Cold Winter Increases Demand for Smaller Rental Spaces

A cold winter and exceptionally high heating and electricity bills have sharply increased demand for smaller and more energy-efficient rental properties.

René-Richard Krause, sales director of one of Estonia's largest accommodation companies, stated that high heating costs and January's record electricity price prompted people to seek more cost-effective housing. "High overhead costs have caused people to actively search the rental market, and we're seeing increased interest in smaller rental properties. For example, in January, demand in our rental apartments grew by 60% compared to the same period last year, which can be linked to the desire to move from an existing rental property to a more energy-efficient one," Krause pointed out.

Although salaries in recent years have grown significantly faster than rental prices, and the average tenant can afford a larger and more expensive rental apartment in Tallinn today, high energy prices have nevertheless substantially increased the total cost associated with housing.

Krause added that the average tenant looks very carefully at the total cost related to the rental property and has become more rational in their choices—namely, they evaluate both the number of square meters to be heated and overhead costs.

"A modern well-insulated building with a thoughtfully designed heating solution helps keep costs at a reasonable level for residents year-round. Additionally, professional rental apartment operators operate at peak efficiency, which also helps keep costs lower on average," Krause confirmed.

The capital's rental market remains active due to ongoing economic uncertainty, which has been exacerbated by this year's high heating and electricity bills.

Additionally, a younger generation has entered the rental market, which prefers smaller and more affordable housing. However, high quality is expected even at favorable prices, and compromises are made regarding location. "Many of our clients don't own a car, but the development of public transport and the availability of rental transport options today are widely prevalent and make mobility sufficiently convenient and fast," explained the sales director of Larsen.

Since tenants prefer more compact living spaces, spacious common areas become important. "At Larsen, our shared spaces in our buildings are highly valued and actively used—featuring a spacious common living room, game and media room, library, gym, and meeting rooms. During the summer, residents actively use roof terraces and outdoor areas," said Krause.