Estonian commercial rents decline 50 pct
02.09.2009, 15:54Estonian commercial property rents fell as much as 50 percent in the first six months after years of “excessive” prices exacerbated the slump, real-estate broker Ober-Haus Real Estate Advisors said, Bloomberg reports.
Office rents declined by as much as 40 percent and rents for retail space are as much as 50 percent lower than in the same period last year, Ober-Haus said in a market review on its Web site today. Monthly office rents in the center of the capital Tallinn were 150 krooni per square meter on average, while retail rents on main streets started at 100 krooni, excluding VAT, it said.
“There is a steep increase in sale offers for leisure objects like restaurants, clubs, motels,” the broker said. “It is clear by now that the projects started at a peak and were too optimistic and investments were clearly excessive, considering present demand, especially in office space.”
Faltering earnings from commercial property may worsen the outlook for the Baltic country’s real estate and construction industry, already hit by a slump in the housing market. That would raise investor concerns that Nordic banks including Stockholm-based Swedbank AB and SEB AB may suffer rising losses.
Arco Vara AS, the biggest listed Baltic property developer, is auctioning “several important projects” to local and foreign investors to lower the liquidity risk, the company said last week.
Sampo Pank, a unit of Danske Bank A/S, will remain “cautious” on lending to the property industry through next year, Chief Executive Aivar Rehe said in an interview with public broadcaster Eesti Rahvusringhaeaeling today.