What kind of demands does a new real estate market growth make on real estate quality in estonia
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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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What kind of demands does a new real estate market growth make on real estate quality in estonia

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
Problem make on real estate quality in Estonia?

  • The Estonian real estate market has experienced a decline and stabilisation phase and started on a new rise

  • In the real estate market decline phase it was discovered that the prices of low quality objects have fallen the most


Th e aim of the paper
Th make on real estate quality in Estonia?e aim of the paper

  • To investigate the opinions of market participants about the real estate quality and make a hierarchy of quality indicators under the new real estate market rise.

  • The object of analysis is the housing and office market.


Purchase sale contracts of apartment ownership
Purchase-sale make on real estate quality in Estonia?contractsofapartmentownership


Housing market
Housing make on real estate quality in Estonia? market

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


Housing market1
Housing market make on real estate quality in Estonia?

  • Thecurrentsituationinhousing market ischaracterizedbya relativelystable number oftransactions.

  • Thesupplyexceedsthedemandand offerpricesvarywidely

  • Still are unsold or not rented out low quality appartments which were buitat the end ofboom period

  • Thepriceshavecleardifferentiationbased on thequality


A and b grade office space indicators in tallinn 200 7 2011
A- make on real estate quality in Estonia?and B-grade office space indicators in Tallinn 2007-2011


Office market
Office market make on real estate quality in Estonia?

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%


Office market1
Office market make on real estate quality in Estonia?

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


Office market2
Office market make on real estate quality in Estonia?

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.


T he basis of the quality rating system
T make on real estate quality in Estonia?he basis of the quality rating system

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


T he basis of the quality rating system1
T make on real estate quality in Estonia?he basis of the quality rating system

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


T he basis of the quality rating system2
T make on real estate quality in Estonia?he basis of the quality rating system

The choice of factors influencing the attributes depends on the type of object to be valued

residential,

office,

commercial,

storage and production properties


Methods
Methods make on real estate quality in Estonia?

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


Weightings of factors influencing the quality rating on the basis of location and plot office space
Weightings make on real estate quality in Estonia?offactorsinfluencingthequalityrating on thebasisoflocation and plot.Office space


Weightings of factors influencing the quality rating on the basis of location and plot living space
Weightings make on real estate quality in Estonia?offactorsinfluencingthequalityrating on thebasisoflocation and plot.Livingspace


Weightings of factors influencing the quality grade on the basis of construction quality Office space


Weightings of factors influencing the quality rating on the basis of construction quality Living space


Weightings of factors influencing the quality grade on the basis of real estate management Office space


Weightings of factors influencing the quality rating on the basis of real estate management Living space




Conclusions
Conclusions quality rating

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


Changes in the attributes that characterise the real estate quality are similar to living and office spaces

  • Weight of location and plot has considerably decreased

  • Weight of the construction quality as well as real estate management has risen

  • Changes listed above are valued similarly by tenants, real estate valuers and investors/ developers


Biggest changes have taken place in the factors which influence the quality rating based on real estate management

  • More attention is now paid to the following factors:

  • Office space: rental rate and use/non-use of electricity saving measures as a result of which energy expenses are lower

  • Living space: utility service cost and energy consumption of the building


Thank You influence the quality rating based on real estate management

[email protected]

[email protected]


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