Find out below the main reasons why real estate in Estonia still has such potential for investment growth.
Investment property in Estonia is a popular option amongst buyers seeking a growing and reliable EU market in which to invest.
A short supply of modern accommodation both in Tallinn city and in seaside resorts such as Parnu is keeping the property market ever buoyant in Estonia, while an emerging wealthy middle-class is now keen to get onto the property ladder for the first time. The greater availability of mortgage finance means a further boost to the market as increased local demand for property should, inevitably, contribute to pushing prices upwards.
Finnish investors dominate overseas buyer statistics as geographic proximity and the prospect of buying property at prices 300% lower than in Helsinki make Estonia an ideal choice for Fins seeking affordable and profitable investments.
The Estonian investment climate is clearly conducive to growth: zero and low corporate taxation rates, a low cost of living and a skilled local workforce have resulted in consistently high levels of foreign investment. A sophisticated workforce, including specialists in the IT, transportation and construction sectors, indicates that Estonia will continue to grow for some time to come.
A wide availability of budget services, such as Easyjet from London and Berlin and the introduction of new routes such as KLM’s twice daily flights to Amsterdam continue to boost international visitor numbers to Estonia, encouraging demand for holiday homes and investment properties.
Current capital appreciation figures are an encouraging 12% per annum, making for profitable medium to long term investment in Estonia’s sought after locations. Although this rate is not as high as in recent years, current economic indications demonstrate a smoothing off to more sustainable levels, comparing very well with growth in many other EU countries.
2007 rental yields reached approximately 6% for new apartments in high demand areas of Tallinn city centre, boding well for buy-to-let investors or those looking to rent out their properties to supplement capital appreciation over time. With prices around 10 EUR per metre squared, renters are foreign workers and, increasingly, the Estonian population.
Estonia receives the second highest per capita EU cash inflow of all nine acceding countries. A growing economy, consistently averaging between 6% and 11% over the last five years, brings with it increased personal incomes and boost to the property market. Assuming growth rates average a 7% per annum, Estonia’s economy will in turn grow by a significant 40% over a five year period, leading to significant capital appreciation over time.
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