Student Housing Rental Markets: Narva Outperforms Others with Double Returns

As September approaches, the real estate market is increasingly attracting the attention of students looking for housing. What does the student rental market look like this year and what should inexperienced young people keep in mind when searching for apartments?

Compared to last June, there have been significant changes in the preferences of students in university town rental markets, noted Urmas Uibomäe, the director of Kinnisvara24, looking at the statistics.

"Looking at data from five main student cities – Tallinn, Tartu, Pärnu, Narva, and Viljandi – we see that the rental yield for two-room apartments has fallen everywhere," said Uibomäe. "The rental yield for one-room apartments is also in a downward trend in Tallinn, Pärnu, and Narva, but in Tartu and Viljandi we have seen growth over the past year."

One interesting finding also emerged from Kinnisvara24's statistical environment: although Narva's figures have fallen compared to last year, the market there still significantly outperforms other student cities with its rental yield in the one- and two-room categories.

"In Narva, the rental yield is significantly higher than in other cities: 12.78 percent for one-room apartments and 8.83 percent for two-room apartments," said Uibomäe. "This is more than twice the yield seen in other student cities."

The reason for this is primarily a combination of low real estate prices and stable rental income, emphasized Uibomäe: purchase prices for small apartments often fall in the range of 15,000–40,000 euros, while their monthly rental income can reach 200–300 euros. "This means 10–14 percent gross yield, which is nearly twice as high as in Tallinn or Tartu," Uibomäe compared the border city to other student cities. "In addition, the rental market in Narva is stable and less competitive – demand comes mainly from the elderly, single individuals, and low-income people who prefer renting to buying."

More supply than last year

Alongside the decline in rental yields, the number of student apartment offerings has grown in all observed cities.

"For one-room apartments, the number of offerings in Tallinn has nearly doubled, and in Viljandi it has almost tripled – in the capital, the number of such apartment offerings has increased from 184 to 366 over the year, in Viljandi from 8 to 22," said Uibomäe. "The number of two-room apartment offerings in student cities has also increased significantly overall. The only exception is Viljandi, where the number of such apartment offerings has fallen from 13 to 12." The growth in the number of offerings and the decline in rental yields suggest that students may have a bit more choice in selecting housing this year than last year, noted Uibomäe.

Student demands are growing

Lumen Kinnisvara broker Maris Tämmo sees in practice that students searching for apartments have a long list of demands specific to them.

"Students expect clean, well-maintained, and furnished apartments. Internet connection and the presence of a washing machine are becoming increasingly important. Why not also the presence of a gym," noted Tämmo. "Affordable rental apartments are preferred, and often they are willing to share an apartment with roommates. Proximity to the university, public transport, and city centers is very important. Short-term or flexible leases are a plus, since studies can be temporary."

In the capital, students look for rental homes in Mustamäe (due to proximity to TalTech), Kristiine district, the City Center, Lasnamäe (cheaper prices), and Kopli (proximity to TLÜ). The most popular areas in Tartu are the City Center, Karlova, Supilinn, and Ülejõe. In Pärnu, the City Center, Ülejõe, and Mai. In Narva, students tend to move toward the City Center, Joaoru, and Kreenholm areas. In Viljandi, apartments near the city center are also in demand.

Demand is still highest at the end of August and the beginning of September, and home seekers should be attentive – in both Tallinn and Tartu, apartments with good location and favorable prices are reserved within 1-2 days, noted Tämmo.

In order not to make hasty decisions under time and financial pressure, Tämmo, based on his experience, recommends keeping the following in mind when searching for housing:

• Start your search early – the data shows that while the number of offerings has increased, the best offers go quickly.

• In Tallinn and Tartu, more popular apartments are often reserved within 1-2 days.

• Prepare the necessary documents – ID, proof of income, and if necessary, parental guarantee. This speeds up the signing of the lease.

• Read the lease carefully – make sure all conditions are clearly stated (rent, security deposit, penalties, lease period).

• Check utility costs – they can be even higher than rent, especially during the heating season.

• Take pictures of the apartment before moving in – this helps avoid future disputes over the security deposit.

• Avoid cash transactions – make all payments by transfer so that there is a traceable record.

Tämmo recommends not rushing into a deal if you see the following warning signs:

• the owner does not want to sign an official lease;

• the apartment is offered at a significantly lower price than market rates;

• the owner is rushing the decision or demanding prepayment before showing the apartment;

• the apartment is in poor condition or lacks basic amenities;

• the owner is unwilling to show previous utility bills.

In summary: for students planning to move in the fall, it's worth starting your search right now – the data shows that there are more options than last year, but competition for good offers is still fierce.