According to Jaanus Laugus, head of Uus Maa, the largest real estate agency in Estonia, the demand this spring for land and plots rose to the highest level of the last decade and a 10-20% price increase is expected by summer.
The investment into real estate is a clearly noticeable trend against the backdrop of growing inflation, confirmed Jaanus Laugus. “The most popular asset class for investments to date has been rental apartments that, against the backdrop of increased sales prices, has levelled off but surging as a new direction is the buying of land”, said Laugus.
“The demand for plots, as well as land, has not been so visible for many years and properties are being sought by ordinary people, as well as developers. Everything is being purchased – forest, fields and building plots. Even such sites that until now showed no movement and that for example have some interfering restrictions”, added Laugus.
People according to Jaanus Laugus, usually purchase plots without a loan, using their own funds. “There is no big plan, purchases are simply made as a reserve for oneself and the family. There are many reasons: Firstly to protect free funds from inflation; secondly there is consideration in light of the increasing food prices that there could be garden beds again somewhere. The direct fear of war has left the market, but some Estonians conservatively consider that if the threat should increase again, then there is some place to shelter oneself, away from the city – historically the best shelter of Estonians has been the forest”, said Laugus.
“It must be taken into consideration when buying an empty plot or land that, differently from an apartment, it is a longer term and less liquid investment. Nor does it provide monthly rental revenue. Previous crises have shown that in the case of a market downturn, it is precisely the price of land that is hit hardest and turning it into cash will then be difficult. Land prices in the long term have still always been increasing”, added Laugus.
The most noticeable interest, according to the head of Uus Maa Real Estate, is in the vicinity of larger drawing centres, as well as for the land of Harju County. “Ordinary people are mainly searching for lower priced plots. Records are however being broken among the very expensive transactions too – recently for example a plot was sold for 1.5 million in Viimsi”, said Laugus.
“Real estate developers, alongside ordinary people, are also searching and buying up plots. The developers sense that the shortage of building materials will cause a standstill for a year or two, but then life will be shaken back to normal, so there is a desire to approach the new wave of growth, with already prepared development plans”, commented Laugus.
“The third very active interest group consists of large companies that manage forests and agricultural land that see when the raw material markets of Russia, Ukraine and Belarus drop out, the value of local production will increase as will the price of land. The local timber, grains and agricultural economies will certainly gain momentum, and all of this will require land”, added Laugus.