Real Estate Agent Reveals Which Apartment Offers the Best Rental Yield

Investor interest in Tallinn real estate has begun to recover somewhat, and with good offers, suitable apartments sell quickly.

The main goal of investing is rental income, but the growth in property value in the future is also considered important. But what are the rental yields of different apartment types, this is explained by ELUM Real Estate broker Egon Juhanson.

Tallinn new developments

Due to high purchase prices, yields have become very low and since many developers have also put some apartments on the rental market, this has created strong pressure on rental prices.

In addition to the apartment sale price, you must also add a parking space, storage and furnishings. All these expenses further reduce the already low rental yield.

At the same time, the investor also considers the growth in property value in the future and from that perspective, Tallinn real estate is the most liquid.

Rental yield: approx. 4%.

Tallinn city center

In the city center, prices are always significantly higher and therefore yields are lower. However, this does not deter buyers, as real estate in the city center is consistently liquid at all times and there are no major fluctuations here.

Rental yield: 3-4%

Suburbs and surrounding Tallinn

Renovated and redesigned older apartments sell best, especially they set the tone in residential areas. Conversions of one-room apartments into two-room apartments have become very popular, and conversions of two-room apartments into three-room apartments. This means converting the old kitchen into a room and creating a kitchenette in the living room.

Four-room apartments with their high prices do not offer good yields, except for Mustamäe 60 m2 apartments. Some of these have also been converted into five-room rental apartments, but only if the layout allows for it very well.

Rental yield: 4.5-5.5%

Micro apartments

Due to their small total area, micro apartments are always affordable and therefore also provide the highest yield percentage.

With micro apartments, the biggest obstacle is that they are often commercial spaces and even if banks give home loans for them today, this is still a negative factor for the buyer.

Rental yield: approx. 6%.

Houses and townhouses

In Tallinn city, there are few rental offers for single-family homes and this is rather a niche market. These are older houses and for them, calculating yield is no longer primary.

New rental houses are not being built because land is scarce and the high construction price does not make it a profitable project.