● THE ESTONIAN PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • AUTUMN 2020
THE ESTONIAN PROPERTY MARKET
ESTONIA REMAINS ATTRACTIVE TO INVESTORS EVEN IN TIMES OF UNCERTAINTY Much like the rest of the world, growth forecasts in Estonia have been cut as a result of the covid-19 pandemic. The latest economic forecast from BNP Paribas predicts that in 2020, GDP in Estonia will contract by 4.4%, under
the assumption that no new covid-19 restrictions are put in place. The central bank’s official forecast predicts that the economy of the country will not return to pre-crisis levels of GDP until mid-2022. Next year, expected
Estonian economic growth is forecast to be 6%, as the economy recovers from the lowest point of the crisis. Both the Estonian and the global economy were already cooling down ahead of the crisis, which is why a quicker recovery is not expected. The commercial real estate market, however, remains very strong in Estonia. Total office supply increased by 21,300 sqm, or almost 3%, up to 827,300 sqm in 2019. Further modern office space is under development, although vacancy rates are slowly increasing. At least 100,000 sqm of new supply may arrive in the coming two years. Prime office yields feel pressure from the market uncertainty and remain compressed at 6.1%, while retail and industrial yields are at 6.9% and 7.6% respectively. The first half of the year saw a transaction volume of nearly EUR 200 million, including two record-breaking transactions on the Tallinn market, one of which is the largest investment transaction in the market’s history. In H1, more than 55% of the total Baltics volume was transacted in Estonia, and investment volume is expected to triple in 2020 when compared to 2019, reaching EUR 260 million. The office segment in Tallinn remains the largest and most balanced among the Baltic capitals.
Photo: Mr Finland
Contact: Kristina Živatkauskaitė k.zivatkauskaite@newsec.lt
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