Over 4% per year: see which Tallinn apartments provide the highest rental yields

According to Kinnisvara24 statistics, the average rental yield for Tallinn apartments reached 3.3 percent in January. In recent years, yields have been under pressure, but market indicators point to stabilization and potential growth.

The average rental price for Tallinn apartments has risen 2.3% year-over-year, reaching 752 euros in January. At the same time, apartment sale prices grew much faster – 12.3%.

According to Kinnisvara24 CEO Urmas Uibomäe, the average rental yield for the capital's apartments has fallen to its lowest level in the past five years, but the trend could soon turn around.

„There is reason to expect that yields will gradually grow this year. Rental prices are already in an uptrend in most areas, and various market analyses forecast average rental price growth of five to eight percent this year. Since rental prices grew slower last year than general inflation, this indicates clear growth potential," noted Uibomäe.

Best rental yields are in residential suburbs

Statistics show that at the beginning of the year, the highest rental yield was in the Old Town – 4.5%, as rental offers there have increased the most in price year-over-year. However, Old Town apartments are very diverse, and the addition of individual exclusive properties to the rental market can significantly affect the average figure.

Setting aside the Old Town's special characteristics, the apartments with the highest rental yields are located in Tallinn's residential suburbs. In January, Mustamäe led the rankings with 4.17%, followed by Lasnamäe with 4.14%. Mustamäe is considered the most stable area – yields have changed only 0.07 percentage points year-over-year. In Haabersti, yields have fallen from 3.8% to 3.2%, but still remain above the city average.

„From an investor's perspective, residential suburbs continue to be the most attractive – rental yields there are up to twice as high as in prestigious areas. In addition, due to lower rental prices, demand for rental space in these areas is stable," explained Uibomäe.

Looking at yields by number of rooms, smaller apartments clearly stand out. The calculated rental yield for one-bedroom Tallinn apartments exceeds 4.5%. Last year, micro-apartments, which are located near universities, in Kalamaja and the City Center, also offered above-average rental yields. These are popular with both students and people living alone, since their monthly rent is affordable. At the same time, the sale prices of micro-apartments have remained stable, which keeps their yields attractive to investors.

Strengthening demand supports rental investor outlook

On a broader scale, several structural factors support improvements in rental yields. Apartment sale prices are growing faster than potential buyers' ability to save the required down payment. This means that more and more people are staying on the rental market for longer. At the same time, rental offerings have decreased compared to, for example, 2024.

„These factors create conditions for rental prices to be rising in Tallinn and, together with this, the rental yield is likely also moving in an uptrend," said Uibomäe.

According to Eurostat data, the share of people living in rental housing in Estonia has grown 2.5 percentage points over the past four years, reaching 20.8 percent. Source: kinnisvara24.ee/statistika