● THE ESTONIAN PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • SPRING 2022
THE ESTONIAN PROPERTY MARKET
Photo: Magnus Heinmets
ESTONIA’S REAL ESTATE INVESTMENT MARKET CLOSE TO ALL-TIME RECORD VOLUME
In 2021, Estonia maintained the fastest economic growth in the Baltic region, with GDP growing 8.1% from the prior year. Construction, IT, real estate and transport- and warehousing activities contributed the most to the economic growth. However, not all sectors performed at pre-pandemic levels. Accommodation and food services, the hardest hit, remained 15% down versus two years ago, and manufacturing has not yet fully recovered either. The labour market has heated up amid the economic growth. Unemployment in Estonia declined to 6.4% last year and is forecast to drop to 5.4% in 2022. Inflation, driven mainly by increases in energy prices, rose rapidly, averaging 4.5% over the year and reaching 12.2% at year-end. Price rises in Estonia were among
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the fastest in Europe and the Baltics. Consumer prices are projected to continue rising in 2022, about 6% on average, with the pace slowing down in the second half of the year. According to the latest forecasts, the Estonian economy will grow 3.5% in 2022. Real estate investments grew more than 90% in 2021, falling just 9% short of 2015’s record level. Investments in cash-flow generating commercial property totalled nearly EUR 450 million, with an all-time quarterly record of EUR 285 million worth of deals in Q4. The previous record was in Q3 2015, when investments totalled EUR 230 million. Investment transactions in Estonia in 2021 accounted for 30% of the total Baltic investment market. The office segment, which
has recovered and grown by more than 30%, was sharply outperformed in 2021 by the retail and the ware housing- and industrial segments, which garnered 42% and 28% of investments respectively. While there were more acquisitions of retail properties late in the year, activity in the industrial and logistics segments remained strong throughout the region. Newsec forecasts Estonia’s real estate investment market to see some EUR 360 million worth of deals in 2022, about 55% more than the average for the last 5 years.
Contact: Kristina Živatkauskaitė k.zivatkauskaite@newsec.lt
