Expert: Two Estonian Spas Became Hugely Popular for the Summer

According to Jaanus Laugus, the head of Estonia's largest real estate office, the popularity of Pärnu and Haapsalu as resorts increased significantly this year, as evidenced by the occupancy rates and prices in the restaurant and hotel sectors, as well as interest in real estate.

"Pärnu and Haapsalu experienced a renaissance and the biggest change in decades this past summer. Recreation opportunities, cultural life, and café culture have been continuously developed, and thanks to a good tourism summer, this impact has now reached every sphere. Many Estonians rediscovered our own popular resorts, and this summer it was trendier to rest on the shores of Pärnu Bay instead of the Mediterranean," said Laugus.

"Tourism to Western Estonia is also clearly returning from Finland. For our northern neighbors, there are more beautiful beaches here, a pleasant small-town atmosphere, and still more affordable prices. This year was quite successful for the resort businesses – hotels and cafés had a very good summer," added Laugus.

"The popularity of the resorts was also reflected in real estate, where several changes occurred. While resorts were previously viewed mainly as an opportunity to earn rental income and as an investment, wealthier Estonians are now buying apartments more for their own summer use and as a second home. Some of these apartments were rented out for short-term use during the summer if the owners weren't using them themselves, or rented out for longer periods during the winter season. Others are simply kept as a second residence and financial investment," commented Laugus.

"The popularity of real estate in Pärnu and Haapsalu has actually been rising for some time. For example, over the past three years, the median price per square meter of apartments in Pärnu has grown by 50%, and in Haapsalu by as much as 75%, which is significantly more than, for example, in Tallinn during the same period. In the first half of 2023, apartment prices in Pärnu rose 12.7% compared to the same period last year, and in Haapsalu 3.6%. For the more expensive new developments in Pärnu, prices are currently around 6000 euros per square meter, and in Haapsalu 4000 euros per square meter."

According to the head of Uus Maa, such high rental prices as those seen this summer have not been seen in Pärnu before. "In the resorts, clearly established popular streets have formed – near the sea and entertainment, prices were rather from a hundred euros upwards per night. In winter, rental prices in resorts clearly drop, but since purchasing decisions are still being postponed, longer-term rental prices have risen about ten percent compared to last year," added Laugus.

"The real estate market in Pärnu is experiencing two contradictory trends. In the short term, the number of sales offers has increased during the summer, and several major developments are nearing completion. Since prices have risen rapidly and more supply has come to market, a correction downward could be expected in the near term. But in the longer term – when the four-lane main road is completed and the Rail Baltic rail connection is established, which will allow people to reach Tallinn in an hour, many will increasingly see Pärnu as an everyday residence, and prices will likely go up significantly," said Laugus.

According to Jaanus Laugus, however, not all Estonian resorts were equally popular this summer. "While Pärnu and Haapsalu were very hot destinations, for example Kuressaare and Narva-Jõesuu were clearly less so. Saaremaa's bottleneck is the poor connection to the mainland and stagnating infrastructure and recreational development. Eastern Estonia was long targeted at Russian tourists, and after that market collapsed, other visitors have not discovered it," added the head of Uus Maa.