The cooling of the Estonian rental market has also reached Tallinn, and landlords have to expect a longer time to find new tenants while prices have fallen lower, writes the Estonian media ERR News.
It takes time to find tenants for luxury apartments that entered the rental market during the investment activity. An owner of a rental apartment who is looking for a tenant for a one-room apartment in one of Tallinn’s most luxurious micro districts experienced an unpleasant surprise this fall. Although the rental market was active in the spring now the search for a tenant drags on for months, and lowering the price doesn’t help either.
«This is the situation at the moment. People prefer to choose a cheaper apartment with lower utility bills,» confirmed Uus Maa Real Estate market analyst Risto Vähi. He said that on the one hand, it is the seasonal effect of winter, which is noticeable every year, but it is also clear that the boom is over, and prices are starting to fall.
Many expensive rental apartments have also entered the market, and the competition between them is fierce. Also, tenants prefer apartments with district heating, and even though gas prices are falling, people believe that district heating is more predictable.
Mihkel Eliste, the appraiser and analyst of the real estate firm Arco Vara, said that the market can be divided into two conditional parts: apartments whose rent is below 500 euros and apartments whose rent is over 500 euros, and the trends are slightly different.
According to Vähi, it is easier to rent out standard two- or three-room apartments in residential areas. The price of a two-room apartment is 480 – 520 euros, a three-room apartment will cost about 550 – 600 euros per month. «Of course, the offers are different, but those who demand a significantly higher price than apartments in panel buildings should expect that they will have to look for a tenant longer and may have to lower the price,» Vahi said.
Luminor Estonia announced that those investors who have chosen a loan to purchase properties are currently facing a difficult choice. The wide offer forces prices to go down, but it can affect the ability to cover the loan payments.