Recently commercial property demand in estonia has been on the increase and experts feel that it is already bouncing back from the doldrums of the world economy issues. There are many factors which are pointing to this.
Firstly, demand for quality commercial property is slowly over-taking supply because nothing was built during the crash, and, the introduction of the euro has piqued interest from foreign investors.
Interestingly, storage and production facilities are coming top of investor lists for Estonian property. The top end of the market has a distinct lack of supply which in turn is creating a higher demand. Estonia is a small country and space therefore is limited, both for existing and for further building of more commercial units.
IT and communications is a growing market in Estonia and quality commercial property is need for that, hence another reason for an uplift for investor demand.
The adoption of the Euro in 2010 saw Scandinavian countries show a particular interst in relocating their production facilities to Estonia. However it’s not all good news from the Euro. Introduction of the Euro saw prices increase and buying power decrease. However, there are other strong growth signals including a GDP rate of growth of about 6% yearly and an income tax flat rate 26%.This makes Estonia one of the most highly competitive of all EU states for commercial investment.
The city of Tallinn is where the majority of the global companies are investing. Meanwhile, the Estonian government has learned from the past property speculating excess and is committed to promoting direct foreign investment. Last year ( 2010) saw the first rise in property values for nearly 4 years.
Estonia has a simple tax system on property with relatively low taxes. Property tax is assessed on the value of all land- referred to as Land Tax.Land tax is the only recurring tax levied on property. Here are some of the main tax points:
- Profits made by non-residents by renting out Estonian property are liable for income tax at 26%.
- Capital gains are taxed at the standard rate of 21%.
- No Inheritance in Estonia.
- Land tax varies from 0.1 to 2.5% of the assessed value of the land only depending on use.