Government buys land on Estonian border

Four in five owners of land on the Estonian-Russian border have given their consent to clearing their land on the border strip of trees and bushes and the Interior Ministry will start making offers to buy the land at the end of this month.

At the moment 77 owners of privately held land plots or about 80 percent of landowners have given their consent to clearing of the border strip, spokespeople for the Interior Ministry told BNS. The ministry is planning to buy up all the land that constitutes the border strip by the end of this year.

Interior Minister Hanno Pevkur, who visited south-eastern Estonia for the cornerstone laying ceremony of the new complex of the border guard base at Piusa on Monday, met with the landowners who have allowed work to be done on their land to thank them for cooperation.

“Evaluation of the land under the border strip will begin already at the end of this month, at the same time making of proposals to landowners to sell the land under the border strip will begin,” Pevkur said. He said the ministry wishes to make just offers for the land and expects to be able to avoid expropriation. “We are planning to transfer all the pieces of land under the border strip that are currently in private ownership by the end of 2015,” Pevkur said.

Seventy-two kilometres of the border between Estonia and Russia making up approximately 200 hectares of the roughly 300 hectares of land constituting the border strip has been cleared of high-growth vegetation by now. The work will continue through the summer.

Source: BNS News

Construction volumes decreased in 2014

According to the preliminary data of Statistics Estonia, in 2014 the total production of Estonian construction enterprises in Estonia and in foreign countries amounted to 2.1 billion euros, which is 3% less than in 2013. If only the Estonian construction market is considered, the construction volumes decreased 2%.

The production value of building construction was 1.3 billion euros and the production of civil engineering works totalled 809 million euros. Compared to 2013, the volume of building construction increased 3% and the volume of civil engineering decreased by a tenth.

The domestic construction market was influenced the most by a decrease in civil engineering volumes. Although, in the second half of 2014, the repair and reconstruction volumes in building construction also took a downturn, then considering the whole year, a small increase occurred. At the same time new building construction, which had taken an upturn already in 2013, continued its growth trend in 2014 as well.

The construction volume of Estonian construction enterprises in foreign countries decreased by a tenth compared to 2013, influenced mainly by the construction of buildings. Construction volumes in foreign countries accounted for 8% of the total volume of construction in 2014.

The number of dwelling completions increased for the third year in succession. According to the data of the Register of Construction Works, in 2014, the number of dwelling completions was 2,756, i.e. 677 dwellings more than the year earlier. The largest share of completed dwellings was situated in blocks of flats and every second dwelling had two or three rooms. The majority of completed dwellings were situated in Tallinn, in the neighbouring rural municipalities of Tallinn and in Tartu county.

There is still a demand for new dwellings with a good location and high quality. In 2014, building permits were granted for the construction of 3,941 dwellings, which is about a third more than in 2013. The most popular type of building was a block of flats.

In 2014, the number of completed non-residential buildings was 785 with a useful floor area of 529,000 square metres – this was primarily made up of new storage, industrial and agricultural premises. Compared to 2013, the useful floor area as well as the cubic capacity of completed non-residential buildings decreased.

In the 4th quarter, the construction market started growing again. In the 4th quarter of 2014, the production value of construction amounted to 596 million euros, which was 6% more than in the 4th quarter of 2013. The increase was primarily caused by the low reference base of the last quarter of 2013 in terms of civil engineering volumes.Diagram: Construction volume index

 

 

Source: Statistics Estonia

Radisson hotel building sold for 46 MEUR

Eften Real Estate Fund II that belongs to Eften Capital has acquired the real estate and operator company of Radisson BLU Sky hotel in Tallinn for 46 million euros, Eften Capital said today.

In addition to the hotel and its operator Astlanda Hotelli, the fund acquired a 3,000 square meter office building and a popular pub, Madissoni.

The new owners plan no changes in the management of the hotel and it will continue to operate under the Radisson Blu brand.

Read more from BBN

Maardu manor house for sale with a starting price of 2 MEUR

Maardu manorThe Eesti Pank executive board has decided to put the Maardu manor estate up for sale at a starting price of two million euros. The real estate company Colliers International Advisors OÜ has been chosen as adviser and manager for the deal.

“Owning the Maardu manor property does not fit with the principles of an efficient organisation, as Eesti Pank only uses the property rarely. I am certain that a private company will be able to put the manor house to better use. We also used our buildings in Kuressaare only rarely, but the Arensburg Hotel has made a success of its operations there and has created extra jobs in Saaremaa”, said the Governor of Eesti Pank, Ardo Hansson.

Eesti Pank considered various ways of using Maardu manor more profitably. One option was to look for a long-term tenant, another was to rent the manor house out more often. In both these cases the owner would have needed to make major investments to turn Maardu manor into a fully-furbished centre for tourism or training events. However, Eesti Pank does not have the skills needed to develop the manor properly and doing so is not one of the core responsibilities of a central bank.

An earlier obstacle to the sale of Maardu manor was that it stood on unreformed state land and could not be sold. Eesti Pank started the process of registration for this in autumn 2013 and it was completed in January 2015.

The central bank discussed Maardu manor with the Ministry of Finance and the national property office, but it became clear that the state had no interest in buying the property.

Eesti Pank took tenders from four real estate companies to find an adviser for the sale of the manor property. The lowest bid came from Colliers International Advisors, who will receive a fee of 9950 euros for successfully completing the sale.

Eesti Pank bought the Maardu manor property in 1993 for 320,000 euros.

In autumn 2013 Eesti Pank sold a property with two buildings in Kuressaare for 550,000 euros to Arensburg OÜ, which runs the Arensburg Hotel near to the central bank property. After selling Maardu manor, the central bank will only own the buildings at Estonia puiestee in Tallinn.

Source: Bank of Estonia

The construction price index rose 0.5 pct in 2014

According to Statistics Estonia, in 2014, the construction price index rose 0.5% compared to the average of 2013.

Compared to 2013, labour costs increased by 1.3% and the costs of building machines by 2.2%. The costs of building materials remained on the same level.

In the 4th quarter of 2014 compared to the 3rd quarter, the change of the construction price index was -0.2%; and compared to the 4th quarter of 2013, the change was -0.7%. Compared to the 3rd quarter of 2014, the index was mainly influenced by the depreciation of building materials, which accounted for more than three-quarters of the quarterly change. Compared to the 4th quarter of 2013, the construction price index was also mainly influenced by decreased material costs, which accounted more than 50% of the index decrease.

In 2014, the repair and reconstruction work price index rose 0.6% compared to the average of 2013: labour costs increased by 1.7% and the costs of building machines by 3.4%, while the costs of building materials remained on the same level.

In the 4th quarter of 2014, the change of the repair and reconstruction work price index was 0.1% compared to the 3rd quarter of 2014, and -0.4% compared to the 4th quarter of 2013.

The calculation of the construction price index covers four groups of buildings: detached houses, blocks of flats, industrial buildings and office buildings. The repair and reconstruction work price index covers office buildings. The construction price index expresses the change in the expenditures on construction, taking into consideration the price changes of three basic inputs: labour force, building materials and building machines.

Change in the construction price index, 4th quarter 2014
3rd quarter 2014 –
4th quarter 2014, %
4th Q 2013 –
4th Q 2014, %
TOTAL -0.2 -0.7
labour force 0.1 -0.6
building machines -0.7 0.4
building materials -0.3 -0.8
Index of detached houses -0.1 -1.0
Index of blocks of flats -0.3 -1.3
Index of industrial buildings 0.1 -0.5
Index of office buildings -0.2 -0.5

 

Change in the repair and reconstruction work price index, 4th quarter 2014
3rd quarter 2014 –
4th quarter 2014, %
4th quarter 2013–
4th quarter 2014, %
TOTAL 0.1 -0.4
labour force 0.2 0.1
building machines -1.5 0.8
building materials 0.1 -0.5

 

Sorce: Statistics Estonia

Requirements for housing loans

The requirements regulating the issuing of housing loans are intended to strengthen the resilience of borrowers and lenders against losses from unfavourable developments, and to reduce the chances of a real estate boom being caused by excessive lending.

From 1 March 2015 all the banks operating in Estonia will have to comply with three requirements when issuing housing loans. These limits are an LTV limit, a DSTI limit, and a limit on the maximum maturity of loans.

1) The LTV ratio is found by dividing the amount of a housing loan by the value of the property used as collateral for it. At the moment the decision to grant the loan is taken, the LTV ratio may not exceed 85%. The LTV ratio for housing loans with KredEx guarantee can be up to 90%.

2) The debt service-to-income ratio is found by dividing all the principal and interest payments that the borrower must make for loans each month by the monthly net income of the borrower. The calculation of the loan payments for loans with variable interest rates uses either the interest rate in the loan contract (base rate plus margin) plus two percentage points, or an annual rate of 6%, whichever is higher. At the moment the decision to grant the loan is taken, the DSTI ratio may not exceed 50%.


where n is all the credit agreements of the borrower including the new housing loan.

3) The maximum permitted maturity of a housing loan contract is 30 years.

Banks will have to abide by all three requirements when issuing new housing loans. To ensure that banks have sufficient flexibility in making decisions about lending and in assessing the risks associated with it, and thus to help make sure that the credit market operates as efficiently as possible, Eesti Pank will permit banks to issue up to 15% of their housing loans each quarter with conditions that breach the limits.

Requirements 1) Loan-to-value (LTV) limit for housing loans: 85%*
2) Debt service-to-income (DSTI) limit: 50%
3) Maximum maturity of a housing loan: 30 years

* Up to 90% for housing loans guaranteed by KredEx

Permitted exceptions up to 15% of the amount of housing loans issued by a credit institution in a quarter
Applies to all credit institutions operating in Estonia, including the branches of foreign credit institutions
Entry into force 1 March 2015

Source: Bank of Estonia

The Dwelling Price Index changed by 13.2 pct compared to last year

According to Statistics Estonia, in the 3rd quarter of 2014, the Dwelling Price Index changed by 4.1% compared to the 2nd quarter and by 13.2% compared to the 3rd quarter of 2013.

Compared to the previous quarter, the prices of apartments increased by 3.6% and the prices of houses by 5.4%.

Compared to the 3rd quarter of 2013, the prices of apartments have increased by 15.3% and the prices of houses by 7.9%. The prices of apartments increased in all three areas under observation: by 15.6% in Tallinn, by 12.8% in areas bordering Tallinn with Tartu and Pärnu cities and by 19.6% in the rest of Estonia.

Compared to the 2nd quarter, the price index of apartments increased by 4.7% in Tallinn, by 1.3% in areas bordering Tallinn with Tartu and Pärnu cities and by 2.7% in the rest of Estonia.

The Dwelling Price Index expresses the changes in the square metre prices of dwellings purchased by households. The Dwelling Price Indices have been compiled for apartments and houses (including detached, semi-detached and terraced houses).

In the 3rd quarter of 2014, the Owner-Occupied Housing Price Index changed by 9% compared to the 2nd quarter and by 13% compared to the 3rd quarter of 2013.

The Owner-Occupied Housing Price Index expresses the changes in the prices of the acquisition of dwellings new to the household sector and other goods and services that households purchase in their role as owner-occupiers. The index consists of four parts: acquisition of dwellings, other services related to the acquisition of dwellings, major repairs and maintenance, and insurance connected with dwellings.

The Owner-Occupied Housing Price Index is published on the base 2010 = 100. The time series starts from the first quarter of 2005; major repairs and maintenance are included from the first quarter of 2007 and insurance connected with dwellings is included from the first quarter of 2012. The annual index is calculated as the average of four quarters.

Source: Statistics Estonia
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