Construction, Estonia, Real Estate

"There were tough times recently, but the demand for new apartments is now so high that we have booked majority of apartments in our new development," said Saa, referring to Arco's decision to extend its Kodukolde apartment house estate in Tallinn.

Saa told Äripäev that there are simply not enough new housing development to correspond the demand.

"There was a permanent stop in housing developments and thus the deficit has formed. Of course, oversupply could be back again and it will be some time until we have a balance of supply and demand in the market," Saa said.

Arco expects to build 100 new apartments by the next spring with an average sales cost of 23,000 to 24,000 kroons per square meter. According to the company, it had five bookings in the first day of sales in June and currently 36% of apartments have been booked or sold.

Another Estonia-based developer – NCC has restarted a frozen housing project. The construction company has decided to add 56 apartments to its Vana-Kuuli project and continue with development of Pärnaõue housing estate in Haabersti just outside Tallinn boundary.

Toomas Aak, the CEO of NCC Ehitus, said that Pärnaõue is a kind of a market test: "We have started with two houses of six apartments each. Let's see if the purchasing power is returning and will decide on project extension according to sales results".

"I know that Oma Ehitaja plans to start building houses, Merko has already done so, Arco Vara plans to develop its Tivoli property in Kadriorg, Astlanta is developing in Lasnamäe. So there will be plenty of supply to meet the demand," he noted.