According to experts in real estate, competition in the market for commercial space is increasing. According to real estate sales specialist Pindi Kinnisvara Peepa Soomana, the appearance of a new area increases competition and affects the price offers.

Head of EfTEN Capital Villar Arakas says that over the past three years, thanks to zero interest rates on loans, commercial real estate prices have increased significantly, which has lowered the yield accordingly. “Since our fund adheres to a conservative strategy, the volume of new investments has declined. Now we are more focused on increasing the effectiveness of the existing property fund: we expand and update the area. This will allow us to be more attractive to the tenant in the face of growing competition. ”

According to the expert of the real estate market of Tõnu Toompark, there are a lot of proposals on the market of office and retail space. “A client who would really like a certain area and he would be willing to pay a price above the market for it is now very small,” remarked Toompark. However, despite the large number of proposals, he is confident that the market can find a niche where there is good demand – for example, in specific parts of the city.

He noted that the rental price of commercial premises for the last 5-7 years has not changed much. “But the expectations of profitability have changed and, as a result, the value of the property itself,” remarked Toompark.

Demand is used for complex solutions

According to Peep Sooman, now the market reacts to offers that differ from the others and which offer additional bonuses. “Today, the number of offers of office space is optimal. The appearance of a new area increases competition and affects the price proposals, “he said. For the success of the project must be approached in a comprehensive manner. “A good example is Ulemiste City and the campus in Mustamäe. These areas are developed entirely, so there are both offices and places for food, as well as kindergartens “- described Sooman.

This approach is also necessary for shopping centers. The market is constantly replenished with new retail spaces, and it is expanding the existing ones. “If you pay attention, you can see that tenants in stores are changing. And they are changing not because the price of rent is increased and it becomes unprofitable to remove this area, but because it becomes unprofitable to sell them in this shopping center, “notes Sooman. The success of the shopping center now depends on whether there are places of entertainment and food under its roof. “The center where the client wants to arrive at 10 am and leave late in the evening is successful,” Sooman said. Those stores where the customer comes only to make one particular purchase, are not viable.

Development spurs cheap loans

How quickly the commercial real estate market will change in the next years depends on the rates for loans. “If the rates are low and the money in the bank is easy to obtain, then large purchases are made. In real estate, loans are very important, “said Toompark. According to him, cheap loans increase demand, and if demand grows, the value of real estate also increases.

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