No bids were received by Monday's deadline in the auction of a former court house building on Liivalaia in central Tallinn. The auction was organized by state real state agency the RKAS.
The RKAS intends to proceed with the sale in any case; some real estate experts say the original asking price of €4.5 million had been too high, and that the detailed plan process is not complete, which has also put off investors
Virgo Laansoo, senior partner and property appraiser with Lahe Kinnisvara told ERR that: "This price does not reflect the current market situation, while in our opinion, the starting price could be between €3 million and €3.5 million."
There are between five and 10 developers in the country who would have the scope for taking on the former courthouse building, a late Soviet-era building located on Liivalaia 24 (pictured), but again, this would require a more modest asking price.
Argo Pillesson, manager of the valuation department at Uus Maa agreed, noting that the asking price, while not ridiculously high given the location, could be revised downward as "there are probably some nuances that are not immediately apparent when looking at [the property]."
The nearby Arter development may be a factor, he added, in terms of filling Liivalaia 24 or any building erected there with business tenants, when there is such an extensive facility practically next door.
At the same time, the district still has a bright future, he said.
"A buyer of this property would probably well capitalized and so would have a longer than average view," Pillesson added.
Pindi Kinnisvara's sales partner Peep Sooman told ERR that the Liivalaia 24 auction is not the first, nor would it be the last, that has fallen through due to an excessively high reserve price.
A new detailed plan has not yet been established in respect of the property either, he said: the mono-functionality and high energy costs the 1980s-built development brings could also scare away potential buyers, e said.
"Once a detailed plan is established, the picture would be quite different - the price differences for properties with and without an attached detailed plan are manifold.
The fact that a plan is currently being processed for the Liivalaia property would made no difference to potential investors right now, he added.
"Tallinn has become very cautious in its establishment of detailed plans," he went on.
Virgo Laansoo at Lahe Kinnisvara concurred. Due to the lack of a detailed plan, the precise construction volumes are unknown and, in addition, the processing of detailed plans by the City of Tallinn is a lengthy one, meaning added time for design and construction procurement.
The Liivalaia 24 property detailed plan process was commenced in 2016 and is still not complete, so the RKAS saying the procedure is now in its final phase does not inspire much confidence either, Laansoo said.
For this reason and also given higher interest rates at present, developers are looking more seriously a larger investments than the Liivalaia courthouse, she went on.
"And as has been heard in the media a lot in recent years, the speed with which the detailed plans are processed and all that the topic has become an acute problem in the city of Tallinn, which has made developers very cautious," Laansoo said.
That it is a vacant former courthouse makes it an idiosyncratic object which may not appeal to all, she noted.
The RKAS put the building on sale this summer with a reserve price of €4.5 million at auction.
No bids were received by the deadline of August 14.
RKAS project director Tarmo Mändmets told ERR that the property will be re-listed in the near future.
The opening asking price was based on a professional appraiser's opinion and taking into account that the detailed plan process was nearing completion, he said.
The yet-to-be completed detailed plan as it stands allows for a 12-floor building up to 45m in height to be built on the plot, which could be used for residential, retail or business purposes.
Permission thus also exists in the plan to demolish the existing court building..
Editor: Marko Tooming, Andrew Whyte