In 2023, several A and B class office centres were completed in Riga with a total area of 64,600 sqm. Currently, a total of 730,400 sqm of office space is available for lease in Riga, which is a very large supply of new space. Tenants are in a much stronger position with more options to choose from. As a result, new space is selected very carefully, paying particular attention to the location, energy efficiency, total cost, and importantly, sustainability.

Last year continued to test the real estate industry for durability. Many had hoped that after the various upheavals and crises of the last 4 years related to the measures to limit the spread of the Covid-19 virus, Russia’s expanded war in Ukraine, the rapidly rising energy and construction costs and the subsequent high inflation, a calmer year might finally arrive and the industry would be able to develop faster than in previous years. However, by the end of 2022, the ECB’s decision to raise bank loan interest rates to reduce high inflation did not promise anything positive for the real estate industry in 2023.

Several new projects with a total warehousing area of around 150,000 sqm were completed in Riga and its surroundings during 2023. These new projects increased the total leasable area of modern warehousing premises by 14% to 1,240,000 sqm.
As heating and utility expenses reached new heights in 2023, businesses continued to calculate their required space and maintenance costs. Although the construction process is still stable, everyone is thinking more about heating solutions and trying to switch from natural gas to LPG to ensure lower heating costs in winter, something that is still very important. The 2022 trend for renting industrial facilities remained – for tenants it was more profitable to rent new premises for a higher fee, but with lower utility payments, than space in old buildings for lower rents, but with higher utility payments.

Apartment prices in Riga decreased by 1.2% in 2023, after an increase of 4.5% in 2022. The main factor contributing to the overall price reduction was the slight downturn in prices for typical older apartments in residential districts. Prices for apartments in Soviet-era buildings decreased by almost 6% and typically ranged from €900 to €1,100 per sqm by the end of 2023. Meanwhile, prices for apartments in higher quality buildings and better locations slightly increased during 2023.

In 2023 the transaction volume of individual residential land plots in Riga city decreased by one third. One reason, is the ongoing price increases for construction materials and making it more difficult to predict the total costs of construction projects. Another reason is the rise in the Euribor rate.
Land offers on the market have increased. Buyers are waiting and watching to see what will happen with the real estate market and the interest rates. The owners are in no hurry to reduce prices, because keeping the land does not require them to spend a great deal and they are waiting for the market to recover. Currently, transactions usually take place with land plots where the owner has an urgent need to sell and is ready to reduce the selling price.

Four new office buildings were completed in 2023, bringing nearly 29,000 sqm of office space to the market. This is almost twice less than in 2022. After the completion of these projects, the total area of modern office space had increased by 2.7% to 1,124,900 sqm by the end of 2023. The completion of several projects was delayed or halted due to the economic recession, high construction costs and reduced demand.

In 2023, as in the period 2021-2022, no larger traditional type shopping centres were opened in Tallinn. At the end of 2023, there were 42 traditional shopping centres (including those with 5,000 sqm of GLA and over), with a total leasable area of 678,300 sqm. Based on official population figures, Tallinn currently has 1.47 sqm of shopping centre area per capita. In addition, Tallinn is home to an undisclosed number of foreigners and refugees and its shopping centres frequently attract residents from neighbouring municipalities.

In 2023, 90,000 sqm of new warehouse space was completed in Tallinn and Harju County providing modern warehouse space of 1,457,000 sqm by the end of that year. And another 110,000 sqm is under construction.

The average price per square metre of an apartment in Tallinn increased by 3.8% in 2023, reaching new heights, with an average price of €3,084 by the end of the year. Compared to previous years, the price increase had slowed down significantly. The reason for the increase were the new apartments transactions, the construction of which had already started in 2022, rising incomes, and high inflation expectations/forecasts.

In Tallinn and Harju County, the number of residential land transactions in 2023 decreased by 15% and the financial volume decreased by 23%. Nevertheless, the average price per plot increased by approx. 19% in 2023 and the average price of residential land in Tallinn was €290 sqm (median price €180 sqm). The price per square metre of a land plot is significantly influenced by its construction rights and size.