Expert: Three-room apartments in new developments have become much more liquid than two-room units on the rental market
The Tallinn rental market for newer apartments has undergone changes in recent years, and the rental yield of the previously most sought-after two-bedroom apartments now lags behind three-bedroom apartments, according to 1Partner Real Estate consultant Helena-Laura Lesment, who describes one of the recent trends.
“If we compare income per square meter, then a three-bedroom apartment in a new development in the city center vicinity should have a monthly rent roughly one-fifth higher than a two-bedroom one, but in reality, this difference can be several times greater,” comments the 1Partner consultant and gives an example that finding a tenant for a new two-bedroom apartment at a monthly fee of 800 euros can be significantly more difficult than for a three-bedroom one in the same building at 1300-1500 euros.
Helena-Laura Lesment explains that the large amount of two-bedroom apartments purchased by rental investors over the past five years has created an oversupply in this category, which is why owners must either be patient or lower their price expectations. “There are clearly fewer new three-bedroom apartments on the rental market and even some deficit has emerged,” says Lesment, emphasizing that these differences apply specifically to apartments in newer buildings. According to the expert, the demand for three-bedroom apartments is supported by a distinctly separate group of families who have postponed buying their new home so far, but do not want to make compromises in their daily quality of life.
Regardless of size, apartments that have been furnished with the help of a professional designer have an increasingly greater advantage on the rental market. “People's expectations for both interior design and the quality of furnishings are significantly higher compared to five or ten years ago,” emphasizes the experienced consultant.
In the case of older rental apartments, the so-called ones located on the hills, a 2-room apartment costing 400-450 euros is still very much in demand. “We certainly don't see the kind of rush there was two years ago, when tens of thousands of war refugees arrived in the Estonian capital in a short time. However, finding a tenant still shouldn't take too long,” comments Helena-Laura Lesment.
