EUROPEAN INVESTMENTS

Estonia is a country of 1,3 Million people, including half million residents in the port-capital Tallinn on the Gulf of Finland with both strong Nordic and Finnish cultures being prevalent.

Since becoming an independent nation, Estonia has completed a stage of dramatic growth and is now positioning itself favourably at almost more than half way between the gap between Western standard of living and other Eastern European standards.

Estonia is considered as to have one of the best educations in the world with ranking in the 5 first nations with Finland, Japan, Canada…

Safety and respect of individual property is much higher than in comparison to Western Europe with crime rates being considered as one of the lowest in Europe.

The average salary is still low at around 600€, this shows the possible convergence potential to come as specialists in Estonia to have the same level of earnings and standards of living within the next 20years in line with the Western Europe averages.

Average living space per person is still half of what it is in the West and this will increase proportionally with economic growth.

The rise of a real middle class who aspire to change living standards and move from Soviet – style blocks into new built apartments thus boosting demand.

Estonia will join Euro Zone at the beginning of 2011 and as noted in Slovakia and in Slovenia before, joining the Eurozone is always equivalent to price step up, particularly in real estate sector.

Estonia remains today one of the best in class in the countries from the previous Soviet Block.

The economy has been hit severely with recession rates of  up to 14%, but one should not forget that GDP growth has also been at an 8% average between 2000 and 2008.

European economists predict a strong GDP growth to return in 2011.

In the wake of the Worldwide Financial crisis in 2008, the Estonian market has been subjected to a fall in real estate prices by up to 50%. Estonia is now in a position where the market is substantially under priced according to experts as the prospective economic outlook improves with a convergence to Western European levels.

Estonia has always have a very strict budget policy and its total public debt is around 14% of the GDP, clearly favourable compared to a level in the UK and France close to 90% of the GDP for both countries.

These highly favourable forecasts combined with the structural strength of the Estonian economy provides justification that Estonia will lead again in the coming years, showcasing the upwards trend of Central European economies.

Under these circumstances, we predict property prices to increase dramatically again in this currently undervalued investors market.

Newly built apartments are rare and the financial crisis from 2008 has halted any new developments of residential assets, resulting now in a lack of high standard apartments; this will add pressure on the pricing and we can expect price of apartments to increase radically in the next 2-4 years. Prices have already risen 25% since the beginning of the year. The Tallinn residential market is characterized by the following trends:

The emergence of the new middle urban class in search for new or recently built apartments with high end and up to date specification levels.

Prices in Tallinn still remain very low for recent apartments (between €1,000 and 1,600 per sq M) compared with the equivalent of a range of €8,000 – 12,000 for similar sized apartment footprints in Paris and £10,000 -12,000 GBP in London.

Tallinn is an affluent capital city with very low unemployment levels and high rate of young professionals, looking for new apartments to buy or to rent.

Proven active rental market; Apartments previously sold and managed by European Investments in Estonia have always been leased within less than 1 month.

Between 2003 -2007, real estate price increases in Tallinn have shown to be one of the strongest in the World. The Global Financial crisis and lack of loans and financing from banks explained the sharp decrease in market prices through 2008 and the now predicted recovery in the price level will be dramatic and sustainable. There is now a real demand from the population for newly built quality apartments and as banks start to lend again to the recovering economy.

Estonia has the level of tax that is one of the lowest in Europe with a tax level around 18% either for income tax or for capital gain tax. Transfer tax is less than 1%, and there is no tax on wealth in Estonia.

Both the Tax and legal systems are predominantly one of the most investor friendly in Europe.

The economy has been hit severely with recession rates of  up to 14%, but one should not forget that GDP growth has also been at an 8% average between 2000 and 2008.

European economists predict a strong GDP growth to return in 2011.

In the wake of the Worldwide Financial crisis in 2008, the Estonian market has been subjected to a fall in real estate prices by up to 50%. Estonia is now in a position where the market is substantially under priced according to experts as the prospective economic outlook improves with a convergence to Western European levels.

Estonia has always have a very strict budget policy and its total public debt is around 14% of the GDP, clearly favourable compared to a level in the UK and France close to 90% of the GDP for both countries.

These highly favourable forecasts combined with the structural strength of the Estonian economy provides justification that Estonia will lead again in the coming years, showcasing the upwards trend of Central European economies.

Under these circumstances, we predict property prices to increase dramatically again in this currently undervalued investors market.

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