OREANDA-NEWS. August 17, 2011.Rent expectations of A-class office building owners have increased. While a year ago the asking rates started from 8.9 EUR/m?/month, the current minimum asking rent level starts from 11.0 EUR/sqm/month, reported the press-centre of Colliers International.

Larger, modern office premises continue to be in strong demand, and becoming more difficult to find. Among smaller companies premises of below 100 sqm located in suburb areas are in demand, with the advantage over CBD buildings of lower rent and free of charge parking.

Retail market
In May, retail sales slowed down, as forecasted earlier in the year by Colliers. Compared to May 2010 the retail sales (income of retail trade enterprises) increased 2% at constant prices down from April 2011, where the corresponding year on year increase was 5%. Along with construction prices growth the retail sales of household goods and appliances, hardware and building materials have started to increase, showing a y-o-y growth in retail sales by 14%. Due to a high inflation rate, consumers have become very sensitive to prices and are often taking advantage of sales prices.

Warehouse and Industrial market
Although during the summer holiday period most decisions are postponed until the autumn, the industrial market continues to be one of the most active sectors. Companies looking for new premises are operating with electronics, distribution or the industrial sector.
Together with export growth, export-oriented companies have again started to group around harbour areas, with the aim of saving on logistics costs. For example Port of Tallinn is holding negotiations with Indian investment company Platinum Corporation, who is interested in building a scrap metal processing plant at Paldiski South Harbour Industrial Park. In addition, by November there will be a new wood pellet terminal established at Paldiski South Harbour.

Hotel market
The hotel sector in Estonia has emerged from the crisis faster and better than forecasted. For example, according to the information received from the market, the average hotel occupancy in Tallinn has improved by approximately 30% and the room prices have increased up to 20-25% compared to summer 2010.

Investment market
Several larger investment deals are expected to be made during the second half of 2011 and even a few likely during the summer.

In general, investors’ mid-term confidence and outlook on rental income and rent levels is not as positive as previously expected. There have not been surprises in the investment market, thus the prime yields have more or less stabilised and it is forecasted that they will not compress significantly in the near future. Although the banks’ financing conditions have improved, the increasing Euribor rate eats up banks’ marginal decrease and makes the loan capital still quite expensive.