Baltic, Estonia, Market Review, Markets and Companies, Real Estate

"Each month from 100-200 new apartments are sold in Tallinn, which is about 15-20 % of the total number of apartments sold. This already reminds us of the previous [boom] cycle," Arakas said at the Ariplaan 2017 (Business Plan 2017) conference of Aripaev.

"Today we have about a whole year's stock of apartments ready in Tallinn. This is just another thing from the supply side slowing down things," Arakas said.

He said that also in commercial real estate supply clearly exceeds demand.

In 2017, three years' demand worth of office space will be completed in the circle surrounding central Tallinn, according to Arakas. This means 95,000 square meters of office space under development, compared with annual demand of 25,000-30,000 square meters.

Therefore banks have already put the brakes of development and are no longer financing new projects.

Of commercial space 84,700 square meters is to be added next year, Arakas added.

He said that when it comes to the development of commercial real estate, an important factor is whether the Pro Kapital T1 and Porto Franco projects will be completed.

Commercial real estate investments in the Baltic countries surpassed the level of the boom of the mid-2000s last year, totaling 1.4 bln euros. Yet liquidity of the Baltic market remains low.

"You want to sell a property, but there are practically no buyers. This keeps foreign investors away," said Arakas.