Estonia, Financial Services, Investments, Real Estate

International Internet Magazine. Baltic States news & analytics Thursday, 28.03.2024, 18:18

Low Euribor rates favor investment in rental property in Estonia

BC, Tallinn, 13.11.2015.Print version
The six-month Euribor rate that has fallen below zero favors investment in rental real estate as banks do not pay interest on deposits in these conditions, head of the Estonian real estate portal kv.ee Tarvo Teslon says, reports BNS/LETA.

"Via our portal 2,100-2,300 apartments are offered for rent in Tallinn during a month, which is 12-15% more than a year earlier. The number of rental listings keeps growing from month to month and the factor behind it is evidently vigorous housing development," Teslon said.

 

Apartments are acquired by rental investors seeking higher return than non-existent interest on their capital and low loan interest rates are conducive to this. It seems to many people placing money in rental real estate with an annual return of 4-8% is a wiser course, Teslon said.

 

"Return before expenses is higher in case of older apartments. But at the same time it has to be taken into account that this market is riskier and also, that owner's expenses are higher. Newer apartments with a better quality and above all lower utilities are certainly more attractive to tenants. Basing on the data of our portal, returns for such properties are of the order of 3-5%," he said.

 

While newer apartments give lower returns on investment, it can be assumed that new buildings require less investment in the near future and owners will therefore have fewer worries with them, Teslon said.

 

The six-month Euribor to which most housing loans are pegged fell on Wednesday to a record low minus 0.006%.






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