Long Term Potential of Property in Estonia

Estonia offers good opportunities for investors looking for possibilities outside the more established eastern and central European markets, such as the Czech Republic, Hungary and Poland.

While Estonian real estate – and the property investment market really only involves Tallinn, the capital – has shown some spectacular growth in the last few years – of up to 30 per cent per annum in the centre of the city – these kinds of gains have diminished for the time being. This year real estate prices look set to grow at a far more sedate pace: they may not even reach double digits.

But the attraction of Estonia is the terrific long-term potential it represents.
The attraction comes from the immediate allure of possible yields of up to 10 per cent, which is the level at which a property becomes cash positive right from the off - ie. it pays for itself. Plus, and more importantly in the long term, the attitude of the country towards the way it wants to develop. Estonia has its problems, certainly; most notable is the economic gulf between the more prosperous capital and the northeast of the country, which remains a black spot for investment and unemployment.

This area will certainly take some time to make the transition from heavy industry to the service and finance centre Estonia seems determined to become.

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