Demand driven by the influx of refugees from Ukraine in Tallinn and other bigger cities in Estonia has caused the rental prices of lower-end apartments to increase by 15-20 percent in just one month, said Jaanus Laugus, partner and board chairman at Uus Maa Kinnisvarabüroo.
According to Laugus, demand has increased the most for apartments on the cheaper end and basic apartments.
"The rental market is overactive right now," he said. "For example, an ordinary three-room rental apartment costing €500 per month attracted 40 interested persons in just one day. Real estate agents have their own contacts, and many apartments don't even reach the point of being publicly listed."
Laugus noted that rental prices have spiked 15-20 percent, and that landlords are now asking for €600 for apartments that were previously renting for €500.
"It is very difficult to find a vacant apartment in decent shape for under €400-500 in Tallinn already, for example," he said. "The price increase hasn't yet reached apartments rented out earlier yet because the market hasn't settled sufficiently and changes to price levels haven't developed. The price increase likewise hasn't affected the rental market for very expensive apartments, as demand for them hasn't increased as much."
If someone is interested in moving to Tallinn to live or work, finding a place to live will be pretty complicated at the moment.
"For regular folks this means that city limits are expanding and that people are moving further and further away from the center in order to be able to afford a suitable and accessible place to live," the real estate company director said. "Keila, Rapla, Kehra as well as other places with good rail or highway connections [to Tallinn] including Paide and Rakvere are already highly valued, and this will certainly be an increasing trend. The rapid urban drift we've been seeing is going to slow, and life will begin to disperse again a bit."
Owning an apartment in Tallinn's city center, meanwhile, is gradually turning into a luxury good, he continued.
"Beyond rental apartment owners, hostels are also doing better than ever before," Laugus highlighted, noting that hostels verged on bankruptcy throughout the COVID pandemic but are now jam packed and have increased their prices severalfold. "The state will likely provide refugees with some sort of longer-term housing opportunities, whether with additional social housing or rental houses, in order to house people. This also creates business opportunities for entrepreneurs as well — offering inexpensive housing solutions by renting out large detached houses by the room or by converting older buildings into dormitories."
Editor: Aili Vahtla