Buying a property in Tallinn: a complete guide

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Yes, the analysis of Tallinn's property market is included in our pack

Have you ever thought of buying a nice property in Tallinn? You're not alone!

Many people are intrigued by Tallinn's historical charm and dream of owning a cozy apartment or a stylish townhouse there.

Is it worth investing there, though? Are property prices increasing in Tallinn? What is the current trend? Should you consider buying in the Old Town or Kalamaja? What about the taxes? Where can you get a rental yield above 7%?

We've figured it out for you.

The Investropa team knows this market inside and out. As a matter of fact, we've gathered all our findings in a pack. Get it now.

In the lines below, we will share some of this knowledge.

How's the property market in Tallinn?

What's the current state of the property market? Data will give us the insights we need.

Types of properties

In Tallinn, you can find various types of properties for sale, including apartments, houses, townhouses, and commercial spaces.

Apartments are typically located in high-rise buildings or smaller complexes and range from cozy studios to spacious multi-bedroom units. Houses come in different styles, such as detached, semi-detached, or terraced, often with private yards or gardens. Townhouses offer a blend of apartment and house living, sharing walls with neighbors but often having multiple floors and outdoor spaces.

Commercial spaces encompass shops, offices, and warehouses suitable for businesses.

Each property type offers different features and lifestyles, catering to diverse preferences and needs.

Better to buy or rent?

(If you're purchasing for personal use and not for renting)

If Tallinn is your city of choice, you may be pondering the buy vs. rent decision in this charming Estonian capital.

Obviously, it's better to buy if you are looking for a long-term investment with potential for appreciation in value and the ability to build equity over time.

One data can help us make a decision - the price-to-rent ratio. It's a simple way to gauge the impact of rental earnings on covering the property's cost.

According to Numbeo, the property price-to-rent ratio in Tallinn is around 26.84, which is above the world average.

This value shows that it would take you 27 long years of paying rents before you can own a property in Tallinn. However, if you rent for a long time, you won't own the property and won't save any money towards ownership.

Property prices in Tallinn

On average, according to the last reported data from Statistics Estonia, buying a property in Tallinn would cost you around $4,410 per square meter.

Naturally, prices are quite spread out. The value of a square meter for an apartment in Tallinn city center might differ from a suburban house in Nõmme. We actually offer a more in-depth analysis in our pack for buying property in Tallinn and in Estonia.

To put things in perspective, it means that, instead of buying an apartment in Paris or London, you can afford 3 properties in Tallinn.

Also, housing prices in Tallinn are 7% cheaper than in Vilnius.

The most expensive neighbourhoods in Tallinn are probably Pirita, Kadriorg, and Lasnamäe, while the cheapest areas are likely Mustamäe, Nõmme, and Kristiine.

Trends

First, let's acknowledge that Estonia remains, today, a very stable country. The last Fragile State Index that has been reported for this place is 37.7.

Consider this when wondering if it's a good investment to buy a property in Tallinn.

Also, according to the IMF’s forecasts, Estonia's economy is expected to soar by 10.2% in the coming 5 years, resulting in an average GDP growth rate of 2%.

If you want to invest in real estate in Tallinn it's a good thing because, when people experience an increase in wealth, it typically translates to a surge in housing costs.

Also, in Estonia, the average GDP per capita has changed by 8.1% over the last 5 years. It's a solid number.

This data is a positive signal - housing prices in Tallinn might soar in 2024 and after that.

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Estonia right now.

Buying property in Tallinn

Buying real estate in Tallinn can be difficult due to the lack of reliable and up-to-date information available during the process. That's why we have created the pack to buy property in Tallinn and in Estonia.

Buying process

Within our pack, we've covered the entire buying process extensively. This includes a detailed breakdown of prices and yields based on the area, advice on negotiating prices, and information about obtaining a mortgage.

Now, we're providing you with a simplified version.

This is the step-by-step process to purchase a property in Tallinn:

1. Research the Tallinn property market and define your budget in euros (EUR).
2. Engage a reputable real estate agent familiar with Tallinn's neighborhoods and regulations.
3. Visit potential properties and conduct thorough inspections, considering factors like energy performance certificates (EPC) required in Estonia.
4. Verify the property's legal status and ownership history through the Estonian Land Board and Property Register.
5. Hire a lawyer specialized in Estonian real estate law to review the purchase agreement and handle notarization.
6. Obtain a property valuation report from a certified Estonian appraiser.
7. Secure financing from an Estonian bank or other financial institutions, if needed.
8. Make a formal offer to the seller, adhering to Tallinn's property purchase regulations.
9. Sign a preliminary sales contract (Vormistatud leping) and pay a deposit (tagatisraha).
10. Apply for necessary permits, like the Alien's Land Acquisition Permit for non-EU buyers.
11. Complete the final property transfer at a notary's office in Tallinn (Notar).
12. Pay the remaining balance, property tax (maamaks), and notary fees. Register the property with the Estonian Land Board to finalize ownership transfer.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Estonia.

Make a profitable investment in Tallinn

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Where to find a property

Explore these websites to find properties in Tallinn.

• Domus Real Estate - They offer comprehensive real estate services, including sales, appraisals, and expert insights, with a focus on client satisfaction.
• Riia kvartal - A real estate company founded in 1998, specializing in commercial property leasing, development, and residential projects.
• RE/MAX - They provide personalized services with a team of experienced agents to help you find your dream property.
• ESTONIAREALESTATE - A comprehensive platform for buying, renting, and selling properties in Estonia.
• ee24 - They are your one-stop search engine for all property-related needs in Estonia, offering 1348 diverse offers.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Estonia.

What you can get

As mentioned before, the average price per sqm in Tallinn is $4,410. A one-bedroom property with 60 square meters would cost approximately $265,000, and a two-bedroom with 85 square meters would cost approximately $375,000.

Of course, the price of properties can be influenced by their qualities and the area they're in.

Top neighborhoods in Tallinn will come with higher price tags. A house in Kadriorg might be priced at around $830,000, whereas an apartment in Kalamaja could cost you $470,000.

Certain places come obviously with a lower price tag. You may find a residence in Lasnamäe for $440,000, or a residence in Mustamäe priced only at $280,000.

We give more details about property types and areas in our full pack for buying property in Estonia.

Common mistakes

Here are the main pitfalls when buying a property in Tallinn, Estonia:

• Leasehold properties with limited ownership rights.
• Restrictions on purchasing agricultural land as a foreigner.
• Complex rules for converting non-residential properties into residential use.
• Land tax adjustments upon property acquisition.
• Potential historical heritage site limitations on renovations.
• Specific requirements for buying properties in the Old Town.
• The risk of encroachments on the property due to historical boundary disputes.
• Limited availability of mortgages for non-residents.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Estonia Property Pack

Living in Tallinn

Living in Tallinn is a great experience; it has a vibrant culture, an active nightlife, stunning architecture, and a high quality of life, making it a great option for those considering buying property there.

Cost of living

The cost of living in Tallinn is generally quite affordable, with rent and groceries costing significantly less than in other European cities. The city is also known for its abundance of free activities and attractions, making it a great destination for those on a budget.

Here are some examples to better understand the cost of living in Tallinn:

• Rent for a one-bedroom apartment in Kalamaja neighborhood: $900/month.
• Monthly public transportation pass with Tallinn Card: $40.
• "Hapukoor" pancakes at a local cafe: $5.
• "Vana Tallinn" bottle at a liquor store: $15.
• Groceries at Rimi or Selver supermarket: $100/week for a family of four.
• Basic utilities for an 85m² apartment with Eesti Energia: $90/month.
• Ticket to a performance at Estonian National Opera: $25.
• "Kama" drink at a traditional tavern: $3.50.

Neighbourhoods

We like to show information in an easy-to-understand way. So, we made a table that gives an overview of the different areas in Tallinn. For yields, prices and rents, check our property pack.

Life in Tallinn

Tallinn is the capital and largest city of Estonia, and is an important economic hub in the Baltic region. It has a strong service sector, and is home to a large number of IT and startup companies, making it an attractive destination for foreign investment.

According to the IMF's data, the GDP of Tallinn accounts for almost 40% of Estonia's GDP. Getting property in a wealthy city is a good choice because more jobs, people like living there, and property prices stay reliable.

What expats usually like the most in Tallinn is its vibrant cultural scene, with its many museums, galleries, and festivals, as well as its charming Old Town, full of cobblestone streets and medieval architecture.

Another great point to note is that Tallinn is an incredibly safe city, with a crime index of only 24, which is a very impressive score. Tallinn has a strong cultural emphasis on respect for the law, which contributes to its low crime rate.

A good point for a property investor - Tallinn has a modern and efficient mass rapid transit system called the Tallinn Metro.

Access to healthcare in Tallinn is more than excellent, with a Healthcare Index of 75. A strong healthcare setup always reflects positively on real estate.

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Renting out in Tallinn

This section is for those who are looking to purchase a property not to live in themselves, but to rent it out and make an income from the rental.

Long-term

Tenant Profiles in Tallinn

According to the data reported by Wikipedia, the home ownership rate in Estonia is 82%, which is rather high.

It is probably a bit less in Tallinn though.

If you decide to buy and rent out to long-term tenants, you should target young professionals, students, and families, as these are the most common tenant profiles in Tallinn. There is also a growing demand for short-term rentals from tourists and business travellers.

Here is a little summary table we've made for you.

Rental yields

As of today, rental yields in Tallinn are within the 3-4% range. It's low. A good rental yield is typically considered to be around 7% or higher (you might know it already).

The best rental yields in Tallinn come from properties located in the city centre, as they are in high demand due to their proximity to amenities, public transport, and other attractions. Additionally, properties located in the suburbs, such as Lasnamäe and Mustamäe, are also desirable due to their lower rental prices, which appeal to budget-conscious tenants.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Finally, be aware that rental incomes in Tallinn are taxed at 20%, which is rather good.

Short-term

You could also decide to rent short-term to business travelers visiting Tallinn for conferences or those on short-term work assignments. Additionally, tourists visiting Tallinn for a few days could be potential tenants for short-term rental.

If you decide to go with that option, look for properties in the Old Town, or in the Kalamaja and Telliskivi areas of the city, which are popular with tourists and offer easy access to the city center.

Currently, there are approximately 2,215 active Airbnb listings in Tallinn, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $82.

You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Tallinn can make around $1000 per month. Also, the average occupancy rate is estimated at 64%.

Is it worth buying real estate in Tallinn then?

Buying a property in Tallinn, Estonia can be a smart move, but it's not a one-size-fits-all solution.

If you're in it for the long haul, looking to secure a stable investment, and willing to build equity over time, Tallinn has potential. The city's stable economy, expected GDP growth, and relatively affordable property prices make it an appealing option. Plus, with low crime rates and a high quality of life, it's a place where people want to live, which can translate into property value appreciation.

However, if you're thinking short-term or solely after sky-high rental yields, Tallinn might not be your jackpot. The property market here may not offer the immediate returns some investors crave. Additionally, navigating the complex regulations, understanding the nuances of buying as a foreigner, and covering the initial costs can be hurdles.

While Tallinn is enticing, it's not a guaranteed goldmine; you need to weigh your goals and financial situation carefully.

In a nutshell, Tallinn's property market can be a fruitful venture for those in it for the long run, but it might not satisfy the desires of those seeking quick gains or unfamiliar with the intricacies of Estonia's real estate landscape.

Make sure you understand the real estate market in Tallinn

Don't rush into buying the wrong property in Estonia. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.