THE KEY FACTS ABOUT ESTONIA
The accession of Estonia to the EU which took place in May 2004 is further increasing inward investment from other EU countries looking to take advantage of the country’s stable economic environment, flexible free-market attitudes and highly skilled but low wage labour market. Estonia is set to receive the second highest per capita EU cash inflow of all 9 acceding countries. This will add a further boost to Estonia’s already rapidly expanding economy, increasing personal incomes and therefore boosting the property market. According to the EU Information Secretariat, the net fund inflow from the EU to Estonia will amount to 11.5 billion kroons (735.8 million euros) in the years 2004-6 (€365 per capita). EU membership has typically produced a significant increase in property prices in the capital city of a joining country - residential prices in Stockholm grew by 108% between 1995 & 2002 following EU membership in 1995; similarly prices in Helsinki have increased by 77% between 1996 & 2002 following EU membership in 1995.
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Rentability |
To early to give accurate pridictions, but early indications are good |
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Capital Appreciation |
5-10 year plan to maximise appreciation |
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Long term rating |
Cheap flights & good airport links and accessible from most international airports |
| Estonian Map, National Flag and Typical Properties. | |||
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| Useful Information: | |
| Time Difference: -5 GMT | Currency: Estonian kroon (EEK) |
| Flying Time: 2 1/2 Hours | Visa Required: Brits can stay 90 days (As homeowner with B1/B2 Visa 180 days) |
| Major Airports: Orlando, Miami, Tampa | Work Visa Required: Yes |
| Dialing Code: 001 | Electricity: 110V/60Hz |
State History
After centuries of Danish, Swedish, German, and Russian rule, Estonia attained independence in 1918. Forcibly incorporated into the USSR in 1940 - an action never recognized by the US - it regained its freedom in 1991, with the collapse of the Soviet Union. Since the last Russian troops left in 1994, Estonia has been free to promote economic and political ties with Western Europe. It joined both NATO and the EU in the spring of 2004.
Russia recalled its signature to the 1996 technical border agreement with Estonia in 2005, rather than concede to Estonia's appending prepared a unilateral declaration referencing Soviet occupation and territorial losses; Russia demands better accommodation of Russian-speaking population in Estonia; Estonian citizen groups continue to press for realignment of the boundary based on the 1920 Tartu Peace Treaty that would bring the now divided ethnic Setu people and parts of the Narva region within Estonia; as a member state that forms part of the EU's external border, Estonia must implement the strict Schengen border rules with Russia.
Estonia's Facts
Location: Eastern Europe, bordering the Baltic Sea and Gulf of Finland, between Latvia and Russia
Capital City: Tallinn
Land Area: total:151,670.4 sq km land: 140,512.68 sq km Water:11,157.72 sq km
Coastline: total: 45,226 sq km land: 43,211 sq km water: 2,015 sq km note: includes 1,520 islands in the Baltic Sea
Climate: maritime, wet, moderate winters, cool summers
Terrain: marshy, lowlands; flat in the north, hilly in the south !
Environmental Issues to consider: air polluted with sulfur dioxide from oil-shale burning power plants in northeast; however, the amount of pollutants emitted to the air have fallen steadily, the emissions of 2000 were 80% less than in 1980; the amount of unpurified wastewater discharged to water bodies in 2000 was one twentieth the level of 1980; in connection with the start-up of new water purification plants, the pollution load of wastewater decreased; Estonia has more than 1,400 natural and manmade lakes, the smaller of which in agricultural areas need to be monitored; coastal seawater is polluted in certain locations
Government Type: parliamentary republic
Legal System: based on civil law system; accepts compulsory ICJ jurisdiction with reservations
Population: 1,315,912 (July 2007 est.)
Government Type: Constitution-based federal republic; strong democratic tradition . capital city - Tallahassee Counties regions in Florida - 67, Form of Government - Governor and independent cabinet consisting of Attorney General, Chief Financial Officer, Commissioner of Agriculture. Legislature - 120 House Districts, 40 Senate Districts, 23 Congressional Districts
Legal System: Civil law system with indigenous concepts; judicial review of legislative acts in the Federal Constitutional Court; has not accepted compulsory ICJ jurisdiction
GDP: $26.85 billion (2006 est.) GDP Growth Rate 11.4% (2006 est.) GDP - per capita $20,300 (2006 est.) Inflation Rate: 4.4% (2006 est.)
Economy - Overview
Estonia has a modern market-based economy with strong ties to the West. It is a WTO and EU member and pegs its currency to the euro. The economy benefits from strong electronics and telecommunications sectors and is greatly influenced by developments in Finland, Sweden, and Germany, three major trading partners. The current account deficit remains high; however, the state budget is essentially in balance, and public debt is low.
For Estonia the following facts apply:-
Why Buy In Estonia?
Estonia has consistently achieved high levels of economic growth (consistently averaging between 6% and 10% over the last 5 years) whilst maintaining low levels of inflation. These growth rates are forecast to continue into 2007/8 making Estonia one of the fastest growing economies in Europe. Such growth is likely to lead to a commensurate growth in property prices over time. The table below shows the Bank of Estonia’s actual and forecast (*) GDP growth rates.
| Estonian GDP (2003-2008) | ||||||
| 2003 | 2004 | 2005 | 2006* | 2007* | 2008* | |
| Real GDP growth (%) |
7.1% | 8.1% | 10.5% | 11.8% | 8.3% | 7.6% |
| GDP, billion kroons | 132.9 | 146.7 | 173.1 | |||
Estonia offers a “liberalised, nearly tariff-free, open market economy with generally healthy growth rates” (source: US Department of State Country Commercial Guide ). With its sophisticated, well-educated workforce and specialisation in growing service industries such as IT, transportation and construction services, it is likely that Estonia will continue to grow rapidly over the next few years. The Estonian Government has an open attitude to the foreign ownership of property and investment from overseas and this openness is encouraging foreign investment in real estate. Private ownership and entrepreneurship are respected in Estonia. Foreign investors can buy and sell residential property freely. As a result of this openness, Estonia received the highest level of inward investment per capita of all of the countries which joined the EU in May 2004.
Consistent Upward Trend in Property PricesProperty prices , even in the historic centre of the attractive capital city, Tallinn, are still relatively low though are increasing rapidly. Over the last 9 years, property prices have risen consistently by, on average 15% - 20% per annum. Prices are likely to continue to rise by 10% per annum largely due to the increase in the costs of constructing new properties which in turn tends to feed through into general real estate prices.
Finnish InfluencePrices of property in the Finnish capital, Helsinki which lies only 55 miles away from Tallinn (just 18 minutes by helicopter & only 1 hour 25 minutes by hydrofoil) have increased significantly since Finland joined the EU in 1995 and, more recently, adopted the Euro. Property prices are, on average, 300% higher in Helsinki than in Tallinn, with city centre apartments generally priced around €200,000. The geographical proximity of the two capitals, the similar languages spoken in both countries (they are both Finno-Ugric languages) and the high levels of Finnish investment in Estonia are all contributing to an increase in the number of Finnish people looking to buy property in Tallinn either for investment purposes, second homes or for businessmen working in Estonia. These factors are likely to cause a convergence in property prices between the two capitals over time.
Increasing TourismTallinn’s very attractive, medieval old town attracts large numbers of tourists and it is likely that tourism will increase further as Tallinn becomes increasingly popular as a city-break destination. This should provide further stimulus to real estate demand and put upward pressure on prices particularly in the historic city centre areas. The commencement of cheap Easyjet airline services from both London Stansted and Berlin along with the continuing expansion of routes from Estonian Air have provided significant further stimulus to tourism in the city and further demand for apartments for holiday or investment uses.
Increasing Local DemandThe banking sector in Estonia, which is largely based upon Scandinavian principles and investment, is well developed, stable and offers high quality mortgage products linked to EU EURIBOR rates. Increased competition between banks has driven down mortgage interest rates (from 11% in 2002 to 4% in 2007) and this, in turn, has encouraged Estonian citizens to take out residential loans thereby increasing the demand for property.
Consumer ConfidenceEstonia’s growing economy and the optimism about EU membership has boosted consumer confidence across the country. Most Estonians now anticipate that their incomes will increase in the future and are therefore more confident about investing in property.
