High demand pushing Tallinn rental prices up

Apartment (picture is illustrative).
Apartment (picture is illustrative). Source: Siim Lõvi /ERR

Rental prices in Tallinn are being pushed up by internal and foreign migration as more and more people move to the capital and demand for accommodation grows, real estate agents told ETV news broadcast Aktuaalne kaamera.

Last fall, data from web portal City24.ee showed the average rent per square meter in Tallinn was €16.10. The website estimates that rental prices rose 6.4 percent year-on-year.

"The main contributor to the rise is domestic migration, meaning people coming to work in Tallinn. But the migrant workforce, where we currently have 20,000 short-term work permits issued to Ukrainians, will certainly play a role here," Karin Noppel-Kokerov, City24's development manager, told Aktuaalne kaamera on Saturday.

She also predicted rents would increase over the coming year.

"Construction projects are still growing steadily, though not as fast as they are now. There is demand, new apartments are being bought, and if the economy is doing well, there is also [an increased] demand for migrant labor, just as rental prices are rising," said Noppel-Kokerov.

In addition to residential construction, Rail Baltic is gaining momentum and needs a lot of additional labor to build the Estonian section, which will run from Tallinn to the Latvian border. The IT sector is also complaining about the lack of workforce, and new hires will need to find accommodation somewhere, says Noppel-Kokerov.

Real estate company Uus Maa analyst Marina Hodus said rents have risen by 10 percent over the last two to three years. A renovated two-room apartment on the outskirts of the city can cost up to €400 per month. But new houses and apartments cost more, she said, and can only be afforded by highly paid IT professionals.

"I think the price level is going to stay the same. They're already pretty high in new houses; the average for a two-bedroom apartment that is well furnished is €850. The rental market is active, more people are coming to work in Tallinn and therefore they are not buying, they are renting, so I predict that the rental market is still dominant."


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Editor: Helen Wright

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