Expert: Capital's New Apartment Rental Prices Declined by a Tenth Over the Year
In Tallinn's new developments, rental prices have fallen by approximately one-tenth over the past year, and given the state of the money market, it is difficult, if not impossible, for rental investors to earn reasonable returns today, says Martin Vahter, head of 1Partner Real Estate.
"Similar to the real estate sales market, the market for more expensive apartments has also been under pressure. I can provide numerous examples of apartments with 800-900 euro monthly rent that cost a hundred euros more a year ago," described Martin Vahter, head of 1Partner Real Estate, noting that while there is no unified registry for Tallinn's rental market, general trends are still visible. "The cold winter of recent months has played a role, and with it come high utility costs. While four or five years ago tenants didn't pay particular attention to utility costs, today everyone has learned to dig into these numbers," added Vahter.
According to 1Partner's head, rental investors in more expensive new developments have switched from a profit-making position to one of minimizing losses. "Recently, an advertisement caught attention offering a spacious 2-room apartment in the Kalaranna district with a warm garage and storage room for only 800 euros per month, although the business plan would require a thousand euros or more per month. Under standard conditions, the loan payment for such an apartment is clearly higher," added Martin Vahter.
However, according to Vahter, demand remains relatively strong at the more affordable end of the market. "Such well-maintained older apartments with 400-500 euro monthly rent still sell relatively quickly after the advertisement is published," confirmed Vahter.
1Partner is the leading real estate group in the Baltic countries, with offices in Tallinn, Tartu, Riga, and Vilnius. 1Partner group provides real estate brokerage, valuation, construction, development, management, and investment management services. 1Partner real estate group is the official cooperation partner of JLL (Jones Lang LaSalle), the world's largest commercial real estate consulting company, in the Baltics.
