Every development company has to assess the market situation and risks for itself and draw conclusions on whether to launch new developments and on what scale, says Janar Muttik, CEO of Everaus Kinnisvara, in his commentary to Kinnisvarauudised.
What were 2023 and the first half of 2024 like for Everaus Kinnisvara?
For Everaus Kinnisvara, the end of 2023 and the first half of 2024 were a busy time, as three developments were under construction: Stage I of the development of the terraced houses of Luige Homes, the development of the Kindlusepealse Villas in Järveküla and the construction of a commercial building in Peetri in the commercial property sector. Two thirds of the residential developments were sold in advance and 90% of the rental properties in the commercial property were covered by contracts.
Some completed developments are still in stock, but as their quantity is not large, we’re launching three new residential development projects in autumn 2024, as well as one mini warehouse complex.
What information and knowledge are you considering and in what directions are you making plans in your company at present?
We’ve been in recession for three years now, and we’re finally starting to see some positive signs. Construction prices are still at rock bottom, interest rates are continuing to fall and external export partners are gradually starting to do better, which gives us hope that our economy will also be doing better in six to nine months’ time. As a result, we’ve gone ahead with building the infrastructure for several new development regions, so that we can start constructing the buildings in the first half of 2025.
What is the current situation in the construction and development sector? What is the prevailing expectation in the sector as a whole?
The construction sector has been through rock bottom, and it’s clear that surviving at such a price level for a long time is difficult, which in turn means that construction prices are slowly starting to rise. This is not expected to happen until mid-2025, but as there is wage pressure also in the construction sector, some small price increases could occur in the next six months.
The development sector is affected by interest margins, buyer confidence, i.e. the recovery in demand, and also construction prices. When we forecast economic growth and a recovery in demand from 2025 onwards, with a decrease in interest margins, the only sensible decision would be to start building new developments in the next six months to a year.
