The Nordic Outlook: Estonia Market Review 2014 - the Case of Investing in Commercial Property. Tallinn, Estonia 2014 by Martin Hirvoja
This review takes a comprehensive approach to commercial property market analysis and brings in new aspects typically not found in similar works. It goes beyond the standard parameters like yield % etc. and brings in relevant additional international comparisons in parameters that can have a significant effect on the actual results of the investment. For example the size of transaction costs and their effect on the real returns on investment and tenant payment discipline are analyzed, as well as the actual commercial bank interest rates in eurozone countries, which is essential if one is looking to leverage the purchase, as the ratio beween yield and interest rates determines the profitability of the investment in the case of leveraged yield, not just the yield alone. Brief introductory insights comparing the historic returns of stocks, bonds and commercial property in the US vs. Europe are also included.
This Nordic Outlook issue concentrates on the example of Estonia, often known as one of the three Baltic countries, but it is also a Nordic country and no longer just in terms of geography as Estonia is leading the convergence with the Nordic economies and commercial property markets likewise, closely followed by Latvia and Lithuania. The yields on European core markets are becoming increasingly depressed due to the surging demand for properties and are around 4% in a number of cities. The wave of pick up in the commercial property market activity after the economic recovery since the Great Recession reached Poland this year, where the benchmark yield in office market is now also below 6% and is expected to fall further. This study goes beyond the 8-9% yield rates that are still present in the Nordic-Baltic region and some other countries in the European Union "high yield belt zone" and analyzes factors that can make a significant difference in actual returns upon the same projected yield rates. The study also gives a snapshop of what is behind the GDP growth figures and explains how the recently launched Estonian e-residency can change the way transnational property investments are being made. Also the effect of the 0% corporate income tax on undistributed profits in Estonia is examined from the viewpoint of a commercial property owner. Read what have Steve Forbes and others to say about it all. Liquidity and transaction volume overview is given, as well as some highly relevant facts about demographic trends are outlined. Find out how is it possible that transaction costs do not exceed 3% in Estonia, twice less than the European average of 6% and what is the effect it has on the cash flow. How has the population of Tallinn grown more than 8%, which is the #7th busiest passenger port in Europe and and what does the metropolitan area of Talsinki stand for? What could be the future trajectory of the economy of the region and what are the factors behind the projected convergence with the Nordic properties markets? What is behind the EIU and OECD reports which project for the region a higher GDP growth compared to Western Europe, CEE and OECD average and specifically for Estonia an accelerating growth reaching 3,4% in 2016? Which country in eurozone currently has the highest difference between commercial property yields and commercial bank interest rates? How is it possible that the leveraged yield in Estonia currently can be twice higher than the non-leveraged yield on the example of 9% vs 18% yield in logistics? Where do European countries stand in terms of payment discipline and why is it important for a commercial property investor? These and many more issues are addressed and explained in the study.
This Nordic Outlook issue concentrates on the example of Estonia, often known as one of the three Baltic countries, but it is also a Nordic country and no longer just in terms of geography as Estonia is leading the convergence with the Nordic economies and commercial property markets likewise, closely followed by Latvia and Lithuania. The yields on European core markets are becoming increasingly depressed due to the surging demand for properties and are around 4% in a number of cities. The wave of pick up in the commercial property market activity after the economic recovery since the Great Recession reached Poland this year, where the benchmark yield in office market is now also below 6% and is expected to fall further. This study goes beyond the 8-9% yield rates that are still present in the Nordic-Baltic region and some other countries in the European Union "high yield belt zone" and analyzes factors that can make a significant difference in actual returns upon the same projected yield rates. The study also gives a snapshop of what is behind the GDP growth figures and explains how the recently launched Estonian e-residency can change the way transnational property investments are being made. Also the effect of the 0% corporate income tax on undistributed profits in Estonia is examined from the viewpoint of a commercial property owner. Read what have Steve Forbes and others to say about it all. Liquidity and transaction volume overview is given, as well as some highly relevant facts about demographic trends are outlined. Find out how is it possible that transaction costs do not exceed 3% in Estonia, twice less than the European average of 6% and what is the effect it has on the cash flow. How has the population of Tallinn grown more than 8%, which is the #7th busiest passenger port in Europe and and what does the metropolitan area of Talsinki stand for? What could be the future trajectory of the economy of the region and what are the factors behind the projected convergence with the Nordic properties markets? What is behind the EIU and OECD reports which project for the region a higher GDP growth compared to Western Europe, CEE and OECD average and specifically for Estonia an accelerating growth reaching 3,4% in 2016? Which country in eurozone currently has the highest difference between commercial property yields and commercial bank interest rates? How is it possible that the leveraged yield in Estonia currently can be twice higher than the non-leveraged yield on the example of 9% vs 18% yield in logistics? Where do European countries stand in terms of payment discipline and why is it important for a commercial property investor? These and many more issues are addressed and explained in the study.
|
Here is the full document in pdf and the same in Scribd web format. We are interested to receive your questions, suggestions, comments or other feedback regarding this research. This is a copyright protected document but you are free to print it out or share digitally in its complete unaltered form or refer to parts of it indicating the source and web address of the original. This research is for a professional reader. An individual investment decision should only be made after proper due diligence regarding a specific property.
|