Currently, six apartment building developments with a total of 80 apartments are underway in Rakvere, with a third of them already covered by various agreements.

"Entrepreneurs active in the county (Lääne-Viru County – ed.) are buying apartments in the city, coming either from other towns – such as Kunda, Tapa or Tamsalu – or from Tallinn where they sell their more expensive apartments and move to the smaller city; often middle-aged and older people," explained Uus Maa real estate agent Jörgen Truu.

While the price gap between apartments in the secondary market in Tallinn and Rakvere remains significant, the cost of new apartments is nearly the same. For instance, a 66-square-meter three-room apartment in the city center is listed for approximately €205,000, while a 55-square-meter two-room apartment in another development costs about €185,000. To the developer's surprise, larger apartments – three- and four-room units – sold quickly in this building, while smaller units have attracted less interest, especially now that several new buildings are entering the market.

"Our initial assumption was that older people wouldn't want to live in houses anymore; they'd prefer a small, cozy apartment with modern conveniences. However, the reality has been the opposite – it's the middle class that's buying," said Kristjan Madisson, CEO of Revin Grupp.

According to Risto Vähi, development manager at ELUM Kinnisvara, the surprising aspect isn't the number of new developments but rather that construction has only now picked up in this vibrant county center.

"Many residents have been waiting for these developments to arrive. If you look at other parts of Estonia, smaller towns like Viljandi have seen more active development for several years now," Vähi explained.

Madisson noted a clear reason for the delay.

"Valuation reports didn't keep up. This means that market prices were higher than property valuation reports, so buyers had to provide larger down payments. Today, however, property valuations in Rakvere match market prices," he said.

Real estate agent Jörgen Truu added that while new apartments in Rakvere have so far been purchased with bank loans, secondary market transactions often rely on buyers using only their own funds.

"In Estonia as a whole, 63 percent of home loans go to Harju County, while only 3 percent go to Lääne-Viru County, which is still a considerable amount. The average loan amount is around €75,000, which is a 5 percent increase compared to last year," said Anne Pärgma, head of housing loans at Swedbank.

Rakvere, which lies 100 kilometers or a 75-minute car ride from the heart of Tallinn, currently has a population of approximately 15,000 people.

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