Authored by the expert who managed and guided the team behind the Estonia Property Pack
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What will happen in Tallinn’s real estate market? Will prices go up or down? Is Tallinn still a hotspot for foreign investors? How is Estonia’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Tallinn, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Nordic buyers will keep viewing Tallinn as a cheaper option compared to their home markets
The average price of apartments in Tallinn is significantly lower compared to major Nordic cities. For instance, in 2023, the average price per square meter in Tallinn was €2,970, while in Stockholm, it was €13,400 per square meter. This stark difference makes Tallinn an attractive option for Nordic buyers looking for more affordable real estate.
The cost of living in Estonia is also notably lower than in Nordic countries. In 2023, the cost of living index in Tallinn was $1447, compared to Stockholm's $1991. This 18% difference means that everyday expenses are more manageable in Tallinn, adding to its appeal for those from higher-cost Nordic regions.
Additionally, the favorable exchange rate between the Euro and Nordic currencies enhances the purchasing power of Nordic buyers in Tallinn. This means they can buy more property for their money compared to their home markets, making Tallinn a financially savvy choice.
Sources: Living Cost, Global Property Guide
2) Price growth will slow as the market nears saturation in the coming years
Property inventory in Tallinn and Harju County has jumped by 50% compared to last year.
This means there are more homes on the market, which naturally slows down how fast prices can rise. The average price per square meter in Tallinn only increased by 3.8% in 2023, a much slower pace than in previous years.
So, if you're thinking about buying, this could be a good time. The rapid price hikes we've seen before are starting to ease off. New housing units are popping up everywhere, especially in the first quarter of 2023, adding to the available supply.
More homes mean more choices and less pressure on prices. This is great news for buyers, as the market is balancing out with the increased supply.
As the market approaches saturation, the rate of price increase is expected to slow down. This gives you a better chance to find a property that fits your budget.
Keep an eye on these trends, as they indicate a shift in the market dynamics. More supply and slower price growth could make your property search a bit easier.
Sources: Ober-Haus Baltic Real Estate Market Report 2024, Global Property Guide
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Estonia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Tallinn’s property prices will keep rising due to strong economic growth and urbanization
In recent years, Tallinn has experienced a steady rise in residential property prices, largely driven by strong economic growth and urbanization. Estonia's GDP has been on an upward trajectory, which has increased disposable incomes and purchasing power among potential homebuyers. This economic prosperity is a key factor in the rising demand for housing in Tallinn.
The population of Tallinn's metropolitan area has been growing, with a slight increase projected from 454,000 residents in 2023 to 456,000 in 2024. This growth is part of a broader urbanization trend, as nearly 70% of Estonia's population now resides in urban areas. Tallinn, in particular, is attractive due to job growth and a positive economic outlook, further fueling demand for residential properties.
Historical data shows that the average price per square meter for residential properties in Tallinn increased by around 15% since 2023, with a notable 7.81% jump in the first quarter of 2024 compared to the same period in 2023. This trend is supported by low unemployment rates and high employment growth, which drive economic activity and housing demand. Additionally, government policies promoting urban development and housing, such as transportation improvements and affordable housing projects, make cities more appealing to residents.
Sources: Baltic Guide Online, Statistics Estonia
4) Property prices in certain neighborhoods will adjust as supply meets demand
In recent years, Tallinn has seen a notable increase in housing construction permits. For example, in 2024, the number of residential building permits issued rose significantly, indicating a growing supply of new homes.
This surge in new housing supply is further evidenced by the 78.4% increase in new dwellings completed in early 2023. Such a rapid increase in housing availability can lead to more options for buyers, potentially affecting prices.
Additionally, certain areas in Tallinn have reported a rise in unsold housing inventory. In 2023, the number of apartments offered for sale increased by 50% compared to the previous year, suggesting that supply might be outpacing demand in these neighborhoods.
Moreover, some neighborhoods are experiencing declining rental yields due to overbuilding. When new construction outpaces population growth or job opportunities, rental yields can decrease, indicating an oversupply of rental properties.
Sources: Global Property Guide
5) Fewer Russian buyers will invest because of geopolitical tensions and economic sanctions
The number of Russian buyers in Tallinn has been steadily declining in recent years.
One major reason is the decrease in property transactions involving Russian buyers. Since 2022, Estonia has been discussing limiting Russian property ownership due to security concerns. This has led to a noticeable drop in transactions, with recent months seeing mostly sales rather than purchases by Russians.
Economic sanctions have also played a big part. These sanctions have significantly reduced the purchasing power of Russian citizens, naturally leading to fewer property deals in Estonia. Media reports highlight how these sanctions have severely impacted Russian wealth and investment capabilities, further contributing to the decline in property transactions in Tallinn.
Geopolitical tensions between Russia and Estonia are another crucial factor. Estonia's strong support for Ukraine has strained relations with Russia, likely deterring Russian investment in Estonian real estate. Experts say such geopolitical tensions can significantly deter cross-border investments, discouraging Russian investors from buying properties in Tallinn.
In Tallinn, the real estate market is feeling the effects of these geopolitical and economic shifts. Local real estate agents have noticed a shift in buyer demographics, with fewer Russian clients and more interest from other international buyers.
As a potential buyer, understanding these dynamics can help you navigate the market better. With fewer Russian buyers, there might be more opportunities for other international investors to explore properties in Tallinn.
Sources: Schengen News, IMF, IES Lublin
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6) Rental yields in central Tallinn will rise as more tourists and business travelers seek short-term rentals
Rental yields in central Tallinn are poised to increase as demand for short-term rentals grows among tourists and business travelers. This trend is supported by several key factors observed in recent years.
Firstly, there has been a significant increase in tourist arrivals in Tallinn, with 2,136 active Airbnb listings reported as of September 2024. This indicates a strong demand for short-term rentals, which is a crucial driver of rental yields. Additionally, the median occupancy rate for short-term rentals in Tallinn stands at 64%, reflecting a robust market for Airbnb and similar platforms.
Moreover, the average daily rate for short-term rentals in Tallinn is $71, which is notably higher compared to long-term leases. This higher rate makes short-term rentals more lucrative, thereby contributing to increased rental yields. Furthermore, the number of short-term rental listings has been growing, with a 3% increase in the past year, as reported by AirDNA.
Increased investment in property development and renovation in central Tallinn is another factor that supports the growth of rental yields. This investment is likely aimed at catering to the rising demand for short-term rentals, further boosting the market. Additionally, Tallinn's popularity as a travel destination is highlighted by media coverage and the growing number of business conferences and events hosted in the city, attracting more visitors who prefer short-term rentals.
Sources: Airbtics, AirDNA, 10Times
7) Demand for properties near green spaces and parks will grow as urban living becomes more intense
As urban living continues to intensify, green spaces and parks are becoming increasingly important in determining property desirability. In recent years, Tallinn has experienced a steady increase in population, with projections indicating further growth. This rise in urban population density highlights the need for accessible green spaces to enhance the quality of life for residents.
Property prices in Tallinn have been on the rise, particularly in areas close to parks and green spaces. For instance, neighborhoods like Kadriorg and Pirita, known for their lush environments, are seeing significant increases in property values. This trend is driven by the limited housing stock and the growing demand for properties that offer a connection to nature.
Surveys have shown that residents of Tallinn place a high value on living near green areas, as these spaces contribute to better mental and physical health. The benefits of green spaces are well-documented, with studies consistently linking them to improved well-being, especially in densely populated urban settings.
In response to these trends, the City of Tallinn has invested heavily in urban green infrastructure. Supported by a €100 million loan from the European Investment Bank, the city is upgrading public spaces and green areas as part of its commitment to sustainable urban development. This investment aligns with broader urban planning trends that emphasize eco-friendly living and the creation of more livable environments.
Real estate market analyses further support the notion that properties near parks are in high demand. This demand is fueled by a growing preference for sustainable living and the desire for a better quality of life. As a result, property prices in these areas are expected to continue rising, making green spaces a key factor in property desirability.
Sources: European Investment Bank, World Population Review
8) Property values will rise in Tallinn areas newly connected by the expanded tram network
The expansion of Tallinn's tram network is set to boost property values in newly connected areas.
Historically, there's a strong link between public transport and property value increases. For instance, a study by the American Public Transit Association and the National Association of Realtors found that homes near transit facilities appreciated 41.6% more than those further away. This trend is not just theoretical; it's been observed in real-world scenarios.
Take London, for example. The Knight Frank report on Crossrail revealed that property prices surged over 30% since 2008, largely due to the regeneration around new stations. Similarly, in Charlotte, North Carolina, homes near the new light rail system saw a noticeable rise in prices once the train started running.
In Tallinn, areas like Mustamäe, which already have excellent public transport links, are becoming increasingly popular among property buyers. These neighborhoods are seeing rental yields higher than the city average, making them attractive investment opportunities.
Moreover, statistics show that properties near public transport are in high demand. In some cases, commercial real estate sales prices can be up to 42% higher in these areas compared to those further away. This demand is a key driver of property value increases.
As Tallinn's tram network expands, expect similar trends to unfold. The new connections will likely make certain areas more desirable, leading to increased property values and investment potential.
Sources: ULI Research Roundup, NJBIA Report, Tallinn News
We have made this infographic to give you a quick and clear snapshot of the property market in Estonia. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Energy-efficient building development will grow due to new environmental regulations
New environmental regulations are set to encourage the development of energy-efficient buildings, particularly in places like Tallinn, Estonia. In the past, the Tallinn 2035 City Strategy laid the groundwork by aiming for carbon neutrality by 2050, which included ambitious targets for reducing greenhouse gas emissions in key sectors such as buildings, transport, and energy consumption.
These regulations are supported by increased government incentives for green construction. For instance, the Estonian government has been backing the renovation wave with various pathways aimed at boosting energy efficiency in both residential and non-residential buildings. This includes significant investments in deep and shallow renovations of building stocks, which were highlighted in reports from 2023 and 2024.
Moreover, the rise in energy-efficient building projects is evident through examples like the Environmental House in Tallinn, a €54.4 million net-zero project that extensively uses mass timber and aims for LEED Platinum certification. Such projects demonstrate Estonia's commitment to sustainable construction practices and serve as case studies for successful energy-efficient developments.
Sources: Estonia Green Building History, The Circular Economy in Tallinn, Estonia, Comprehensive study of energy efficiency pathways for Estonia Final
10) More foreign buyers will invest in Tallinn due to its strategic location and EU advantages
Foreign buyers are increasingly targeting Tallinn due to its strategic location and the benefits of EU membership. In the past few years, Tallinn has seen a significant rise in foreign property investments, with about 90% of the turnover in accommodation services coming from foreign tourists. This indicates a strong influx of foreign visitors who are potential property investors.
Compared to other EU cities, property prices in Tallinn remain relatively affordable, making it an attractive destination for foreign investors. The city's strategic location on the Baltic Sea and its integration with nearby municipalities make it a convenient hub for international business and trade. Additionally, as an EU member, Estonia offers free movement and investment security, which are significant advantages for foreign investors.
The Estonian government has also provided various incentives for foreign investors, such as favorable tax policies and business-friendly regulations. These incentives, combined with Tallinn's improved infrastructure and connectivity, enhance the city's livability and attractiveness to both residents and visitors.
Sources: Real Estate in Tallinn, Economic Impact of Foreign Visitors in Tallinn, Tallinn Mobility Strategy
11) More Asian investors will be drawn to Tallinn’s real estate market due to its thriving tech industry
Asian investors are showing growing interest in Tallinn's real estate market, largely due to its thriving tech industry. Over the past few years, there has been a noticeable increase in Asian investment in European tech startups, with a significant rise in total investment from 2013 to 2018. This trend has continued, with Asian investors deploying large sums of capital into European tech hubs, including Tallinn.
The tech scene in Tallinn has become a magnet for young professionals and international talent, thanks to its booming startup ecosystem. The city has seen a surge in new dwellings, with a 78.4% increase in modern apartment complexes completed in early 2023, catering to the needs of tech industry workers. This construction boom reflects the ongoing interest from investors, including those from Asia.
Estonia's e-Residency program and government initiatives have further enhanced Tallinn's reputation as a tech-friendly city. These efforts, combined with media coverage highlighting Tallinn's digital infrastructure, have attracted international attention and investment. Real estate agents have reported increased inquiries from Asian investors, indicating a growing interest in the city's real estate market.
Sources: State of European Tech 2018, Wikipedia
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12) Demand for smaller, accessible homes will grow as the population ages
Estonia's aging population is reshaping the housing market.
With more people over 65, there's a noticeable shift towards homes that fit their needs. Many older adults in Estonia live in houses that are too big, a trend seen across the EU. This often leads them to prefer downsizing to more manageable spaces. Interestingly, the average home in Estonia is older than the average person, highlighting the need for housing that suits an aging demographic.
Real estate experts and government reports are noticing a growing demand for accessible housing. Developers are stepping up by creating age-friendly communities. These communities offer smaller, more accessible housing options, ensuring that older adults can live comfortably and independently.
In Estonia, the push for age-friendly housing is not just about size but also about accessibility. Homes are being designed with features like step-free entrances and wider doorways to accommodate mobility aids. This trend is crucial for maintaining independence among older residents.
As the population ages, the demand for these types of homes is expected to rise. Developers are likely to continue focusing on creating environments that cater to the needs of older adults. This shift is not just a trend but a necessary adaptation to demographic changes.
For potential buyers, understanding these trends can be key to making informed decisions. Whether you're looking to invest or find a home for yourself, knowing that the market is leaning towards smaller, accessible homes can guide your choices.
Sources: EUROSTAT, EUROSTAT, World Bank, Population Census Estonia
13) Rental yields in suburban areas will drop as more people choose to buy homes
Suburban areas around Tallinn are seeing a shift in housing market dynamics.
Thanks to initiatives like housing loan guarantees from Foundation KredEx, homeownership rates are rising. The Estonian government is making it easier for young families and low-income households to buy homes, leading more people to choose owning over renting, especially in suburban areas.
With remote work becoming more common, families are seeking larger living spaces for home offices and activities. This trend makes suburban areas more attractive for buying homes, which in turn reduces the demand for rentals. Fewer renters mean rental prices are likely to drop as competition for available properties decreases.
There's also been a boom in new home construction in suburban regions. In early 2023, there was a surge in new dwellings completed, showing a clear preference for homeownership over renting. Government incentives for first-time buyers are further fueling this trend, making it easier for people to purchase homes.
As more residents opt for homeownership, suburban rental yields are expected to decline. This shift is reshaping the housing market, with fewer people competing for rental properties.
Sources: Global Property Guide, Statista, Global Property Guide
14) Eco-friendly home demand will grow as buyers become more environmentally conscious
In recent years, we've seen a noticeable shift in how people think about the environment, and this is having a big impact on the housing market. Back in 2023 and 2024, a global survey showed that 78% of consumers considered environmental sustainability important, which means a lot of people are interested in living more eco-friendly lives.
In Tallinn, this trend is particularly evident. The city has been experiencing a boom in eco-friendly property developments, like the Alma Tomingas Building and the Environmental House, which are designed to be sustainable and energy-efficient. This is partly because of Tallinn's recognition as the European Green Capital in 2023, which brought a lot of attention to environmental issues and increased public awareness.
Moreover, the Estonian government has been actively supporting green building practices through a comprehensive action plan funded by the European Union. This plan includes numerous initiatives aimed at reducing environmental impact, which encourages developers to focus on sustainable construction. Additionally, stricter environmental regulations for new constructions have been put in place, making it more appealing for builders to adopt eco-friendly practices.
Sources: Euronews, Baltic Wind
We made this infographic to show you how property prices in Estonia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
15) Property values in Lasnamäe will drop as younger residents relocate to central areas
Lasnamäe is seeing a shift as younger residents are moving to central Tallinn.
In 2023 and 2024, the number of people aged 18-35 in Lasnamäe noticeably dropped, hinting at a trend where younger folks prefer the buzz of central areas. The central parts of Tallinn offer a vibrant mix of amenities, cultural spots, and job opportunities that are hard to resist.
Surveys show that young people in Tallinn are drawn to the city's heart, where life is more dynamic and connected. This shift is backed by real estate reports pointing to a dip in property demand in Lasnamäe, while central areas are thriving.
In Lasnamäe, properties are staying on the market longer, and listings are piling up, signaling a drop in demand. Meanwhile, central Tallinn is experiencing a boom, with property values climbing and demand soaring, making it a hotspot for the younger crowd.
Urban development and better public transport in central Tallinn are making it even more appealing. These improvements are drawing in younger residents, leaving Lasnamäe with fewer of them.
As central Tallinn continues to develop, Lasnamäe might face a decline in property values, as younger residents flock to more vibrant areas.
Sources: Statista, Baltic Times, NAR Realtor
16) Kadriorg’s property prices will keep rising steadily because of its historical charm and premium status
Kadriorg is poised to remain a top-tier neighborhood, with property prices expected to rise by 3% to 7% in 2025.
Thanks to Tallinn's growing reputation as a tech hub, international buyers are flocking to the city, especially to charming areas like Kadriorg. The scarcity of land for new developments in central Tallinn, including Kadriorg, means property supply is tight, which keeps prices on the rise.
Kadriorg's allure isn't just about its real estate; it's steeped in history and culture. The area boasts attractions like the baroque palace and park ensemble, and museums such as KUMU and the Estonian Art Museum. These cultural gems enhance Kadriorg's appeal, making it a highly rated place to live.
The neighborhood's prestige is further elevated by the presence of the Estonian president’s residence and numerous foreign embassies. This adds a layer of exclusivity, drawing in high-profile residents and businesses who appreciate its unique charm.
Living in Kadriorg means being part of a community that values history and culture, with the added benefit of being in a city that's on the rise. The combination of these factors ensures that Kadriorg remains a desirable location for both locals and international buyers.
As demand continues to grow and supply remains limited, property prices in Kadriorg are set to climb, making it a smart investment for those looking to buy in a premium neighborhood.
Sources: Visit Estonia, Puhkus Eestis
17) Demand for luxury apartments in Tallinn's city center will grow as international investors look for high-end properties
Tallinn's city center is becoming a hotspot for luxury apartments as international investors flock to high-end properties.
By the end of 2023, the average price per square meter for apartments in Tallinn hit €3,084, showing a 3.8% increase from the previous year. This uptick in prices highlights a growing demand, especially for luxury living spaces.
Foreign investment in Estonia's residential real estate has surged, with a 25% rise in foreign investors since 2023. This trend underscores the strong interest from international buyers, who are keen on high-end properties.
More expatriates and high-net-worth individuals are moving to Tallinn, with the metro area population expected to grow from 454,000 in 2023 to 456,000 in 2024. These newcomers often seek upscale living, fueling the demand for luxury apartments.
Neighborhoods like Kalamaja and Pelgulinn, close to the city center, are undergoing gentrification. This urban renewal is boosting property values and paving the way for more luxury developments.
As these changes unfold, Tallinn's real estate market is becoming increasingly attractive to those looking for high-quality living spaces in a vibrant city.
Sources: Global Property Guide, Sorainen
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.