown 23 apartments were sold in Narva-Joesuu in June and July, in addition to five private houses. Over the year, 67 transactions have included apartments, while seven have involved private homes. Mr Vanaveski believes the strong performance in June and July was the result of the notarization of apartments booked earlier at one popular building. Sunset Residence had 95 per cent of their apartments booked by Russian citizens.
Investors on the lookout for Estonian property should expect to pay between €80,000 and €500,000 for a seaside apartment. However, in all markets prices are on the up. Data from Eurostat recently revealed that in the first three months of the year values were up 7.7 per cent from the same time in 2012. During the period, this was the highest annual increase recorded on the continent. Figures were also positive when analysed quarter-on-quarter, up 3.1 per cent from Q4 2012. This was the second largest increase recorded in Europe for Q1, with Romania topping the growth charts at 4.3 per cent.
Improved lending conditions are likely to be behind the upturn in the Estonian housing market. At the beginning of 2013, Bloomberg reported the country was planning to create a mortgage bond market too. This would stimulate activity by lowering borrowing costs further and revival capital. Priit Perens, Swedbank chief executive officer, told the news provider: "The main reason to do this is to finance our activities more cheaply. In Sweden, there is a clear difference in prices of mortgage-backed bonds and senior unsecured bonds. It would definitely also be a suitable instrument to boost the local capital market."