Exceptional opportunity in the centre of Estonia's Summer Capital Parnu from just £55,000 with Guaranteed Rental 6% for 2 years
*ONLY 15% Deposit
*2 Year 6% rental guarantee
*Prices from 87,900 Euros
*Typical finance Levels of up to 70%
*19% VAT refund if purchased via Estonian Ltd Company
*Highest Property capital growth Country in 2006
*Excellent prospects for capital growth
*Assistance & support through entire process
*Completion Spring 2008
*Furniture pack and Kitchen, white goods all included in price
Estonia Investment Property Overview
Background and Location
Pärnu is the summer Capital City of Estonia. It is 100 km from Tallinn in South-West of Estonia. The development is situated in the middle of Pärnu centre and is called ‘Heart of Pärnu’. It is in the most popular location in Pärnu. We expect this area in particular to experience an excellent level of capital growth over the short and medium term due to the accessibility to the area and its general appeal outlined below. The development will be situated between Port Artur 1 and 2 which are the two main shopping centers. It is a popular meeting area with the additional appeal of the surrounding parkland, proximity to the river, the city’s concert hall and the beautiful Old Town.
The main bus station is only 50 meters away from the development with convenient buses both locally and to Tallinn, Riga and across Europe. Its central location means that it is easy to walk everywhere including along the coast line and beaches.
Pärnu is an excellent destination for active holidays, offering many different sporting facilities. The city is famous in Scandinavia and the Baltic area for its numerous health spas and hotels right on the beach and in the centre.
Q - Are there any restrictions on foreigners buying property in Estonia?
A - After becoming a full member of the EU in May 2004, Estonia’s government has maintained a highly favourable and open attitude to foreign investment. Foreign investors are able to buy and sell property freely. As a result of this openness, of all the countries which joined the EU in May 2004, Estonia receives received the highest level, per capita, of inward capital investment, so far totalling over 2,000 million EUR. (Source: Bank of Estonia).
Q – Is there a history of Property Investment from Overseas buyers in Estonia and Pärnu?
A - The big influence in Estonia has been Scandinavian buyers. Due to their close proximity, property investors from Sweden and Finland have been investing in Estonia for several years. There is a long trend for retirees, especially from Finland, to buy or rent long term in Pärnu.
Q – Are there any currency Risks?
A - Estonia is scheduled to replace its national currency, the Estonian Kroon, with the Euro in 2007. The Estonian Kroon has been pegged to the EURO since its inception and there is therefore negligible currency risk for Euro based investors. Loans can be in Euro or in Estonian EEK and the two currencies are effectively interchangeable at the fixed rate of 15.64 EEK per Euro. Like most other Euro currency countries, this has meant that residential property values have been rising steadily since May 2004. The Institute of Chartered Surveyors (RICS) has found that house prices in Estonia rose more than any other European country last year.
Q – Are the house prices rises backed up by economic growth?
A - During the past five years Estonian wages have increased steadily by an average of 10% per year. This trend seems set to continue and if property prices increase in line with wages, Estonian property prices have the potential of doubling within the next three to four years. A GDP growth of 7.8% in 2004 placed Estonia among the fastest growing economies in the region. According to the forecast for 2006 and 2007, the economy of Estonia will grow 8.2% and 7.7% respectively. (Source: Estonian Ministry of Economic Affairs and Communications, Estonia). Estonia’s economy is based around Information Technology, Telecommunications, Engineering, Timber and Tourism. In terms of tourism, for example, Estonia is officially Europe’s fastest growing country. Compared to 2003, foreign accommodated tourism in Estonia increased in 2004 by 30%, from 1.05 to 1.36 million tourists and by 30% in 2005. This makes it Europe’s fastest growing tourist destination.
Furthermore, International Credit Rating agencies mark Estonia as one the worlds strongest emerging markets: Moody’s: A1 ; Standard & Poor: A-, outlook upgraded to positive from December 2003 ; Fitch: A, outlook upgraded to positive from October 2003.
Q – Is the banking system ‘friendly’ and are Interest Rates competitive?
A - Between 1995 and 2005 interest rates in Estonia fell from 12% to their lowest ever, starting at 4.5%. As of June 2006, rates averaged at 4.3% (Source: Bank of Estonia). This is the lowest rate in its history and rates are predicted to remain low due to a controlled economy and strong competition between banks. Estonian banks will typically lend a foreign investor up to 70% of the value of the property in Estonia, provided proof is given of the ability to repay the loan. (i.e. Bank Statements from UK or Ireland are usually satisfactory)
The low interest rates and aggressive banking have not only encouraged foreign investment in Estonia but have also meant greater affordability for Estonian citizens. This accessibility for a much larger share of the population, to whom buying property would previously have been out of reach, has increased the demand for property from local occupiers and investors.
Q – What is the rental market like?
A - The rapid growth in tourism during the past few years is clearly leading to an equally rapid growth in holiday rental accommodation, mainly in Tallinn and Pärnu. Increasing tourism means more new businesses, more new jobs generated and more people available to buy and rent properties. As Pärnu becomes increasingly popular as a city-break destination, it should provide an increase in real estate demand and bring an upward trend to property prices, particularly in the accessable centre. The current shortage of hotel accommodations, particularly in the peak season, brings a great opportunity for holiday rentals to the small property investor.
The private rental market has in the past few years grown beyond just foreign nationals and now encompasses the growing local middle class, who don’t want the commitment of ownership but are looking for a central location and a good specification of property in which to live.