Expert: Prices of Expensive Rental Apartments Will Fall in the Near Term

In Tallinn, there are nearly five hundred apartments on offer, for which owners hope to receive rent significantly over one thousand euros per month, but most of them would need to lower their expectations by several hundred euros if they don't want to end up paying the utilities themselves for an empty apartment in addition to the lost income, says Meelis Ränk, head of residential real estate at 1Partner Real Estate.

"The prices of more expensive rental apartments have started to come down, as supply currently clearly exceeds demand. A more spacious apartment located in a good area of the capital, for which one could calmly ask 1200-1300 euros at the beginning of last summer, could now find a tenant more easily at a price tag below one thousand euros," Ränk pointed out the suggested price corridor range.

"For good products, one can still get a decent price, but the trend is clearly toward price correction. On one hand, people are looking for savings opportunities in conditions of high inflation, and on the other hand, real estate investors are in a hurry to preserve cash flows, as they are pressured by high winter utility costs and loan payments, whose interest rates have risen significantly," explained Meelis Ränk.

"At the same time, it is already evident that many of our clients have heeded our recommendations and we have found quite quickly tenants paying reasonable prices and having a trustworthy background even for the more expensive apartments," noted Meelis Ränk.

As for smaller and cheaper rental apartments, costing approximately 500 euros per month, Ränk considers a general price drop to be quite unlikely in this case, since there is always greater demand for apartments in the more affordable price class, and the small investor can manage to cover the associated utility and interest costs themselves for a few months while searching for clients with relative ease.

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.