Authored by the expert who managed and guided the team behind the Estonia Property Pack
Yes, the analysis of Tallinn's property market is included in our pack
What is happening in Tallinn’s real estate market? Are prices on the rise or decline? Is the city still attracting foreign investors? How are local government policies shaping real estate dynamics in 2025?
These are the questions we hear every day from professionals, buyers, and sellers alike, from the Old Town to the modern districts and beyond. Perhaps you’re curious about these trends too.
We know this because we stay closely connected with local experts and people like you, exploring the Tallinn real estate market daily. That’s why we crafted this article: to offer clear answers, insightful analysis, and a comprehensive view of market trends and dynamics.
Our aim is straightforward: to make sure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could improve, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll strive to enhance this content for you.
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1) Tallinn will attract more foreign investors as it becomes recognized as a tech hub
Foreign investments in Tallinn hit a record $4.6 billion in 2023 and 2024.
As Tallinn's reputation as a tech hub grows, it's becoming a hotspot for foreign investors. The city is buzzing with 1,136 tech startups, and ten of these have reached unicorn status, including big names like Bolt and Pipedrive. This thriving tech scene is a goldmine for investors hunting for the next big thing.
What makes Tallinn even more appealing is its cutting-edge digital infrastructure. 99% of services are available online, thanks to its successful e-governance. This digital prowess offers a secure and efficient environment for businesses to thrive, making it a top choice for investors.
Sources: Sequoia Capital Atlas, World Economic Forum, ERR News
2) Tallinn’s property prices will stabilize following a period of rapid growth
In recent years, we've seen a noticeable slowdown in the growth of residential property prices in Tallinn. For example, in the first quarter of 2024, the average price per square meter for housing increased by just 1.0% year-on-year, marking the weakest growth since the third quarter of 2020. This trend suggests that the rapid price increases of the past are beginning to taper off.
Another factor contributing to this stabilization is the significant increase in the supply of new housing. In early 2023, there was a 78.4% rise in new dwellings completed. This construction boom means more options for buyers, which can help balance out demand and prevent prices from skyrocketing further. Additionally, the completion of new office and warehouse spaces in 2023 adds to the overall real estate supply, indirectly influencing residential property dynamics.
Rising interest rates globally have also played a role in affecting mortgage affordability. As borrowing becomes more expensive, fewer people can afford to take out large loans for property purchases, which can slow down the growth of property prices. Moreover, government initiatives aimed at cooling the housing market, such as support for affordable housing and renovation strategies, are designed to make homes more accessible and energy-efficient, further contributing to a more balanced market.
Lastly, demographic trends show a plateau in population growth, with the metro area population increasing only slightly from 454,000 in 2023 to 456,000 in 2024. This steady growth rate suggests that demand for housing may not increase dramatically, allowing supply to catch up and stabilize prices.
Sources: Sorainen, Integra Dom, ERR News
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) Stable foreign ownership regulations will keep attracting international investment
Estonia has a strong track record of maintaining stable and transparent property laws, which have been a key factor in attracting foreign investments over the years. This consistency in regulations provides a sense of security for investors, knowing that their investments are protected under a reliable legal system.
The Estonian government has consistently expressed its support for foreign investment, emphasizing liberal policies to attract investments and export-oriented companies. This commitment to creating favorable conditions for foreign direct investment (FDI) is a clear indication of the country's openness to foreign trade and investment.
Furthermore, Estonia's favorable investment climate is reflected in its international rankings, where it stands out as a leading country in Eastern and Central Europe on a FDI per capita basis. This ranking highlights the country's stable business environment and regulatory framework, which are attractive to foreign investors.
Sources: Trade.gov
4) Outer district prices may dip slightly as demand moves towards central areas
Property demand is shifting towards central Tallinn, leaving outer districts less popular.
In the outskirts of Tallinn, apartment prices have dipped by 1% in areas bordering the city as of Q3 2024. This trend is even more noticeable in other parts of Estonia, where prices have fallen by 7.7%. People are moving away from these areas, seeking the vibrancy and convenience of city life.
Central Tallinn, including the city center and Old Town, is seeing a boom. Apartment prices here have nearly doubled since 2020, now ranging from 4,500 to 7,000 euros. This surge reflects a growing desire for the lifestyle and amenities that central living offers.
Urban development is playing a big role in this shift. New projects and better public transportation are making central districts more appealing. With new transportation terminals and night bus lines, getting around is easier than ever, drawing more people to the heart of the city.
Media coverage is also influencing this trend. Reports often highlight the perks of living centrally, from cultural attractions to dining options, which fuels the demand for properties in these areas. As a result, central Tallinn is becoming the go-to choice for many homebuyers.
Sources: Baltic Guide, Statista, Wikipedia
5) Newly developed areas will attract tenants with modern amenities, offering competitive yields
Newly developed areas in Tallinn are becoming hot spots for tenants seeking modern amenities.
In the heart of the city, studio apartments are now averaging €143,550 in 2024, with rental yields hitting 3.51%. This surge in interest is not just about location; it's about the lifestyle these areas offer. Take Mustamäe, for example, where rental yields for studio apartments have climbed to 5.36%, thanks to high occupancy rates.
One reason for this popularity is the improved public transport. With a 70% increase in ridership after bus route enhancements, getting around is easier than ever, making these areas even more attractive to potential tenants.
Young professionals are flocking to Tallinn, drawn by its vibrant city life and booming tech scene. This influx is pushing up demand for modern apartments with cutting-edge amenities. As a result, rental yields for new apartments range from 3.87% to 5.07%, outpacing older properties.
These modern developments are not just about the apartments themselves; they offer a lifestyle that appeals to a younger, tech-savvy crowd. The combination of modern living spaces and easy access to the city’s amenities is a winning formula.
Investors are taking note, as these areas promise competitive yields by attracting tenants who value modern conveniences. The trend is clear: newly developed areas are the future of Tallinn's rental market.
Sources: Global Property Guide, Global Property Guide, Colliers
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6) City center rents will increase as more people opt for the convenience of urban living
More people are moving to city centers like Tallinn, seeking the convenience and vibrancy of urban living.
In Tallinn, the population is on the rise, with the metro area now home to 454,000 residents in 2023. This growth is pushing up demand for rental properties as more folks want to live in the heart of the city. Tallinn's appeal isn't just about numbers; it's also about opportunities. The city has become a major employment hub, especially in the tech sector, drawing in young professionals who prefer to live close to work.
With 43% of Estonia's employed individuals working in Tallinn, the city is a magnet for job seekers. The improved public transportation system, including fare-free public transport, makes getting around a breeze, adding to the city's allure. This ease of movement is a big plus for those who want to enjoy everything the city has to offer without the hassle of a long commute.
Central areas are buzzing with new amenities and services, and modern apartment complexes are popping up to cater to the younger crowd's tastes. This development is making urban living even more attractive. As a result, rental prices in Tallinn have been climbing, with a 3.8% increase in 2023. This rise in rent is making buying less affordable for many, nudging more people towards renting instead.
For those considering a move, it's worth noting that Tallinn's city center is becoming increasingly popular. The combination of job opportunities, easy transportation, and modern living spaces is hard to resist. As more people flock to the city, the demand for rentals is likely to keep rising, pushing prices up further.
So, if you're thinking about buying property in Tallinn, keep in mind that the city's growing popularity is driving up rental demand. This trend is expected to continue as more people seek the convenience of urban living.
Sources: Strateegia Tallinn, City Population, SAGE Journals
7) Foreign interest in short-term rentals will increase due to the city's tourism appeal
In recent years, Tallinn has become a hotspot for tourists, with a notable increase in foreign visitors. In 2023, Estonia welcomed nearly 4 million visitors, marking a 13% rise from the previous year. These tourists spent over €1.2 billion, a 17% increase from 2022, highlighting the city's growing appeal.
The rise in tourism has naturally led to a higher demand for short-term rental properties. Although specific data on the increase in listings isn't provided, it's reasonable to assume that more property owners are listing their homes on platforms like Airbnb to cater to this influx of tourists. This trend is supported by the rising occupancy rates for short-term rentals in Tallinn, which stood at 54% in August 2023.
Moreover, Tallinn's international connectivity has improved, with a significant increase in passenger traffic at Tallinn Airport. This suggests that more international travelers are visiting the city, further boosting the demand for short-term rentals. Additionally, media coverage and social media trends showcasing Tallinn's attractions have amplified its popularity, drawing even more tourists.
Sources: ETIAS, CEIC Data, Travel and Tour World, Schengen News
8) Telliskivi will draw more young professionals looking for trendy and modern living spaces
The Telliskivi area has become increasingly attractive to young professionals over the past few years. In 2023 and 2024, property prices in Telliskivi rose significantly compared to other parts of Tallinn, signaling its growing desirability. This trend often correlates with an influx of young professionals who are drawn to modern living spaces.
Additionally, the area has seen a surge in new residential developments and renovations, indicating active efforts to cater to the needs of this demographic. The presence of Telliskivi Creative City, a vibrant hub for creative industries, further enhances its appeal. With over 300 creative sector companies and numerous cultural spaces, the area offers a lively environment that young professionals find attractive.
Moreover, Telliskivi experiences high foot traffic due to its numerous cultural events, with over 800 events annually. This thriving community atmosphere is a significant draw for young professionals. Social media trends also highlight Telliskivi's lifestyle appeal, showcasing its unique blend of modern living and cultural activities, which resonates well with this group.
Sources: Creative Hubs, XYZ Lab
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) Suburban rental yields will dip slightly as urban convenience becomes more desirable
In Tallinn, urban living is becoming increasingly popular.
With more people flocking to the city, nearly 70% of Estonia's population is expected to live in urban areas by 2024. This trend is fueled by the appeal of city life, offering both convenience and opportunities.
Rental prices in Tallinn are climbing, with a 3.8% increase in 2023. Despite the higher costs, the central areas are buzzing with young professionals eager to be part of the city's vibrant tech scene and enjoy modern apartments.
The Estonian government, alongside the European Investment Bank, is pouring resources into urban infrastructure. This means better public transport and amenities, making places like Mustamäe highly sought after for their excellent transport links.
Suburban areas, while offering more space, are seeing less demand. The rise of remote work has shifted preferences, with people now favoring the convenience and amenities of urban settings over larger suburban homes.
This change in lifestyle is leading to a slight decline in rental yields in suburban areas, as urban convenience takes precedence.
Sources: Global Property Guide, CBRE
10) Central Tallinn will see higher rental yields as demand for city living stays strong
Rental yields in central Tallinn are on the rise as city living remains highly desirable.
In recent years, property prices in Tallinn have surged due to a combination of high demand and a limited housing supply. This trend is expected to persist, encouraging landlords to hike rental rates to boost their returns.
The influx of young professionals and expatriates is a key driver. Tallinn's reputation as a tech hub and its appealing quality of life have made it a magnet for professionals, especially those in the tech and digital nomad sectors. This wave of new residents has significantly increased the demand for rental properties, thereby pushing up rental yields.
Adding to the pressure, new housing developments in the city center are scarce. This limited supply has not only driven up property prices but also rental rates. High occupancy rates in central Tallinn rentals further underscore the strong demand, enabling landlords to charge more.
For those considering investing in Tallinn, it's worth noting that the city's vibrant tech scene and lifestyle continue to attract a diverse crowd. This ongoing demand is a promising sign for potential property investors looking to capitalize on the rental market.
Sources: Global Citizen Solutions, Global Property Guide, Support Adventure
11) Pirita will attract more families with its green spaces and seaside proximity
Pirita is becoming a top choice for families because of its lush green spaces and seaside location.
Families are flocking to Pirita, drawn by its rising property values that reflect the area's growing popularity. The spacious homes and natural beauty here are a big hit, especially for those who love the outdoors.
People really value green spaces and being near the coast, and Pirita delivers both. With its high greenery ratios, the area is not only beautiful but also climate-resilient. Parks and recreational spots are everywhere, offering plenty of chances for outdoor fun and a healthy lifestyle.
Another big plus for Pirita is its proximity to quality schools and family-friendly amenities. The district is known for being safe, with lower crime rates than other parts of Tallinn, making it even more appealing for families.
Getting around is easy too, thanks to improved public transportation and investments in local infrastructure. This makes daily life in Pirita convenient and enjoyable.
Sources: Tallinn 2024 Annual Publication, Connecting Nature, Dynamic Environments
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12) Yields on older Soviet-era buildings will drop due to rising maintenance costs
In Tallinn, older Soviet-era buildings are seeing a drop in yields because of rising maintenance costs.
Over the years, construction costs in Estonia have climbed, making it pricier to maintain or renovate these aging structures. For instance, back in 2018, the cost to build a modern apartment in Tallinn was already 1,152 euros per square meter, which highlights the financial strain on maintaining older buildings.
These Soviet-era buildings often have structural issues that need constant attention. Take Maarjamäe and Linnahall, for example; they are known for poor maintenance and vandalism, forcing owners to shell out more for repairs and renovations.
On top of that, Estonian government regulations are pushing for upgrades to meet new sustainability and energy efficiency standards. This is part of the country's green energy focus, meaning older buildings, which are generally less energy-efficient, need costly upgrades to comply.
These regulations are not just about aesthetics; they aim to reduce energy consumption and promote sustainability. However, for owners of Soviet-era buildings, this means additional financial burdens to meet these standards.
In the end, the combination of rising construction costs, frequent repairs, and new regulations is making it tough for owners of older buildings to maintain profitability.
Sources: GlobalData, Housing Europe, Lossi 36
13) Demand for luxury rentals will rise among expatriates and foreign professionals
In recent years, Tallinn has become an increasingly attractive destination for expatriates and foreign professionals. This trend is largely due to the rising number of expatriates moving to the city, as evidenced by Estonia's net positive migration in 2023. With more people coming in than leaving, it's clear that Tallinn is drawing in a significant number of foreign professionals.
Another key factor is the substantial foreign direct investment flowing into Estonia, which was reported at 12.96% of GDP in 2023. This influx of capital often targets high-value sectors like real estate, including luxury rentals. As more international companies establish offices in Tallinn, particularly in the booming tech scene, the demand for luxury accommodations is likely to rise. Young professionals and expatriates working in these industries often seek high-end living spaces.
Moreover, the demand for short-term luxury rentals on platforms like Airbnb is already high, with average monthly revenues reaching $9,056. This suggests that expatriates and business travelers are willing to pay a premium for luxury accommodations. Additionally, the growing appeal of Tallinn as a business hub, coupled with its efficient public transport system, makes it an attractive destination for business travelers, further driving the demand for luxury rentals.
Sources: Baltic Times, Trading Economics, AirDNA
14) Kadriorg will continue to attract buyers for its prestige and historical architectural appeal
Kadriorg's property prices have grown steadily by 2.5% annually over the past two years, showcasing its allure as a luxury residential area.
With apartments fetching over €10,000 per square meter, Kadriorg remains a hotspot for those seeking upscale living. The limited housing stock and upcoming renovations of heritage buildings keep demand high, likely pushing prices even further.
Strict preservation rules mean new developments in Kadriorg are rare, preserving its historical charm. Ongoing restoration projects enhance its unique character, drawing in buyers who appreciate the neighborhood's distinctiveness.
Media often highlights Kadriorg's architectural significance, boosting its reputation as a luxurious and historically important area. This attention makes it a top choice for those wanting an upscale lifestyle.
The area's desirability is further enhanced by cultural landmarks like the Kadriorg Palace and its lush parklands. These attractions draw both local and international buyers who value Kadriorg's rich heritage.
City planners are committed to preserving historical districts like Kadriorg, ensuring its unique appeal remains intact. This dedication supports its ongoing prestige and attractiveness to potential buyers.
Real estate listings in Kadriorg frequently emphasize its historical and architectural allure, reinforcing its status as a prestigious neighborhood.
Source: Realting
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) Eco-friendly homes will attract more interest as buyers become more environmentally conscious
Interest in eco-friendly homes is set to grow as more people become aware of environmental issues. In the past, specifically in 2023 and 2024, Tallinn was recognized as the European Green Capital, which highlighted the city's commitment to sustainable development. This recognition has increased media attention on the benefits of eco-friendly homes, making more people aware of their importance.
Additionally, the demand for sustainable building materials has been on the rise. For instance, the sales of eco-friendly materials in Estonia reached €640 million in 2021, and innovative products like Greenful Panel and Myceen’s mycelium-based insulation are gaining popularity. These materials not only reduce pollution but also lower energy consumption, making them attractive to environmentally conscious buyers.
Consumer surveys have shown a growing preference for energy-efficient homes that minimize carbon footprints and use renewable energy sources. This trend is reshaping the real estate market, as more buyers are looking for properties that align with their environmental values. Furthermore, government initiatives and EU support for green building practices are making eco-friendly homes more accessible and appealing.
Sources: Greenful, The Madrona Group, Euronews, Research in Estonia
16) Foreign buyers will increasingly target Tallinn’s luxury market for its relative affordability compared to other European capitals
Foreign buyers are showing increased interest in Tallinn's luxury market, primarily due to its relative affordability compared to other European capitals. In 2023, the average price of apartments in Tallinn was €2,970 per square meter, which is significantly lower than in cities like Paris, Berlin, and Barcelona. This makes Tallinn an attractive option for those looking to invest in luxury real estate without the hefty price tag associated with other major cities.
The luxury real estate market in Tallinn is experiencing growth, driven by high demand and limited supply. This trend is expected to continue, with projections showing a 3-7% increase in property prices by 2025. The combination of affordability and potential for price appreciation makes Tallinn a compelling choice for foreign investors.
Additionally, Estonia's policies favor foreign investment, with no restrictions on foreign ownership of real estate. This ease of access, coupled with the city's high quality of life and functional transport links, further enhances its appeal to international buyers. The growing interest in modern apartments, especially among young professionals attracted by Tallinn's booming tech scene, also contributes to the increased demand in the luxury market.
Sources: Global Property Guide, Brussels Times
17) Demand for accessible housing in quieter neighborhoods will rise due to an aging population
Tallinn's population is getting older, and this shift is shaping the housing market.
Back in 2021, the census revealed a notable rise in the elderly population, with an 18.6% increase in those aged 65 and above. This means more people are reaching an age where they need homes that offer comfort and accessibility.
Older adults often seek out quieter, more accessible places to live, prioritizing their health and comfort. This is why there's a growing demand for homes that are single-story or have elevator access, featuring accessible entrances and adaptable bathrooms.
In Tallinn, real estate trends show a rising interest in properties located in quieter neighborhoods. This trend aligns with the needs of older residents who value peace and easy access in their living spaces.
As the population ages, the demand for accessible housing options in quieter areas is expected to grow. This shift is not just about numbers; it's about creating environments that cater to the needs of an aging community.
For potential buyers, understanding these trends can be crucial. Investing in properties that meet these demands could be a smart move, as the market for accessible and peaceful living spaces is likely to expand.
Sources: Macrotrends, Rahvaloendus, Norden
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.