Real estate

Purchase of property by foreign citizens or foreign companies

Foreign citizens and foreign companies may purchase any property (apartments, houses or buildings) without restrictions. Foreign companies and individuals also have the first option to buying the land under the buildings they have acquired.

There are no particular restrictions for Estonian citizens and citizens of the countries belonging to European Economic Area – EEA (EU countries + Norway, Iceland, Liechtenstein) in purchasing land up to 10 hectares.

Concerning land plots larger than 10 ha, the ownership can be transferred to a foreign citizen or a foreign company with permission from the County Governor at the location of the plot of land. When purchasing larger areas of forest and agricultural land the company must be registered in Commercial Register and must have been active in areas of forestry or manufacturing of agricultural products for at least the past three years.

There are some restrictions on foreigners regarding purchases of land on small islands (i.e. islands other than Saaremaa, Hiiumaa, Vormsi and Muhu).

 Prices of industrial land plots

In the Tallinn area industrial land prices range in huge intervals. In the central city area, close to main roads prices reach up to EUR 125 per m2. However a few kilometres away, and less favourably located, prices fall to EUR 10 per m2.

 Office, retail and industrial premises

There are no restrictions for the lease of buildings and rooms. Nor are there any procedural peculiarities. Costs for electricity, heating etc are normally excluded from rent and have to be paid by the lessee.

Indicative range for rents in major towns of Estonia, class A premises (EUR/m2 per month)

Type of Space

Tallinn

Tartu

Pärnu

Narva

Office

11,5 – 17,5

9,5 – 11,5

7,5 – 16

7,5- 9,5

Retail

13 – 50

7,5 – 60

5,5 – 20

9,5 – 25

Industrial

4,5 – 6,5

5  – 6,5

3 – 4

4 – 5

Source: Arco Vara

Indicative costs for construction of new storage or industrial facility ranges between EUR 500 and 800 per m2 (excluding land cost).

 Property taxes, fees, charges

Property taxes are relatively low, and are likely to remain so. In Estonia the land tax is the only real property tax; buildings and forests are not taxed separately.

Land tax is based on the market value of land and ranges between 0.1 to 2.5 percent of market value of land annually (0.1 to 2.0 for arable land and natural grassland). Factors that affect the market value are location, land use and environmental characteristics. Landowners or in some cases land users (Local Government or state property) must pay Land tax.

Commissions, charged by real estate companies vary in line with different objects (flats and apartments about 5%). Rent commissions amount to between 1 and 2 month’s rent.

The notary fee is paid to a public notary for legal and technical services connected to a real estate transaction. The fee is based on the value of the transaction, which is the price of property or rights declared by the transaction party. In case of a bilateral transaction (e.g. purchase-sale) the double full fee is used. Price examples:

Transaction Value, EUR

Notary Fee, EUR

3,195

22

6,390

25

31,949

55

63,897

103

638,977

958

3,195,582

3,771

exclusive of VAT

In addition, when registering into Land Register, the state duty is applicable.

Property maintenance costs depend on the amortisation level of the building and quality of the services provided. Maintenance costs such as water, sewage, insurance, electricity, heating and security range between 2 – 5 EUR/m2 per month for commercial space and 1,3 – 1,6 EUR/m2 for industrial and storage facilities.

 Industrial parks

The recent trend in industrial property market are industrial parks. There is less and less manufacturing industry in the central parts of Tallinn, companies and factories are moving to more suitable locations in the outskirts of the city or even farther.

Tallinn and its immediate vicinity have three areas under development for manufacturing facilities and warehouses: Peterburi road, Pärnu road in Laagri and Tartu road between the city boundary and Jüri. The biggest industrial parks in and around Tallinn are Jüri Industrial Park, Tänassilma Technological Village, Dvigatel Industrial Park, Keila Industrial Park and Lasnamäe Industrial Park. The total areas of the parks vary from 30 to 85 hectares and companies can purchase grounds with areas from 2000 up to 30 000 square meters with purchase price around 80 – 100 EUR per square meter.

Also in other parts of Estonia, around major cities, industrial parks are being developed.

Source: Estonian Investment and Trade Agency www.investinestonia.com

Read also blog entries about REAL ESTATE

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