What kind of demands does a new real estate market growth make on real estate quality in Estonia?. Ene Kolbre Angelika Kallakmaa-Kapsta Tallinn University of Technology. Problem. The Estonian real estate market has experienced a decline and stabilisation phase and started on a new rise
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Tallinn University of Technology
Theincrease in the number of transactions in 2009 compared to 2010 was 20%.
The median price of apartments in center district has risen to 1 300 €/m2 by 1st quarter of 2011,
which is 25% higher than the lowest average prices in 3rd quarter of 2009
In Estonian office sector Tallinn clearly dominates, described by largest stock of office space and highest market activity
During the crisis periood 2008 and 2009 there was great amount of new office space added to the market and the vacancy rate reached 30-40%
From the second half of 2008 until the end of 2009 the rent levels decreased around 35-40%
The year 2010 brought stabilization on the office market, mostly affected by positive changes in the economical situation
2011 will bring slight increase in rent levels and stabilization of vacancy rates around 10% in city center.
The vacancy level in older office buildings stays around 20%.
Development activity in office sector will not increase during coming years.
Quality grade is a complex indicator that represents a combination of factors that characterise
the income potential and value of the real estate taking into consideration that every factor has to assessed based on the principles of sustainable development and saving use and market expectations for these indicators
Income potential is evaluated on the basis of the following attributes:
location and use of the plot,
quality of construction,
real estate management
Valuation of each attributeis based on the factors that influence the respective attribute
The choice of factors influencing the attributes depends on the type of object to be valued
storage and production properties
Analytic Hierarchy Process (AHP) methodelaborated by Thomas L. Saatywasused to evaluate
the hierarchy of the factors influencing the quality grade
the changes in the hierarchy, depending on market changesorwhether the quality rating factor is evaluated from the aspect of market expectations, market value or developer
Experiencegained from the real estate boom and the followed fall of the market forced all of the market participants to re-evaluate their opinion on the real estate quality
At the beginning of new real estate market rise the weight of attributes and factors inside every attribute according to which the market participants evaluate the real estate quality has changed considerably