Commercial Real Estate - Estonia | Statista Market Forecast

The Estonian Commercial Real Estate market market is predicted to achieve a value of US$50.63bn by 2024.
It is anticipated to experience a compounded annual growth rate (CAGR 2024-2029) of 2.42%, leading to a market volume of US$57.07bn by 2029.
In terms of global comparison, the United States is expected to generate the highest Real Estate value, reaching US$25.3tn by 2024.
Estonia's commercial real estate market is experiencing a surge in demand, driven by the country's strong economic growth and increasing foreign investment.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in Estonia has been experiencing significant growth and development in recent years.

Customer preferences: Customers in the Commercial Real Estate market in Estonia are increasingly seeking modern and sustainable office spaces. They prioritize buildings that offer energy-efficient features, flexible layouts, and advanced technological infrastructure. Additionally, there is a growing demand for mixed-use developments that combine office spaces with retail and leisure facilities.

Trends in the market: One of the key trends in the Commercial Real Estate market in Estonia is the rise of coworking spaces. With the increasing number of startups and small businesses, there is a growing need for flexible and cost-effective office solutions. Coworking spaces provide a collaborative environment and shared amenities, attracting entrepreneurs and freelancers. This trend is expected to continue as the gig economy expands and remote work becomes more common. Another trend in the market is the transformation of traditional retail spaces. With the rise of e-commerce, brick-and-mortar retailers are facing challenges. As a result, landlords are repurposing retail spaces into mixed-use developments that incorporate office spaces, entertainment venues, and dining options. This trend is driven by the need to create vibrant and experiential destinations that can attract both tenants and consumers.

Local special circumstances: Estonia's strategic location and favorable business environment make it an attractive destination for international companies. The country has a well-developed digital infrastructure and a highly skilled workforce. This has led to an increase in foreign direct investment and the establishment of multinational companies in Estonia. As a result, the demand for commercial real estate, particularly office spaces, has been on the rise.

Underlying macroeconomic factors: Estonia's strong economic growth and stability have contributed to the development of the Commercial Real Estate market. The country has a low unemployment rate and a high GDP per capita, creating a favorable business environment. Additionally, the government has implemented policies to support entrepreneurship and innovation, attracting both local and foreign investors. Furthermore, Estonia's membership in the European Union provides access to a larger market and trade opportunities. This has encouraged companies to expand their operations in the country, leading to increased demand for commercial real estate. In conclusion, the Commercial Real Estate market in Estonia is experiencing growth and development driven by customer preferences for modern and sustainable office spaces, as well as the rise of coworking spaces and the transformation of traditional retail spaces. The country's strategic location, favorable business environment, and strong macroeconomic factors contribute to the attractiveness of the market.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.