Estonian Property News - updated weekly

10.01.05 - Foreign Direct Investment falls to 7 billion EEK in 2004 but estimated to increase to 10 billion by 2006

There have been fewer foreign direct investments (FDI) pouring into Estonia in 2004, recently announced by an executive of Enterprise Estonia.

Mrt Kivine, press spokesper of Enterprise Estonia, said that while in 2003 Estonia received EEK 8 billion in foreign investments, the figure last year totalled 7 billion.

"However, this is preliminary estimation," said the official, saying that final figures will be released at the end of January.

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10.01.05 - Tallinn airport passenger numbers up 40% on 2003.

Tallinn Airport served approximately 1 million passengers in 2004 which is the point that defines airports of local importance with international ones.

The airport registered 997,475 passengers last year which is 40 percent more than in 2003.
During the year, there were 26,501 flights which is 4.8 percent more than a year ago.

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10.01.05 - Estonia is in first place among the Baltic states in terms of foreign direct investments

According to banks in Lithuania, Latvia and Estonia estimate that the flow of FDIs in Estonia in nine months last year came to USD 646 million. The same figure in Latvia and Lithuania was USD 474.06 million and USD 618.2 million, respectively.

During the entire period of the Baltic states' independence until September 30 last year, FDIs totaled USD 5.343 billion in Lithuania, USD 4.022 billion in Latvia and USD 7.474 billion in Estonia, the Lithuanian Finance Ministry said.

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12.01.05 - Estonia ranked no.4 in Economic Freedom Index

An assessment of 155 countries of the world in terms of market freedom has showed that Estonia's business environment improved in 2004 from 6th position to 4th position behind Hong Kong, Singapore and Luxembourg, making it the best Eastern European performer.

In comparison to the other Baltic countries, Lithuania and Latvia were 23rd and 28th respectively.
For more information see http://www.heritage.org/research/features/index/country.cfm?id=Estonia.

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13.01.05 - House prices expected to grow by 15% in 2005

Monica Meldo from Rime Kinnisvara real estate agency, says that due to high demand, sale of centrally located apartments in central Tallinn could go up by about 15 percent in 2005.

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19.01.05 - Pirita Yachting Centre in Tallinn propases to build 64 million waterpark comparable to famous Serena

According to chairman Ahto Altje, the waterpark would be the biggest in the Baltic Sea region, having around 20,000 square metres of floor space which is twice more than the famous Serena waterpark in Finland.

When the complex is completed, Pirita could become the most attractive leisure and entertainment centre in Tallinn providing several water sports and leisure facilities. In addition, a hotel with 300 beds would also be built.

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21.01.05 - 2004 Construction price index increases by 6.5% compared to 2003.

The change in the construction price index in the 4th quarter of 2004 compared to the 3rd quarter was mainly influenced by the increase in the labour costs and cost of materials. The average annual increase in the index was first of all influenced by the rise in the labour costs.

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21.01.05 - A record year for apartment developers

2004 was the strongest year ever for property developers who sold the most number of new apartments recorded.
Aripev reports that, during 2004, a total of 2,700 new apartments were sold, about 1,000 apartment more than in 2003.

Real estate experts said in particular, the Spruse boulevard apartment building, developers had a waiting line for buyers since there were three interested buyers for each apartment.

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23.01.05 - Tourism rockets by 35% in Tallinn

"There has been more tourists from Russia, Scandinavian and Southern Europe, said Kairi Teniste who is responsible for the tourism industry in Tallinn.

Teniste added that growth is significant not only in tourist numbers, but also in their spending in Tallinn. In 2003 foreign visitors spent on average EEK 1,602 a day in Tallinn, the figure in 2004 was 2,500EEK.
In the first eight months, 638,625 foreign tourists stayed in Tallinn hotels and other accommodation facilities.
This is approximately 35 percent more than 2003 and makes Tallinn one of the fastest-growing capitals in Europe in number of foreign tourists.

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23.01.05 - Forecast for 2005

2005 will continue to see apartment price rises, with the most significant increases likely to be seen in new developments in the Tallinn city centre. Price rises are expected to be approximately 12%. "The fundamentals are all in place to ensure a continued demand for property in Tallinn." says Darren Goodson, co-founder of tallinnapartments.co.uk. "Interest rates are at an all-time low, employment is increasing, demand is greater than supply and economic growth is strong. Membership of the European Union will also increase Tallinn's exposure to Western Europe, in addition, new foreign investment will come and tourism will inevitably increase. With an increase in European countries already undertaking business in Estonia, there will be a significant and sustained requirement for quality apartments in central Tallinn."

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24.01.05 - Danish Tivoli International has submitted to Tallinn city governments plans for a €64 million amusement park.

Tivoli International, the Danish amusement park operator that operates the famous Tivoli amusement park in Copenhagen, is seeking 6 hectares of land in the middle of Tallinn for its amusement park.

The project could cost as much as EEK 1 billion (about 64 million euros) and would become a key tourism magnet for the city. According to Teniste, the earliest that the amusement park could open doors in Tallinn is 2007.
So far Tivoli has built two such entertainment centres, one in Denmark and the other in Japan.

Organizers hope to attract to the Tallinn Tivoli around two million visitors a year in which Finnish tourists play an important role. It would also be a boost for local tourism industry, say tourism experts.

Erik Sakkov, marketing manager of Port of Tallinn, said that Tallinn needs another magnet in addition to its Old Town. Attractions such as the amusement park which is being planned by Danish Tivoli International could make Tallinn the leading port for cruise tourists who would not stay here for a few hours, but a few days, said Sakkov.

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24.01.05 - Estonias economy is expected to grow 6.5 percent in 2005

Researchers of the Estonian institute of market research EKI said at a press conference that if the current economic boom continues, the Estonian economy may grow 6.5 percent in 2005. Estonian central bank has forecasted economic growth between 5.6 and 6.1 percent.

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27.01.05 - Estonia is ranked 6th wealthiest of developing countries

Estonia ranks sixth in a national wealth rating of developing countries compiled by the World Paper and Money Matters Institute.

Slovenia topped the 2004 rating followed by Israel, South Korea, the Czech Republic, Taiwan, Estonia, Hungary, the Slovak Republic, Lithuania, and Latvia, in that order. Seven of the top 10 nations were East European countries.
The Wealth of Nations Triangle Index has been issued annually since 1996. It measures the balanced development potential of 70 developing countries around the world in terms of three sub-indices - economic environment, social environment and information exchanges.

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28.02.05 - New airlines fly to Tallinn in 2005

The following airlines have announced their intention to add Tallinn to their list of destinations; City Airline, KLM and FlyNordic. These new routes will link Tallinn with Gothenburg, Amsterdam, Stockholm, Copenhagen, Milan and Manchester.

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05.03.05 - Singapore's Raffles Holdings unit to open Swissotel in Tallinn

Raffles Holdings Ltd announced its unit Osauhing Evans Kinnisvara has signed a deal to operate a new hotel development in Tallinn.

The deal has been signed with Tornimae Hotel and the hotel will open in early 2007.

The 239-room, 28-story hotel will be called Swissotel Tallinn Estonia.

It will increase the Raffles presence overseas to 39 hotels and resorts in 34 destinations in 20 countries.

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15.03.05 - Home loan rates down to 2.2%

Estonian banks continue to rates to new customers of housing loans. Hansabank has announced that it will lower its interest rate to 2.2 percent a year. In addition, some banks are willing to pay for costs of attracting a customer over from another bank.

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22.03.05 - KLM begins flights to Tallinn

Dutch aviation company KLM Royal Dutch Airlines will launch Tallinn-Amsterdam regular flights beginning March 27.

KLM will fly the route every day and will compete directly with Estonia’s national airline Estonian Air who also operates direct flights to Amsterdam.

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22.03.05 - Estonia to invest €15 million in R&D

The Estonian state will provide €15 million over the next two years to support the infrastructure of research and development in the country.

R&D institutions can apply for the state's aid to develop their buildings, labs, equipment, software, databases and other technical support structures.

"Estonia's R&D development system must become internationally attractive and yield results," says Ahti Kuningas, the chancellor for economic development at the Estonian economy and communications ministry. "Universities and science establishments should become partners of companies in their innovation activities."
In addition to this, in 2006 the state plans to issue an extra €11 million as support to the project but after it will be financed by EU structural funds between 2007-2013.

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23.03.05 - Estonia to receive €5.1 billion of EU funding between 2007-13

Estonia will have to decide this summer on how to spend over €5 billion of EU funds between 2007-2013.
Finance minister Taavi Veskimägi said that the support funds will be first reflected in Estonia’s 2007-2010 budget strategy that the finance ministry will compile by next spring, and will decide upon 3-4 priority areas will have to be decided. Veskimägi said that first, Estonia must follow European Commission’s directions that determine the use for the money.

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4.04.05 - Estonia one of the most competitive countries in the world 2005

The recent adhesion to the European Union is expected to enhance Estonia’s competitiveness, by Estonian exports access to the European market, promoting even more FDI in the country and endorsing Estonia’s prudent macroeconomic approach. Estonia has been leading the central and eastern European countries in the World Economic Forum’s competitiveness indexes for the past few years. The recently released Global Information Technology Report 2004-2005 and its NRI rank Estonia at the 25th position overall out of the 104 countries covered, continuing to show the way on ICT penetration and usage to the rest of the region.

Estonia positioned itself at number 20, up from number 22 the previous year, in the 2004 GCI. In addition, Estonia has consistently improved its rankings in the GCI over the last four years -from number 29 in 2001 up to number 20 in 2004, an encouraging trend for the country’s economic growth prospects.

Latvia and Poland lost 21 and 25 positions respectively (from position 35 to 56 and from position 47 to 72 respectively) from 2003 to 2004. Some of these setbacks are explained by the impressive progress made by other countries –particularly in Asia- who have continued to move up the NRI rankings.

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5.04.05 - Tallinn Airport passenger numbers up 40 percent this year than a year ago

In March, there were 104,903 passengers which is approximately 30,000 more than last year. The growth came mainly from the 23 percent increase in the number of flights which now stands at 2,598.

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07.04.05 - Tallinn no.1 in terms of tourist accommodation

In terms of the number of tourists staying at hotel accommodation in Tallinn, Stockholm, Helsinki and Riga, Tallinn takes the no.1 position.

Last year hotels in Tallinn served 957,000 foreign tourists, compared to 899,000 in Stockholm, 767,000 in Helsinki and 620,000 in Riga.

The number of foreign visitors of Tallinn also increased 31 percent in a year.
In comparison in the rest of Europe the number of foreign tourists grew on average by four percent and in the world by 10 percent.

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09.04.05 - Tallinn and Helsinki could be merged to become Talsinki under proposed plans

Talsinki is the name proposed under the visionary project of the Tallinn Vision Conference to merge the two capitals Tallinn and Helsinki into one city and rename it Talsinki. In one scenario, the two cities could have a single city government in ten years and one city council in 20 years. A plan to develop Tallinn until 2025, approved by the city authorities, proposes for the merger of the two capitals. Such entities already exist and one of them is a merger between Danish Copenhagen and Swedish Malme.

A more efficient transport system is planned to facilitate the implementation of this plan. Estonian experts have proposed linking the two cities, located 80 kilometers from one another, with an underwater tunnel as apposed to the current ferry line.

The plan is not new, but is highly expensive and unlikely to be feasible in the near future. But interest in it may increase sharply in about ten years, following the European Union's enlargement. A survey published in February by real estate group Jones Lang LaSalle claims that the twin town of Tallinn and Helsinki could be among the world’s top 24 best-performing cities. Helsinki has 900,000 inhabitants and 32,000 USD per person in GDP. It is the world’s leading technology centre with world-class infrastructure and next to Russia and Baltic states. Tallinn has 400,000 inhabitants and 12,600 USD per person in GDP. It is expected to rapidly become an integral part of the Nordic technology network with high technical education and good business climate.

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12.04.05 - Hunders of millions of Kroons to be invested into Baltic real estate

It is reported that, Finnish and Swedish private investors are planning to invest hundreds of millions of kroons in the Baltic real estate market including Estonia, through Evli Property Investments (EPI). Total assets managed by EPI Baltic I are between EEK 1.6 and 2.3 biliion.

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28.04.05 - Estonian economy set to grow by 6% a year until 2010, says Estonian Prime Minister

Estonian prime minister Andrus Ansip stated in an interview to Bloomberg that the Estonian economy could grow by about 6 percent a year until 2010. Ansip mentioned that such growth would come from lower taxes and increase of foreign direct investments.

"Estonia is getting lots of foreign investments that are key to our economic development," said Ansip.
Toomas Reisenbuk, head of investments of Trigon Capital, said that Estonia's biggest economic risk is the increase in growth of household debts that is now driving Estonian economic growth.

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12.05.05 - Estonia climb two places in IMD competitiveness index

Estonia is up 2 places this year at 26th place in the 2005 competitive index published by the Management Development Institute IMD yesterday. The IMD look at 300 different indicators on the country’s economic situation, government efficiency, business climate and public infrastructure.

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13.05.05 - Tallinn ranked no.1 city in the world by Jones Lang Lasalle

A survey by Jones Lang LaSalle puts Tallinn first among 24 towns in the world with the best potential for development.

The survey praises Tallinn for its technological development, but criticises it for lack of living quality, environmental quality. Tallinn was included in the category of Rising Technology.

“Tallinn in Estonia is rapidly becoming part of the Nordic technology cluster and has strong links with both Helsinki and Stockholm. It is also developing as an important tourist location. Tallinn is a small city and the supply of high quality real estate is currently limited, but substantial land is available for development. International developers and investors have so far focused on retail, but there are likely to be growing opportunities in logistics, “ wrote the authors of the study.

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23.05.05 - Apartment prices in central Tallinn have skyrocketed by 15 percent in just 4 months

Estonia scores rather well in all the components of the GCI, presenting sound macroeconomic fundamentals (ranked10th out of 104 countries), well developed public institutions and a notable technological readiness –also confirmed by Estonia’s performance in the NRI-. With regards to macroeconomic stability, Estonia has been experiencing very low inflation, a government budget surplus in 2003 (when most of the world's countries were in deficit), and increasing ease of access to credit for business development. Such factors provide an atmosphere in which both local and international businesses feel confident about making investment decisions and promote foreign direct investment (FDI) in the country. It must be pointed out that Estonia has been one of main destinations of FDI among the central and eastern European countries, thanks to its comparative advantages: a stable macroeconomic environment, excellent human rights as well as developed infrastructure and public institutions. Its privileged geographical position and closer links with the West have also helped. FDI has been and is a very important source of technology into the country –Estonia ranks 16th in the Technology Transfer Subindex.

In terms of overall ICT penetration and usage, Estonia does quite well in all three of the NRI’s subindexes, relatively better in the environment and usage components (21st and 22nd respectively) than in the readiness component (27th). Noteworthy are the political and regulatory environment provided by Estonia to ICT -for which Estonia positions itself at position 16 overall-, the individual and government readiness to benefit of ICTs –for which Estonia ranks 23rd – and the government usage of ICT –for which Estonia ranks an impressive 9th overall

That reflects the success of the government’s strategy of prioritising the adoption of ICT as a prerequisite for the economy’s modernization and growth: in fact, Estonia scores 14th in Government Prioritization of ICT, 6th in Government Success in ICT promotion and 16th in Government Online Services. The new technologies are increasing productivity in the country and thus Estonia's potential for growth

Hindrek Leppsalu, managing director of Ober Haus Kinnisvara, says due to huge demand and little supply, the price of apartments in central Tallinn have increased between 10 to 15 percent so far this year. Real estate experts say that since their forecast for the whole of 2005 was a rise of 15 percent they are now forced to re-adjust their forecast.

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03.05.05 - Enterprise Estonia focuses on Japanese tourists to Estonia

Enterprise Estonia is on the verge of signing a cooperation agreement with the Japanese Travel Bureau which is Japan’s largest travel company. The aim is to increase the number of incoming Japanese tourists in Estonia, which will mainly mean Tallinn. Last year there were 7,000 Japanese tourists in Estonia, this year that number should double.

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03.03.05 - Estonia's mobile penetration rate up to 95 percent

The percentage of mobile telephone users in Estonia's population climbed to 94.7 percent in Q1 2005.
This is compared with 93.2 per cent at the end of 2004 (source: Communications Board)
Rivo Mets, Head of Department at the Communications Board, said "mobile penetration is expected to rise to 100 per cent by the end of this year or in early 2006".

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13.06.05 - UK's largest property company joins the Baltic property rush

Grainger Trust, the UK's largest quoted residential property company, is joining the rush of western investment into eastern Europe, including Estonia, Latvia and Lithuania. It has set up joint ventures to develop homes in the Baltic states with two local companies and plans to spend EUR 50m on projects. estonia

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16.06.05 - Half of Finnish companies consider Estonia the No. 1 market in Baltics

A survey carried out by the Finnish central chamber of commerce reveals over half of Finnish companies consider Estonia No. 1 market in Baltics. Estonia was followed by Latvia and Poland while Lithuania was considered least interesting.

As for Latvia, Finnish companies criticised low language skills, price level and business culture.

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16.06.05 - Accommodated tourism up 18 percent in April

In April 88,000 tourists used the services of accommodation establishments of Tallinn. Which is 18 pcnt more than in the same period of the previous year. Most clients in the accommodation establishments of Tallinn were foreign tourists, 71 pcnt of them were on holiday trip, 25 pcnt on business trip and 4 pcnt visited Tallinn for some other reason.

In April more than 145,000 tourists stayed in accommodation establishments of Estonia. A little more than a fourth of tourists were residents of Estonia, 47 pcnt came from Finland and 27 pcnt from other foreign countries.
The average length of stay in an accommodation establishment was 2 nights.

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20.06.05 - DHL considers Estonia as its transit centre for express mail to Russia

Bill A. Blomquist, Nordic area manager of DHL Express, said in Tallinn last week that DHL plans to double its business in the Baltic region and re-locate the handling centre for express mail to Russia from Finland to Estonia. “We want to be the biggest operator in the Baltic transport and logistics industry,” said Blomquist.

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20.06.05 - Estonia came fourth in a new EuroHealth Consumer Index

Estonia followed Holland, Switzerland and Germany and shared the fourth place with Belgium and Sweden with 40 points out of 60. Estonia came out ahead of France, Spain, UK, Hungary, Italy and Poland.

The survey ranked countries according to their performance in patients’ rights, waiting times for treatment, treatment outcomes, customer friendliness and pharmaceuticals.

“The three eastern European EU member states – Poland, Hungary and Estonia – are doing surprisingly well, considering their much smaller healthcare spend as a ratio of GDP. However, readjusting from planned to consumer-driven economies does take time. Estonia, being the smallest ship to turn around, seems to lead this subgroup,” the report said.

The report also said, “It takes more than a dozen years to change a top-down planned economy to become a customer-driven one. Estonia, its population of 1½ million people, seems to be catching up faster than bigger nations. Good on infections and efficient financial administration of pharmaceuticals.”

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22.06.05 - Half of Finnish companies vote Estonia the No. 1 market in Baltics

A recent survey carried out by the Finnish central chamber of commerce reveals that over half of Finnish companies consider Estonia No. 1 market in Baltics.

Of 280 companies interviewed, 57 percent of respondents said that Estonia was their most important partner in the Baltic states. Estonia was followed by Latvia and Poland while Lithuania was considered least interesting. Of the respondents, a third said that they had invested in Estonia during the last year.

As for Latvia, Finnish companies criticised low language skills, price level and business culture.

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22.06.05 - In April 75% of foreign tourists using accommodation services stayed in Tallinn

In April 88,000 tourists used the services of accommodation establishments of Tallinn. It is 18 pcnt more than in the same period of the previous year. Most clients in the accommodation establishments of Tallinn were foreign tourists, 71 pcnt of them were on holiday trip, 25 pcnt on business trip and 4 pcnt visited Tallinn for some other reason.

In April more than 145,000 tourists stayed in accommodation establishments of Estonia. A little more than a fourth of tourists were residents of Estonia, 47 pcnt came from Finland and 27 pcnt from other foreign countries.

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11.07.05 - Estonia No. 1 in Baltics in terms of foreign investment

Last year Estonia got EEK 800 million from foreign investors, Lithuania got EEK 700 million and Latvia EEK 600 million.

EU gave Estonia, Latvia and Lithuania EEK 2 million each.

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26.07.05 - Estonia's debt ratings outlook was revised upwards from stable to positive last week by Standard & Poor

S&P said it revised its outlook on Estonia to positive from stable due to a better-than-expected macroeconomic performance and the prospect of EMU entry by 2008.

"Estonia benefits from a strong track record in fiscal control, a competitive economy, and the prospect of adopting the euro," said S&P credit analyst Eileen Zhang.

"The ratings on Estonia could rise further if it continues to lower its inflation rate and maintain strong fiscal performance, thereby facilitating a smooth transition to the euro in the near term," said Zhang.
"Moreover, the creditworthiness of the sovereign would improve in the medium term if it sustains its highly competitive economy and achieves rapid real convergence with peers," she said.

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09.08.05 - Situation on Tallinn apartment market is hysteric say developers

Because of continued demand for new apartments in Tallinn the price of newl build residential developments has gone up sharply recently.

Today Äripäev reports that while apartments with non-central location cost around EEK 17,000 a square metre few months ago, the price of such apartments are now well over 20,000 kroons per square metre.
One of the largest developers, Arco Vara plans to start development of an estate of residential housing of 405 apartments near Stroomi beach and is asking up to EEK 1.7 million for three-room apartments. This is as much as new private houses or row house apartments cost near Tallinn only some time ago.
Price of apartments near city centre and in the picturesque quiet Kadriorg district are now around EEK 30,000 per square metre.

Most real estate developers say that prices are being driven up by central locations where demand is simply outperforming supply.

"The market is slightly overheated," said Alvar Ild, chairman of SRV Kinnisvara, a Finnish-owned real estate developer. Ild said that since construction capacity was not growing the increased demand would push up prices even further.
Andres Aavik from Skanska EMV's real estate development unit said that while construction costs have gone up by around 10 percent in the last couple of years, the price of apartments has almost doubled. According to Ild, the situation on the Tallinn apartment is hysteric and that prices are being driven up by speculators who book and yet-unbuilt apartments hoping to make a profit by selling them after they are completed.

One reason why the price of apartments has gone up so sharply in the last year is the fact that real estate transactions that were made after May 2004 are now subject to 18 percent VAT.

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11.08.05 - Estonia No.1 in Baltics in terms of FDI

Latvia received EUR 174 million in FDI during in Q1, while FDI inflow in Lithuania was EUR 164 million and in Estonia EUR 886 million, recently stated by the Central Statistical Bureau.
The FDI inflow in Latvia increased 43.8 percent, while in Estonia it increased 400% and in Lithuania decreased by 21.2 percent year-on-year.
The FDI inflow in Latvia in the first quarter accounted for 6.3 percent of GDP, up from 5.1 percent a year earlier.
The figure for Estonia was 38.2 percent, up from 10.3 percent, and for Lithuania 3.9 percent, down from 5.4 percent.

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12.08.05 - Profit potential - Top-end apartments prices 50% cheaper in Tallinn and Vilnius than in Riga

Estate agency Vestabalt of Riga reports apartment prices in other Baltic capitals, Tallinn and Vilnius, are nearly a half of the Riga prices for the top-end apartments.

For example, the average price for apartments in Old Town of Vilnius were EUR 2300 per square meter, and in the Old Town of Tallinn EUR 2600 per square meter at the beginning of 2005. At present the price for one square metre in apartments in Riga Old Town it is about EUR 5000 per square meter. Outside of the Old Town Riga per square meter prices are around EUR 3000. Tallinn city centre prices are around 1900 per square meter, reports Darren Goodson of TallinnProperty.com. the UK based property consultant.

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08.09.05 - Tallinn's real estate market to keep growing for at least 10 years - published in Äripäev today

Investment adviser Darren Goodson says that the ongoing boom on the Tallinn real estate market will continue for at least the next 10-20 years. “Maybe not at the same pace but it will certainly continue to increase,” writes Goodson.

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27.09.05 - More than 40 percent of older Finns dream of retirement abroad, possibly Estonia

A recent survey made in Finland reveals that the dream of living at least part of the year abroad is planned by Finns aged between 50 to 59 years. However, only 15 pcnt of them actually intend to move abroad once they are retired.
According to experts, one possible destination for retired Finns is Estonia because of its proximity to Finland and considerably cheaper living costs including real estate.

"Even though the number of actual emigrants is lower than those who are just dreaming, the fact is that over 100,000 ageing Finns might move abroad and live there at least part of the year in the course of the next 10 to 15 years", says Business Unit Director Juhani Pehkonen of TNS Gallup Oy.

The survey commissioned by Valitut Palat (the Finnish edition of Reader's Digest) and conducted by TNS Gallup in June, was published on Monday.

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13.10.05 - Estonia's GDP forecasted to grow by 8 percent in 2005 and 6.5 percent in 2006

The Bank of Estonia announced that Estonia's GDP is expected to grow by 8 and 6.5 percent for the years 2005 and 2006 respectively.

The BOE revised its forecast due to faster than expected growth in the economy which has been driven by a significant increase in export volumes as well as higher domestic demand.

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14.10.05 - Tallinn's tourism numbers continue to skyrocket

The port of Tallinn received 20.1 percent more cruise passengers between Jan-Aug 2005 compared to the same period in 2004. In total there were 220,600 passengers. Tallinn airport received 45.5 percent more passenger numbers during the same period reaching 916,314. Tallinn airport is expecting to reach around 1.4 million passengers for 2005, a 40 percent increase on last year.

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19.10.05 - Estonia holds 1st position of the new EU member countries in Annual Corruption Perception Index (CPI) 2005

The index compiled by Transparency International, which tracks 159 countries, announced today that Estonia was leading the way in combating corruption. Estonia was 27th, Lithuania was 44th and Latvia was 51st.
EU policy officer Rune Rasmussen from the Transparency International office in Brussels, says "During the accession period, any signs of wide-spread corruption can reverse the process, but as soon as it is over, the external pressure is gone", he also points out that not only Poland scores poorly year after year, but also Greece, which sits in 47th position, and Italy lands in at 40th position in the world.

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18.11.05 - Estonia's 2005 GDP up 8.4 pct and 7.2 pct in 2006 - European Commission

European Commission expects the Estonian economy to grow by 8.4 pct this year and 7.2 pct next year, according to its autumn forecast.

Latvia's GDP is estimated to grow 9.1 pct this year and 7.7 pct in 2006. Inflation in Latvia is forecast at 6.8 pct and 6.0 pct respectively.

The Estonian Finance Ministry meanwhile has projected a GDP growth of 6.5 pct in 2005 and 6.6 pct growth in 2006 while the Bank of Estonia has forecast an 8 pct growth rate this year and 6.5 pct the next.
The EC estimates inflation in Estonia to be at 4.1 pct this year and 3.3 pct in 2006.
The EC forecast indicates slower but still robust growth for Lithuania. GDP growth rate is expected to drop from this year’s 7 pct to 6.2 pct and 5.8 pct in 2006 and 2007 respectively.

In 2006, inflation is projected to edge up 2.8 pct and 2.9 pct in the coming two years.

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19.11.05 - Boom in the real estate market continues

In the 3rd quarter 33 percent more real estate contracts were notarised than in the same period of the previous year. 53 percent of contracts were notarised in Tallinn which accounted for 80% of the total value of all contracts in Estonia. Source : Statistical Office

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24.11.05 - Estonia’s power to pull in foreign investments grows: Financial Times

Estonia’s inward investment, most of it from Sweden and Finland, is higher than that of any other European country when measured against the size of the population, whose radical tax system is helping fuel an economic boom that rivals growth in Asia’s tiger economies.

The inflows helped fuel economic growth of 8.6 pct in the first half of this year, an achievement that is prompting calls in neighbouring Finland for the government to follow Estonia’s example of decisive economic liberalisation.
Finland is keenly affected by developments in Estonia because of the countries’ close trading links and geographical proximity. The distance between the capitals is just 80km and commuting between the two is growing increasingly easy. Attracted by Estonia’s lower and simpler taxes, Finnish businesses and individuals are moving to Estonia in increasing numbers, taking jobs and tax revenues with them.

Mr Helenius sums up the challenge facing Finland’s high-tax social model: ‘Why remain based in Helsinki if you can move operations to Tallinn, from where your client base can be served just as efficiently but in a much more cost-efficient way?’’The competitive pressure from Estonia is set to increase further as the government prepares to cut both the income and corporate tax rates by 4 percentage points to 20 pct over the next four years.

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25.11.05 - Estonia ranked 21st, Lithuania 35th and Latvia 46th in financial market study

Estonia has the most efficient financial market among East European countries, according to the Capital Access Index 2005 from the Milken Institute.

This year's index expands coverage from 88 to 121 countries, ranking them on more than 50 measurements, from the strength of their banking systems and the diversity and efficiency of financial markets to general economic conditions.
The top countries ranked by Milken Institute were UK, Hong Kong, Singapore, the United States, Sweden, Denmark, Australia, Norway, Finland, Canada and Ireland.

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25.11.05 - Central bank expects economy to grow 8 pct this year

Estonian central bank says in its forecast published yesterday that it expects Estonia’s economy to grow 8 pct in 2005. According to Eesti Pank, growth in 2006 and 2007 should be a little less than 7 pct. The banks says that it expects inflation to slow down from 4.2 pct in 2005 to around 3.4 pct in 2006 and 2.9 pct in 2007.

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28.11.05 - Estonian Economy Minister rekindles Helsinki-Tallin twin cities idea

It was mentioned initially around a year ago and now again last week, that Helsinki and Tallinn, the Finnish and Estonian capitals, should have a common city council within around 10 years. This view was proposed by Edgar Savisaar, the Estonian Minister of Economic Affairs and Communications in the Monday issue of Helsingin Sanomat, Finland's biggest daily. 'I think the nearing of Helsinki and Tallinn is an objective process. It progresses regardless of whether one likes this sort of development or not,' Mr Savisaar is rumored to become the mayor of Tallinn.

Jussi Pajunen, the mayor of Helsinki, supports the merging of the twin cities idea in principle, but is less enthusiastic than Mr Savisaar over the planned timetable. Mr Savisaar's plans also include a public transport travelcard valid in and around both cities, a tunnel between the cities and street signs will be in both Finnish and Estonian.This plan, whether it takes 10 or 20 years will have a positive impact on Tallinn's real-estate prices.

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28.11.05 - There are still 50,000 families capable of borrowing – SEB Ühispank

Riho Unt, deputy retail banking manager of SEB Eesti Ühispank, says that there are at least another 50,000 families in Estonia who are in a position of borrowing for real-estate. Unt said that this remains the target group for SEB Eesti Ühispank which expect to see a 50 pct growth in housing loan volume over the next few years. Unt said that the Russian-speaking population was also becoming more attractive for banks as a potential growth customer base.
While the average loan repayment will remain up to 60 pct of borrowers’ income, the average loan amount is predicted to grow to over EEK 1 mln.
Unt mentioned that while he did not forecast growth of margins, which is currently as low as 0.7 percent, the base interest rates are likely to go up in near future.

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