Expert: High Prices and Better Connections Drive More Middle Class Out of Tallinn

According to Argo Pillesson, the head of Estonia's largest real estate office Uus Maa, counter-urbanization is gaining momentum, meaning that people are moving beyond the capital's borders and back to smaller towns due to expensive prices in Tallinn, improved road and rail connections, and remote work opportunities.

According to Pillesson, statistics office data shows that Tallinn's internal migration balance has been clearly negative in recent years. "Tallinn has lost 10,000 people over five years, while at the same time the balance is positive in all neighboring municipalities. The large wave of moving to the capital is over and areas near the city and sometimes more distant small towns are becoming increasingly valuable," said Pillesson.

„High real estate prices in the capital and better transport connections to the rest of Estonia, especially four-lane highways and improved rail connections, give people more choices. People are also moving further away from neighboring municipalities, where at a distance of an hour's train or car ride from the capital, one can already get significantly more space or even their own house for the price of a two-room apartment in the capital. Since many people have been able to work from home since the corona era and don't have to be on-site every day, people are increasingly moving back either to their hometown or to a place where they can afford more space than in the capital," said Pillesson.

„Small towns offer families a healthy and safe life as well as more affordable real estate. While for decades the first thought of young people was to escape from small towns, such a lifestyle is now slowly becoming desirable again. New state gymnasiums have started operating in county centers and offer more consistent quality. More natural and sparse settlement has become a value and the lights of Tallinn no longer attract people as they once did," added Pillesson.

„Significant trend-changing factors are the construction of four-lane Tallinn-Tartu and Tallinn-Pärnu highways and the development of the rail network. The first one, for example, affected Järvamaa, where internal migration balance was positive for the first time in over a decade in 2025. With this, capital money also reaches Järvamaa, which gives a boost to local services and the real estate sector, and finally, people who had no previous connection to the region also move to more distant places. A similar change occurred earlier, for example, in Raplamaa, Kohila and Kose, and is now moving in the direction of Central Estonia," said Pillesson.

According to the head of Uus Maa, it is primarily those regions whose connections to Tallinn are improving that have the greatest development potential. „Rail Baltic will certainly affect Pärnu when completed, but the electrification of the Narva-bound railway will be completed much earlier, which will promote development for regions along the route - for example, Aegviidu, Rakvere and Tapa. Within Tallinn, travel time from one end of the city to the other has not decreased significantly by car or public transport, and this affects people looking to move out of the city," added Pillesson.

"Tallinn city should take more decisive steps to improve the city's internal transport network and especially public transport if it does not wish to lose position to regions within Tallinn's sphere of influence in the future. For example, during peak hours, the travel time by public transport from Haabersti to Ülemiste City is already quite similar to the travel time from Rakvere, which could start affecting real estate demand and price even within Tallinn," added Pillesson.