The market has not been in a rush for new real estate for a long time, but despite this, developers do not seem to be in a hurry to sell. Tanel Rebane, Head of Retail Banking at Luminor Baltic, predicts what will happen to the prices of new buildings. According to statistics, sales of new apartments have dropped significantly: if at the peak, 300-400 new apartments were sold in Tallinn every month, then in July of this year, 77 new apartments went on sale. “Developers are not very active in starting new projects, and the price of money has increased significantly during this time, as a result, the number of transactions has decreased,” said Rebane. He explained that the price per square meter has also lengthened the sales cycle of new apartments. If two years ago the average price in Tallinn was 3,500 euros per square meter, today it has risen to 4,200 euros. According to Rebane, this shows that the main focus is on the construction of exclusive real estate that wealthier clients can afford. As a result, the Tallinn real estate market is dominated by more attractive areas, with the exception of Haabersti, where more affordable apartments are being built. According to the expert, developers do not think about lowering prices – they use methods that allow those taking out a home loan to save on expenses, for example, offering a storage room, parking space or kitchen furniture for free. However, there are also those where there is neither room nor reason for discounts. “At some point, every apartment will find its owner, even if the sales cycle is longer,” says Rebane. He noted that, although many developers are starting to build outside the city, there are still excellent plots in the “sleeping” areas. “The city centre is the most attractive area for developers, but there are few good plots there. Since the price of a plot is on average 10% of the total construction cost, the final amount does not depend so much on the location,” says the head of retail banking at Luminor Baltic. Although buyers are offered non-monetary bonuses for new properties, this does not mean that the buyer cannot negotiate with the seller on the price. However, according to Rebane, one should not expect a very large discount, since the effects of inflation have reached the construction market. Overall, the situation looks promising: the real estate market is starting to revive after a period of stagnation, and new properties are expected to appear in the near future both in the city center and outside it. However, Rebane does not predict an impact on sales prices, since competition is intensifying and the average price will not fall. However, the choice for home buyers will expand.
