Real Estate Expert: Tallinn's "Hills" New Apartments Have Become a Luxury Commodity

According to Igor Habal, a member of the board of Estonia's largest real estate agency Uus Maa, the prices of new apartments in Tallinn's "hills" are approaching those of the city center, and affordable homes must increasingly be sought further from the city limits.

According to Igor Habal, the prices of new residential district apartments have risen proportionally more than, for example, those in the city center, and are therefore no longer accessible to many. "Five years ago, the price of a new two-room residential district apartment was around 110,000 euros, but now it is on average 165-170,000," said Habal.

"In residential districts, the average price per square meter of a new apartment has risen to around 4,400-4,500 euros, and in this respect there is no significant price difference between Lasnamäe, Mustamäe or Õismäe. However, one thing is clear – the "hills" can no longer be considered a place where one can find a new home cheaper than other city districts, and instead they are becoming luxury. In reality, a 60-square-meter new development apartment in Mustamäe is being asked for 265,000 euros, and this is pushing people to look for older apartments or a new home outside the city as an alternative," said Habal.

"Partly behind the high prices is the limited supply of new developments in Mustamäe and Lasnamäe, while there are more available at the Astangu end of Õismäe. In Lasnamäe, for example, there are currently just over 50 new apartments for sale, which is several times less compared to what is usual. When supply is limited, developers are in a stronger position and can also ask for more," commented Habal.

"The prices of older apartments in the hills have not risen so vigorously, and the difference with the city center is noticeable. For example, you can find an older two-room apartment in the "hills" for under 100,000, but in the city center comparable prices are around 150,000," added Habal.

According to the member of Uus Maa's board, people have increasingly started looking for new apartments outside Tallinn's borders, where prices are more affordable. "The more popular areas closer to Tallinn are starting to fill up – for example, Peetri, Haabneeme and Tabasalu. Therefore, instead of these, areas further from the capital are being looked at, such as Rae village, Raasiku, Jõelähme and especially Kiili, which is supported by both the improvement of local infrastructure and accessibility. In these places, you can find new apartments at 3,000–3,500 euros per square meter," added Habal.