Ober-Haus: a mixed picture
19.01.2010, 11:30Half of apartments on sale in central Tallinn are priced at more than 1,600 euros per square metre, but only very few deals are made at such level, writes real estate company Ober-Haus in its fourth-quarter overview of residential real estate.
Most transactions are done in price range between 650 to 1,300 EUR/sqm. Major renovations needed apartments price offers are starting from 500 EUR/sqm, apartments in good shape from 830 EUR/sqm. In newly constructed or renovated buildings real sales are done between 1,000 – 1,600 EUR/sqm. In the Old Town, prices starting from 1,000 EUR/sqm for major renovations needed apartments and from 1,500 EUR/sqm for the renovated apartments.
In suburbs most transactions are done with 1 or 2-room cheaper and major and modernization needed or with very good condition apartments. The decisive factor for customers is a technical condition of the building, housing union´s activity and the debt burden. In not so valued areas and major renovations needed price offers start from 320 – 450 EUR/sqm. Most of the sales are done in price range 580 – 830 EUR/sqm.
The company writes that in 2009 total number of transactions with apartments in Tallinn declined 28% and the sales volume declined 54%. This year's fourth quarter price decrease stopped and number of transactions began to increase. There were also several block deals with lower price than average.
Due the individuals and companies bankruptcies, more properties are thrown into the market, but also we can see some upward price pressure for apartments in good locations and in good shape.
During next few months some financially strong developers will start with few new objects, because construction prices have fallen substantially and in some locations demand exceeds supply in certain price level. A considerable number of transactions are made without a bank loan.
In City Center and Old Town according to preliminary data, on the 4Q of 2009 financial volume fell 14%, but number of transactions rose 10% in y-o-y comparison. Comparing with 3Q 2009, number of deals rose 25% and statistical price increase was 7%. Similarly to 3Q, we can see growing number of foreigners purchasing real estate, but they only have interest to unique objects. Number of properties in the market and offer prices have stabilized.
If the rental market in the 3Q showed signs of stabilizing, then 4Q supply increased by 10% due the decreasing demand. Compared with the 3Q of this year rent price decrease was 5% and comparing with 4Q last year 35%. Price reduction has been bigger in expensive apartments. Because supply exceeds demand, the rental market has become so called “tenant market” and the apartment owners are willing to make significant concessions in terms of prices and length of the lease. The precarious situation on the labour market often leads to short term agreements than in the past.
Potential tenants have begun to increasingly focus on the heating costs of the property. Most demanded is 1 - 2 room furnished apartment in the City Centre or nearby, in rent range 160 – 288 EUR per month, preferably with parking. In the suburbs, a typical furnished 2 - room apartment rent is 128 – 192 EUR per month, depending on the location and conditions. In Harju County and Tallinn, on the 4Q, number of private house sales rose 20% but price volume fell 20% y-o-y. Average price decrease was 30%. Comparing with 3Q number of transactions and price volume both increased, 13% and 28%. There are 1 800 – 2 000 private houses on the market in Tallinn and Harju county, but only 220 – 240 sales are done during recent quarters, ca 75 per month.
Most of the sales taking place in areas close to town, with developed infrastructure in price range between 58,000–115,000 EUR. Modern and in good condition house prices are from 102,000 to 141,000 EUR, renovations needed or not finished houses from 51,000 to 96,000 EUR. In very highly valued regions there have been sales between 192,000 EUR – 288,000 EUR. In areas far from Tallinn the liquidity is very limited, even prices are cheap. While in Tallinn liquidity and prices are stabilizing, in secondary locations they still declining.
In the 4Q, the number of transactions with residential land and prices were both in downfall trend. In Tallinn and Harju county there are around 1 800 plots on the market in very different price scale. There were only 150 deals with land during 4Q. Most transactions take place in Tallinn and in the immediate vicinity of the city between 19,000 – 51,000 EUR (19 – 51 EUR/sqm). At a price level more than 1 000 000 EEK or 64,000 EUR, (more than 64 EUR/sqm) very few sales have been done in very valued regions such as Nõmme, Pirita and Kakumäe. Similarly to private houses sector, land prices differentiation in continuing based on location.