TALLINN — On Wednesday the Estonian real estate development conglomerate Kodumaja signed three new contracts worth a total of €4.2 million to construct apartment buildings in Norway later this year, another sign that the moribund Baltic real estate development sector is resuscitating.
The contracts demand 64 apartments in two or three floor houses. Kodumaja, which specializes in the construction of houses and apartment buildings, has contracts for up to 200 million krooni (€12.8 million) for 2010, showing that investment in the [private_supervisor]Scandinavian real estate sector is blooming again despite downward capital values. The company also won a procurement in Copenhagen and once the contract will be signed then the company’s estimated turnover for 2010 will be 400 million krooni (€25.6 million).
Kodumaja focuses on buildings in Norway, Denmark, Finland and Sweden. Since its 1994 founding, only 10 percent of its projects were have been in Estonia.
However, despite its foreign market focus and the lingering economic crisis, Kodumaja has some developments planned in Estonia for this year according to Lembit Lump, chairman of Kodumaja’s management board.
“This year we modestly start building in Estonia as well,” Lump told Baltic Reports. “Building in big capacities is risky but we thought of combining the advantages of private houses and apartments.”
As a result the company now offers energy-efficient houses which are divided between four families.
“This is the direction we believe in,” said Lump.
Sector recovering…
The real estate sector remains in tough shape. According to the Estonian Unemployment Insurance Fund there are currently 11,727 former real estate sector workers unemployed, the highest of all job sectors.
However, a trickle of new work is flowing after the crisis killed off any new projects for a one-year period. Arco Vara, Merko Ehitus, Endover KVB, and YIT have already initiated projects. Banks are prepared to finance other developments, too, but the selection criteria is more strict than in the past, increasing the rate of self-financing.
Merko Ehitus is set to complete a 200-apartment development in Tallinn, 109 apartments on their own and 96 in cooperation with Arco Vara. The first will be complete by the end of this summer.
…but it’s a weak recovery
Yet the slight uptick in building sector is not strong enough to affect the overall Estonian economy according to Annika Paabut, a Swedbank analyst.
“It is positive that the building market shows some signs of recovery, but the former capacities will not be achieved,” Paabut told Baltic Reports.
Paabut said that it is hard to evaluate the overall impact to the economy as the number of offers is still quite high, which means that the demand is still weaker than the supply.
Analysts say that the consumers are still cautious and the sales are low due to high unemployment rate and low confidence into the future. Further growth is blocked by weak demand, caused by lower incomes and a cautious loan market.
Maris Lauri, a Swedbank analyst, wrote in the bank’s blog that the Estonian residential real estate market shows signs of stabilization and slow recovery, at least in the Tallinn region. However it does not mean a significant growth.
“The growth of the market will remain weak for several years, if not for the next decade, despite the strong need for new or renovated residential real estate,” wrote Lauri. “Developments in the real estate market will be uneven due to a structural disharmony between demand and supply.”
Olavi Pakkonen, head of Retail Banking in Nordea Estonia said that while there is some activity going on in the real estate market, a significant rise in the prices is not expected for another few years.
Lump is more optimistic and said that he believes that housing construction will slowly start picking up this year, although not the way it was back in 2007.
“We believe that if the price and quality is right then there will be a buyer as well,” said Lump.
Lump explained that the real estate prices in Norway already bottomed out and are where they were during the boom time, giving hope that if things are moving there then it will in Estonia, too. [/private_supervisor] [private_subscription 1 month]Scandinavian real estate sector is blooming again despite downward capital values. The company also won a procurement in Copenhagen and once the contract will be signed then the company’s estimated turnover for 2010 will be 400 million krooni (€25.6 million).
Kodumaja focuses on buildings in Norway, Denmark, Finland and Sweden. Since its 1994 founding, only 10 percent of its projects were have been in Estonia.
However, despite its foreign market focus and the lingering economic crisis, Kodumaja has some developments planned in Estonia for this year according to Lembit Lump, chairman of Kodumaja’s management board.
“This year we modestly start building in Estonia as well,” Lump told Baltic Reports. “Building in big capacities is risky but we thought of combining the advantages of private houses and apartments.”
As a result the company now offers energy-efficient houses which are divided between four families.
“This is the direction we believe in,” said Lump.
Sector recovering…
The real estate sector remains in tough shape. According to the Estonian Unemployment Insurance Fund there are currently 11,727 former real estate sector workers unemployed, the highest of all job sectors.
However, a trickle of new work is flowing after the crisis killed off any new projects for a one-year period. Arco Vara, Merko Ehitus, Endover KVB, and YIT have already initiated projects. Banks are prepared to finance other developments, too, but the selection criteria is more strict than in the past, increasing the rate of self-financing.
Merko Ehitus is set to complete a 200-apartment development in Tallinn, 109 apartments on their own and 96 in cooperation with Arco Vara. The first will be complete by the end of this summer.
…but it’s a weak recovery
Yet the slight uptick in building sector is not strong enough to affect the overall Estonian economy according to Annika Paabut, a Swedbank analyst.
“It is positive that the building market shows some signs of recovery, but the former capacities will not be achieved,” Paabut told Baltic Reports.
Paabut said that it is hard to evaluate the overall impact to the economy as the number of offers is still quite high, which means that the demand is still weaker than the supply.
Analysts say that the consumers are still cautious and the sales are low due to high unemployment rate and low confidence into the future. Further growth is blocked by weak demand, caused by lower incomes and a cautious loan market.
Maris Lauri, a Swedbank analyst, wrote in the bank’s blog that the Estonian residential real estate market shows signs of stabilization and slow recovery, at least in the Tallinn region. However it does not mean a significant growth.
“The growth of the market will remain weak for several years, if not for the next decade, despite the strong need for new or renovated residential real estate,” wrote Lauri. “Developments in the real estate market will be uneven due to a structural disharmony between demand and supply.”
Olavi Pakkonen, head of Retail Banking in Nordea Estonia said that while there is some activity going on in the real estate market, a significant rise in the prices is not expected for another few years.
Lump is more optimistic and said that he believes that housing construction will slowly start picking up this year, although not the way it was back in 2007.
“We believe that if the price and quality is right then there will be a buyer as well,” said Lump.
Lump explained that the real estate prices in Norway already bottomed out and are where they were during the boom time, giving hope that if things are moving there then it will in Estonia, too. [/private_subscription 1 month] [private_subscription 4 months]Scandinavian real estate sector is blooming again despite downward capital values. The company also won a procurement in Copenhagen and once the contract will be signed then the company’s estimated turnover for 2010 will be 400 million krooni (€25.6 million).
Kodumaja focuses on buildings in Norway, Denmark, Finland and Sweden. Since its 1994 founding, only 10 percent of its projects were have been in Estonia.
However, despite its foreign market focus and the lingering economic crisis, Kodumaja has some developments planned in Estonia for this year according to Lembit Lump, chairman of Kodumaja’s management board.
“This year we modestly start building in Estonia as well,” Lump told Baltic Reports. “Building in big capacities is risky but we thought of combining the advantages of private houses and apartments.”
As a result the company now offers energy-efficient houses which are divided between four families.
“This is the direction we believe in,” said Lump.
Sector recovering…
The real estate sector remains in tough shape. According to the Estonian Unemployment Insurance Fund there are currently 11,727 former real estate sector workers unemployed, the highest of all job sectors.
However, a trickle of new work is flowing after the crisis killed off any new projects for a one-year period. Arco Vara, Merko Ehitus, Endover KVB, and YIT have already initiated projects. Banks are prepared to finance other developments, too, but the selection criteria is more strict than in the past, increasing the rate of self-financing.
Merko Ehitus is set to complete a 200-apartment development in Tallinn, 109 apartments on their own and 96 in cooperation with Arco Vara. The first will be complete by the end of this summer.
…but it’s a weak recovery
Yet the slight uptick in building sector is not strong enough to affect the overall Estonian economy according to Annika Paabut, a Swedbank analyst.
“It is positive that the building market shows some signs of recovery, but the former capacities will not be achieved,” Paabut told Baltic Reports.
Paabut said that it is hard to evaluate the overall impact to the economy as the number of offers is still quite high, which means that the demand is still weaker than the supply.
Analysts say that the consumers are still cautious and the sales are low due to high unemployment rate and low confidence into the future. Further growth is blocked by weak demand, caused by lower incomes and a cautious loan market.
Maris Lauri, a Swedbank analyst, wrote in the bank’s blog that the Estonian residential real estate market shows signs of stabilization and slow recovery, at least in the Tallinn region. However it does not mean a significant growth.
“The growth of the market will remain weak for several years, if not for the next decade, despite the strong need for new or renovated residential real estate,” wrote Lauri. “Developments in the real estate market will be uneven due to a structural disharmony between demand and supply.”
Olavi Pakkonen, head of Retail Banking in Nordea Estonia said that while there is some activity going on in the real estate market, a significant rise in the prices is not expected for another few years.
Lump is more optimistic and said that he believes that housing construction will slowly start picking up this year, although not the way it was back in 2007.
“We believe that if the price and quality is right then there will be a buyer as well,” said Lump.
Lump explained that the real estate prices in Norway already bottomed out and are where they were during the boom time, giving hope that if things are moving there then it will in Estonia, too. [/private_subscription 4 months] [private_subscription 1 year]Scandinavian real estate sector is blooming again despite downward capital values. The company also won a procurement in Copenhagen and once the contract will be signed then the company’s estimated turnover for 2010 will be 400 million krooni (€25.6 million).
Kodumaja focuses on buildings in Norway, Denmark, Finland and Sweden. Since its 1994 founding, only 10 percent of its projects were have been in Estonia.
However, despite its foreign market focus and the lingering economic crisis, Kodumaja has some developments planned in Estonia for this year according to Lembit Lump, chairman of Kodumaja’s management board.
“This year we modestly start building in Estonia as well,” Lump told Baltic Reports. “Building in big capacities is risky but we thought of combining the advantages of private houses and apartments.”
As a result the company now offers energy-efficient houses which are divided between four families.
“This is the direction we believe in,” said Lump.
Sector recovering…
The real estate sector remains in tough shape. According to the Estonian Unemployment Insurance Fund there are currently 11,727 former real estate sector workers unemployed, the highest of all job sectors.
However, a trickle of new work is flowing after the crisis killed off any new projects for a one-year period. Arco Vara, Merko Ehitus, Endover KVB, and YIT have already initiated projects. Banks are prepared to finance other developments, too, but the selection criteria is more strict than in the past, increasing the rate of self-financing.
Merko Ehitus is set to complete a 200-apartment development in Tallinn, 109 apartments on their own and 96 in cooperation with Arco Vara. The first will be complete by the end of this summer.
…but it’s a weak recovery
Yet the slight uptick in building sector is not strong enough to affect the overall Estonian economy according to Annika Paabut, a Swedbank analyst.
“It is positive that the building market shows some signs of recovery, but the former capacities will not be achieved,” Paabut told Baltic Reports.
Paabut said that it is hard to evaluate the overall impact to the economy as the number of offers is still quite high, which means that the demand is still weaker than the supply.
Analysts say that the consumers are still cautious and the sales are low due to high unemployment rate and low confidence into the future. Further growth is blocked by weak demand, caused by lower incomes and a cautious loan market.
Maris Lauri, a Swedbank analyst, wrote in the bank’s blog that the Estonian residential real estate market shows signs of stabilization and slow recovery, at least in the Tallinn region. However it does not mean a significant growth.
“The growth of the market will remain weak for several years, if not for the next decade, despite the strong need for new or renovated residential real estate,” wrote Lauri. “Developments in the real estate market will be uneven due to a structural disharmony between demand and supply.”
Olavi Pakkonen, head of Retail Banking in Nordea Estonia said that while there is some activity going on in the real estate market, a significant rise in the prices is not expected for another few years.
Lump is more optimistic and said that he believes that housing construction will slowly start picking up this year, although not the way it was back in 2007.
“We believe that if the price and quality is right then there will be a buyer as well,” said Lump.
Lump explained that the real estate prices in Norway already bottomed out and are where they were during the boom time, giving hope that if things are moving there then it will in Estonia, too. [/private_subscription 1 year]
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