According to Danel Talpsepp, CEO of UUS MAA Commercial Real Estate, Estonia is facing a shortage of development land for both residential and commercial use—largely due to bureaucratic hurdles. This scarcity is keeping prices high even during market slowdowns.
“While the commercial real estate sector is currently quiet, there’s a clear shortage of development plots, and prices are holding steady. In Tallinn, it’s extremely difficult to get any zoning plans approved within a reasonable timeframe. The process has only become longer. Suburban municipalities are somewhat easier, but it’s still a complex, time- and resource-intensive undertaking,” Talpsepp explains.
“Although, by law, a building permit process should take 30 days, in reality, it can take six months to several years. And securing a detailed plan in under five years is now considered overly optimistic,” he adds.
Talpsepp emphasizes that while balancing developer interests with community and environmental goals is necessary, the real bottleneck often lies in bureaucratic inertia and conservative municipal attitudes.
“Only a very small portion of land is zoned in a way that allows or makes sense for development. Because of that, plots in good locations with visibility are effectively sold out. This impacts both residential and commercial real estate,” he says.
Due to the limited supply of permitted plots, transactions are sometimes happening at unrealistic prices.
“This ultimately drives up the cost of housing and commercial development. For example, the price difference between agricultural land and a fully permitted development plot can be up to 100 times, even though it’s the same piece of land,” Talpsepp notes.
The biggest shortage, according to him, is for commercial plots along key transport corridors out of Tallinn, especially those suitable for large-scale projects—such as 20,000–40,000 m² logistics or production facilities.
“Larger buildings often conflict with general zoning plans, requiring amendments through detailed plans—which brings significant additional bureaucracy,” he adds.
As a result, development land prices continue to rise, and owners tend to hold rather than sell. For instance, Talpsepp confirms that in Rae municipality, the price of larger development plots has quadrupled in the last three to four years.
Source: Baltic News Service
