Economy
AI
Tallinn's Real Estate Market Splits as New Builds Stall and Older Offices Devalue
Tallinn's property market is undergoing a sharp correction as price-sensitive buyers overwhelmingly favor resale apartments over new constructions, while a glut of modern commercial space has slashed rental rates for older office buildings to as low as 5 euros per square meter.
- —The Estonian real estate market is experiencing a divergence, with resale apartments showing greater potential for future price growth compared to new constructions, which have seen a significant price gap widen over the past four years.
- —New apartment prices in Tallinn increased by 5.3% year-on-year to 4,591 euros per square meter in Q4 2025, while resale apartments rose by 5.2% to 2,945 euros per square meter.
- —Transaction activity in Tallinn favors the resale market, with 635 apartments sold in December, an above-average figure, contrasting sharply with only 72 new construction sales, indicating buyer price sensitivity.
- —Older, partially amortized office buildings in Tallinn are facing challenges due to new high-class commercial spaces entering the market, leading to significant price reductions for lower-class offices, with some deals reported at 5 euros per square meter, down from 8 euros a year ago.
- —New commercial developments like Lennuradari laokompleks are catering to micro and small businesses, offering functional stock-office spaces in a strategically advantageous location near Tallinn's transport hubs.
Recap
The market isn't just slowing; it's undergoing a structural re-evaluation of value. A glut of high-priced new supply is colliding with buyer affordability limits, creating a clear split between viable resale assets and struggling new builds. In the commercial sector, this translates to a brutal correction for older properties, which now face obsolescence without massive capital injection.