Why Invest In Estonia?

Today’s investors are increasingly aware of Estonia’s relative potential for high capital appreciation and rental yields, compared with many other European destinations.

Gone are the days of spiraling growth in Estonia. But the good news is that prices are still comparatively low, though slowing somewhat – meaning it may now take weeks or months rather than days to sell on your property and of course it should take longer to achieve your targeted returns on investment. Nevertheless, those investors seeking an easy-to-reach location, within a safe and solid EU economy, are selecting Estonia as a reliable medium to long term investment option, where very realistic profits are still to be made.

Advantages of Investment in Estonia

• Low levels of unemployment, wage increases, and rapid economic growth have led to an increasingly sophisticated and wealthy population in Estonia. More Estonians now seek to jump onto the property ladder for the first time since Soviet days, by owning their own modern style homes
• Despite boom days during and since EU accession, demand for property remains high and supply low, particularly in major town centres. Many experts predict it will still be some 10 to 20 years before supply finally meets demand
• Prices still compare extremely favourably with other European countries: in Tallin centre, a new flat (50m2) can still be bought for approx GBP 66,000
• Approx. capital appreciation of 12.5% per annum. Over the past 11 years, prices have risen consistently by, on average, 10 - 15% per annum
• Apartments in the city centre are renting well, mostly to foreign workers, but also to affluent Estonians, at approximately 10 EUR per square metre, and yielding some 6% per annum
• Estonia receives huge amounts of foreign investment, particularly from neighbouring Finnish investors, who seek affordable properties in Tallinn, in preference to higher prices (approximately 300% higher) back home in Helsinki. In time, this is likely to result in converging property prices between the two capitals
• GDP growth rates have stabilised and are expected to average 7% per annum. Assuming this is the case, over a 5 year period, the country’s economy is likely to grow by a significant 40%. This, in turn, should have a positive effect on property price growth over time
• Home mortgages are increasingly available to local buyers, meaning more scope for many ordinary citizens to finance a property purchase
• The impending introduction of the Euro, set for approximately 2010, means that many people with cash are investing in tangible assets such as property. In the run up to the Euro, this has been a common trend in other countries such as Spain and Portugal, that also saw significant price rises since adopting the Euro.
• Easy access is ensured via Tallinn’s recently upgraded international airport. Many low cost airlines service Tallinn from major European cities, and new Estonian Air routes are scheduled for spring 2008

Property purchase specifically as an investment vehicle is a popular option amongst those aiming to profit from the solid growth potential of property in Estonia. This type of investment could consist of an off-plan purchase for sale prior to project completion. Alternatively, a buy-to-let investment could provide reliable rental income, along with capital appreciation.

Our Estonia Investment Research section allows you to research further into investment property in Estonia and the location as a whole. IPIN members may view carefully selected Estonian investment opportunities. If you are not yet a member, you can join FREE now and gain instant access our detailed Investor Reports on these recommended properties.

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