baltic states and belarus real estate market review - Colliers

Stability, optimism
and The Euro
After several difficult and challenging years of economic downturn in Estonia,
2010 can be hailed as the end of crisis times, and of stabilization of the economy and
real estate markets.
2010 saw an end to falling figures and negative growth, as well as a farewell to the
Estonian Kroon, with the country embracing The Euro on 1 Jan 2011. The market
turnaround as well as the new era of membership of the Eurozone have given a great
sense of optimism and positive outlook for Estonian real estate markets.
Economic growth has recovered above expectations in 2010, driven by exports to
key trade partners, most notably Finland and Sweden. Investment activity emerged
once again after very little activity in 2009 thanks to revived foreign interest in
Tallinn, which offers companies commercial areas very much below average Eastern
European capital city prices.
Avo Rõõmussaar
Partner, Director
Colliers International, Estonia
Supply showed little change during the year, with difficult financing conditions, and
soaring construction costs however demand generally increased in most sectors. 2011
should not differ greatly in this respect. Rents in most sectors finally strengthened
and showed a slight increase in an upward trend that is expected to continue into
2011 also. Finally, vacancy rates increased in older or poorly located properties, but
are generally decreasing and effectively nil in some segments such as CBD office and
retail in modern shopping centres.
Although crisis times are officially over and there is a sense of optimism in the market,
this does not signal a return to boom-times by any means. Several ongoing defects in
the economy will continue to impact the growth of real estate markets such as high
structural unemployment, high construction prices, inflation and supply side defects.
Overall the market is much more optimistic entering 2011 12 months earlier. The
adoption of the Euro was a landmark event and is symbolic of the beginning of a new
post-crisis phase and the expectation of steady growth in years to come.
We, at Colliers International hope that the following market summaries, prepared by
our market experts in Tallinn will provide you with useful information and insights to
assist you in your business decision making in Estonia in 2011.