For the two major problems of the Tallinn real estate market – the high prices of new homes and the declining demand for office space – there is an effective remedy, provided that the city government allows the rapid conversion of emptying old office buildings into residential houses, proposes Invego’s CEO Kristjan-Thor Vähi.
According to Invego’s CEO, there is a very clearly felt problem that many young families today cannot financially afford a brand-new home. “The concern is all the more serious because in reality new homes will become even more expensive. This trend is inevitable, as all input prices around us have already risen along with the inflation of recent years and continue to rise,” explains Kristjan-Thor Vähi.
One of Estonia’s largest real estate developers offers a solution: the new Tallinn city government could encourage the simplified conversion of old commercial buildings into residential ones. “At today’s prices, the price of newly converted, near-new homes of this kind should, depending on location and other details, remain somewhere around 2,500 euros per square meter,” believes the Invego CEO.
According to the developer, demand for office space has been declining in the post-pandemic period, and an oversupply is clearly emerging on the market. “The question is time – if we again begin to operate according to previous practices and the pace of detail plan amendment processes, then quite a few old office buildings may end up becoming complete ghost houses, which in turn will clearly lower the prospects of their surroundings,” emphasizes Vähi, adding also the environmental argument – giving an old building a new life instead of demolition.
Kristjan-Thor Vähi says that today similar choices are being faced in many places around the world, because urbanization continues and no massive return from home offices is visible. “The accessibility problem of residential real estate is serious in many big cities, and at the same time there is also a considerable amount of vacant office space in many places. Those cities where such office-to-residential transformations succeed painlessly will develop faster and will certainly gain an advantage in attracting new high-quality labor,” reflects Vähi.
According to Vähi, brand-new homes will remain considerably more expensive, although here too it is possible to bring price increases under control for some time. “Once again, we look to the local government – the faster all necessary processes are handled, the lower the final price for the homebuyer,” emphasizes the Invego CEO, recalling that in Latvia’s capital Riga it is mainly for this reason that a new home comparable to Tallinn’s can be purchased today at a price nearly 30% lower.
Invego is a new-generation real estate developer operating in three countries, specializing in the construction of large-scale residential districts and business quarters with comprehensive concepts that create the urban space of the future. Invego group companies in Estonia, Latvia, and Portugal currently have nearly 30 different development projects underway. Invego has developed 150,000 m² including 1,300 homes and more than 50,000 m² of commercial space, and an additional 450,000 m² of residential and commercial real estate is in development.
Among companies developing real estate in Tallinn and its surrounding areas, Invego ranks second in the number of new homes sold over the last five years, with 900 homes. The largest developments to date include the completed Vana-Peetri, Tiskreoja, and Tabasalu Kodu projects, as well as the currently ongoing Luccaranna, Uus-Järveküla, and Keila Pargikodud residential quarters.
In Latvia’s capital, Invego is developing the residential quarters Vitolu Parks and Mārupes Sirds, together with development partner Retera the projects Parka Kvartals, Skanstes Rezidences, and Miera Rezidences, as well as terraced houses in the Vide Adaži development near Riga.
In southern Portugal, the 65-hectare Silves Hills development with 154 villas is underway, suitable both for year-round living and for seasonal use.