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Developers plan to start Tallinn Hipodroomi Quarter construction in summer

A vision for the development on the current site of Tallinn's Hippodrome on the EKE website.
A vision for the development on the current site of Tallinn's Hippodrome on the EKE website. Source: EKE

The developers of Tallinn's Hipodroomi Quarter, who have been waiting for building permits from the City of Tallinn for several years, hope to get them soon and are now preparing to hit the ground running this summer. In addition to the construction of a number of commercial and residential buildings on the site, the large intersection will also be rebuilt.

Businessman Jaan Manitski initiated the Tallinn Hippodrome Quarter project in 2007, with the aim of building a residential and commercial district on a 19-hectare site. However, the venture has since been delayed for years.

Alfa Property board member Jaanus Mikk told ERR that a permit has now been issued for the construction of the tunnel connecting Merimetsa tee and Hipodroomi tänav. When work actually begins will depend on the receipt of a permit for the construction of the first building.

"There is no point in building streets before then, it is much quicker to construct them than buildings. Once the construction permit for the first building arrives, which we hope to receive in the first quarter, we will start on the tunnel," Mikk said.

While in the past, developers have also hoped to get planning permission for the sight sooner or later, but failed, according to Mikk, the situation now is different.

No major improvements are still to be made and only minor details concerning some of the planned buildings are awaiting approval. With infrastructure permits also already in place, there is no reason to expect that there will be any last-minute obstacles to prevent the company obtaining planning permission on this occasion.

Renders of the planned Hipodroomi Quarter in Tallinn's Pelgulinn neighborhood. Source: Referra Estate

EKE AS owns around a third of the total area to be developed. Karl Ader, head of EKE's development division, said that the company has been working on the development for four years. He added that the time it has taken to build has turned out to be much longer than originally hoped when they first bought the land. However, they are now in the final stages of obtaining the required construction permits and expect to receive them during this quarter.

The EKE development will consist of four interconnected commercial buildings with a total floor area of 130,000 m2. The buildings will not be residential and the developer has no concerns regarding the demand for space in the business district.

"Eventually it will become clear when it comes to the signing of leases how many of the parties that registered their interest will actually come. However, nowadays there have been so many uncertainties that it has not been possible to sign leases without a construction permit," Ader said.

However, a deal has already been struck with supermarket chain Rimi, which will open a store under one of the buildings. Elisa will also relocate its head office to the area.

Once EKE's construction permit is in hand, negotiations will be reopened with the parties that registered prior interest, with Ader noting that because prices have risen in the meantime, not all the space will be filled immediately. Nevertheless, he said that there is currently more interest in renting than there is space available.

Renders of the planned Hipodroomi Quarter in Tallinn's Pelgulinn neighborhood. Source: EKE AS

While the original plan had been for Swedbank's new headquarters to be one of the buildings developed by EKE, the delay led the bank to change its plans and instead move from near the Olümpia Hotel to the Arter Quarter across the street

Ader said that EKE's C-building, which had been earmarked for Swedbank is now being redesigned. A special feature of the building allows smaller customers the possibility to use the terrace or balcony, while all parking has been moved underground.

Even once the permits have been granted, it is not simply a case of getting straight down to business. A construction project of this size necessitates the selection of a new general contractor, and, according to Ader, there may even be more than one contractor involved.

"The selection will definitely take time. Then there's the choice of the financier, because a project of this scale is not something we're going to do with our own money alone. We'll definitely use money from a bank, several banks even. These issues will need to be resolved before the real construction work starts," he explained.

When the whole quarter will be completed is difficult to say, according to Ader. The target for the business quarter is to have most of the buildings ready in three years. However, he estimates that it will take at least five years to complete the entire site, with a total of 49 new buildings.

Jaanus Mikk was also unable to predict the final completion date. He admitted that the speed of development would be determined by the market. The real estate market is currently fairly quiet, but the construction of the first building will get underway as soon as planning permission has been granted.

"We are not going to develop everything at once, but we will start from the beginning," said Mikk, adding that the hope is to start construction in the summer.

Reigo Randmets, head of Reterra, the third developer involved, said that the pace of sales will certainly depend a great deal on the market situation. He believes that the large number of interested buyers so far is cause for optimism.

"Hipodroomi is a unique development area, with health resorts, a beach and the city center all in the vicinity. It is difficult to find another development area of this scale and with such scope in Tallinn," he said.

In the first phase of development, Reterra will build five apartment buildings containing a total of 107 apartments at Merimetsa tee 6 and 8. Those buildings are expected to be completed by the end of 2025. The construction permit procedure is also in its final stages, with Reterra planning to begin work as soon as the first half of this year.

"We will start the public sale of the apartments in the coming months," added Randmets.

During the second phase, two 12-story high-rise buildings containing 64 apartments and nearly 25,000 square meters of commercial space will be completed on the Merimetsa tee 4 property. The application for a construction permit for that phase has not yet been made. According to Randmets, that will start within a few months.

"The aim is to obtain a building permit for the high-rise buildings this year and then start construction next year. We have estimated that the construction period will be 24 months, which means the buildings are expected to be completed by the end of 2026," he said.

The architectural competition for the third phase of development was launched at the end of last year and the design for five plots of land, which will be home to 15 apartment buildings, is expected to be finalized in February.

The Hipodroomi Quarter in Tallinn. Source: Siim Lõvi /ERR

 

Redevelopment also awaits Hipodroomi junction

The Hipodroomi intersection and along with a section of Paldiski maantee adjacent to the development, is also set to be rebuilt. The construction and associated financing is a joint project between the City of Tallinn and the developers. Alfa Property is responsible for the project from the developers' side.

The junction had been the subject of a lengthy design process, with the vision for the area made public in October. It still remains unclear however, when it will be built.

Mikk said they were already quite far along in the process of obtaining a construction permit when the City of Tallinn decided the redevelopment also needed to pay more attention to the bigger picture.

"Now there is a dialogue with the City of Tallinn, and they are looking at how big of an area it should cover. We will make a separate agreement for that, which is logical, because it is such a busy intersection that you need to look at the bigger picture, beyond just the hippodrome. At the city's request, this project has been delayed slightly, but that shouldn't hold up other building permits," he Mikk explained.

Ader was also of the view that delayed completion of the junction would not pose a problem. He pointed out that it takes much less time to build new streets and roads than it does to construct buildings. This means the developers are able to take a year or even 18 months to erect the buildings at their leisure, while also working to complete the junction at the same time, in order for it to be ready when the first building has been finished.

The Hipodroomi Quarter development stalled for a long time because the owner of the site, Alfa Property, and the Tallinn Municipal Authority were unable to find common ground regarding the construction of a water system for the site.

The city demanded the developer create a rainwater drainage system with a pump station at an estimated cost of €12 million. However, in March last year, the developers reached an agreement with the city, whereby the latter would be tasked with drawing up construction plans and running a public procurement procedure for the development area without a water system. As part of the agreement, Alfa Property would co-finance the site's infrastructure.

Once complete, the Hipodroomi Quarter development will include 1,000 apartments, with the business district expected to create around 10,000 jobs. A total of 350,000 m2 of commercial and residential space, new infrastructure, roads and communications are planned for the site.

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Editor: Michael Cole

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