Only one office project was completed in Riga in 2022. The first stage of the Verde business centre with 15,000 sqm was completed and this project increased total office space (A and B class) to 658,800 sqm. Following the difficult times of the pandemic, entrepreneurs have been choosing smaller, functional and energy efficient premises, with the hybrid working environment remaining relevant. Unfortunately, the world’s geopolitical situation has created new challenges for these businesses. Rapidly increasing inflation and an increase in costs across all sectors, has made the decision to expand or relocate much more difficult.

When 2022 began with the cancellation of various measures that had limited the spread of the Covid-19 virus, many thought that after this relaxation of restrictions, the already suffering commercial space sector would finally be able to recover and only positive development of the segment could be expected. However, the extended war in Ukraine, the subsequent unpredictable energy price increases and high inflation have brought new challenges not only to the retail segment but the entire real estate industry.

In 2022 the world was rocked by war in Ukraine. It introduced major changes in all areas, including the property market. Everything remained very expensive, affecting necessities and things like entertainment. People remained cautious. Employers started reviewing the need for certain room sizes as well as overall costs. There is also a possibility that some current development projects could be delayed because of increased costs and overall uncertainty .Although the construction process remains stable, developers have become more nervous and hesitant to initiate large developments. Industrial properties are also affected by energy costs. When building new industrial parks everyone is thinking more about heating solutions so that more savings can be made. Currently and importantly, existing industrial parks are trying to switch from natural gas to LPG to ensure lower heating costs in winter.

As demand for apartments decreased in the second half of 2022, the sale prices had dropped a bit by the end of 2022. Despite this, overall apartment prices increased by 4.5% during 2022. Some vendors are rethinking, and waiting for a more active period providing they are not in a hurry to sell their home.

The land market in 2022 decreased, especially with for larger plots of land. One reason, is the significant price increases for building materials. Those clients who did choose to buy land, tried to find already started or unfinished projects, which significantly reduced construction costs. Most clients were also convinced that real estate prices would fall, which further influenced the reduced interest in land. The most requested plots of land were for the construction of a private house on a small land area, with all services established, and near to water.

Five new larger office projects and a few spaces in mixed-use buildings were completed in 2022, bringing almost 50,000 sqm of office space to the market. This is twice as much as in 2021. After completion of these projects, the total area of modern office premises grew by 4.8% to 1,095,600 sqm by the end of 2022. Completion of several projects was delayed or suspended, due to high construction costs and labour shortages.

In 2022, as in 2021, no large shopping centres were opened in Tallinn. At the end of 2022, there were 42 traditional shopping centres (including those with over 5,000 sqm of GLA and over), with a total leasable area of 678,300 sqm. Tallinn currently has 1.48 sqm of shopping centre per capita. An additional 40,000-60,000 refugees have arrived from Ukraine or other countries.

Tallinn and Harju county have a total of 1,367,600 sqm of modern warehouse space. In 2022, the industrial sector was still active and at the end of the year there was approx. 100,000 sqm under construction.

The average sqm price for an apartment in Tallinn increased 22.1% in 2022, reaching €2,970 per sqm by December 2022, which was a new record. It was a significant jump in prices when compared with the annual increase of 5% in 2020. The reasons behind these increases include overall growth in demand, lower interest rates, rising incomes, high inflation expectations/predictions and the purchase of apartments for investment purposes.

In Q4 2022, the number of residential land transactions decreased by approx. 70% compared to the same period the previous year, but the average price increased by around 50%. The average price was €60 per sqm.