Deals

Arte House – BIT005

Introduction

The Arte House project consists of guest apartments in one of Tallinn’s most popular and quickly growing districts – opposite Telliskivi Creative City. The house’s dynamic external architecture tastefully uses the slopes that are characteristic to the industrial feel of the Telliskivi area. The impressive door portal of Arte House brings the characteristics of the external architecture smoothly to the spacious lobby.

The interior decoration solutions are inspired by the district and lifestyle. In the lobby one can encounter natural tones inherent to Kalamaja and both the macro photography of a leaf and the modern solution of embalmed moss have been skillfully used as design elements.

The investment case

Via BitOfProperty’s platform at www.bitofproperty.com, investors have the opportunity to invest in a 3 apartment bundle deal – units 38, 66 and 76. The total investment amount is €422,600, including all furnishing and other setup and acquisition costs. These are fully furnished two-room apartments with a gross floor area of 41,5 m2 per unit. Experience the apartments with a 3D walkthrough here, to get a better feel of the space.

We believe this investment opportunity comes with several advantages, such as:

  • Competitive rental return of 5,3% per annum
  • 5+5 year tenancy agreement signed on April 2019
  • Rental income distributions carried out monthly
  • The investment is asset backed
  • Strong local rental market
  • Consistent capital appreciation in the area
  • Fully furnished apartments in a newly developed residential building

With BitOfProperty, all investment sizes are welcome as the minimum investment size is as low as 50€ – just open up an account here and start your real estate investment journey.

The tenant

The tenant for these three units is a short-term rentals operator called Best Of Both Worlds (BOBW) – a tech-enabled hospitality company merging hotel-like consistency, services and amenities with the authenticity and livability of a home. They take long-term leases (5+5 years) for bundles of apartments of whole buildings, furnish the interiors according to an authentic and local design and rent out the single units short-term with hotel-like amenities and services. In the same building, they are operating 41 apartments in total.

bobw

Read more about them here.

Location

Arte House is in one of Tallinn’s most popular and quickly growing districts – opposite Telliskivi Creative City. Since the privatization of the former Baltic Railway factory building in 2009, more than 200 creative industries companies have been established here. They have found a home in old industrial buildings that have been given new life. The district’s streets with high vegetation and parks with playgrounds make spending time in the open air enjoyable – and the most popular means of mobility there is a bicycle.

There you can find restaurants and street food, cafés, boutiques, hobby and art shops and also a bicycle studio and a massage studio. Next to the Creative City lies the newly finished Balti Jaama Turg, where you can buy whatever you need for your everyday life – to keep your stomach full and have fresh food products on the table.

Read more about the district at https://telliskivi.cc/en.

Property market

The average sqm price for an apartment in Tallinn grew 12.4% in 2017 reaching €1,962 per sqm in December 2017. Reasons behind the increased prices for apartments include: low interest rates, rising income levels, and the purchase of apartments for investment purposes. Another of the reasons behind such purchases is also energy efficiency (lower heating costs). Altogether 40% of the deals took place without a bank loan and overall 10-20% of the apartments were bought as investments. New apartments cost €2,300-€5,000 per sqm in the city centre and €1,600–€2,200 per sqm in the residential districts. Prices for apartments vary mainly according to location. Most transactions were in the city centre and involved apartments in good condition in modern or fully renovated buildings, with prices from €2,200 to €2,900 per sqm.

In 2017, rents for apartments in Tallinn increased by around 5% on average. Compared to sales prices, rental increases were lower due to an increased supply of new apartments on the market. At the end of 2017, the average asking price was €8.00-€9.00 per sqm for rental apartments in the suburbs of Tallinn and €10.00-€12.00 per sqm in the city center. In the center of the city, demand is highest for one or two-room furnished apartments, which rent for €450 to €550 per month, preferably with parking. Tenants pay their own utilities on top of the rent. The gross rental yield of apartments in Tallinn in 2017 was ca. 5.0-5.5% depending on the location and the property. Owners generally negotiate rental agreements of short duration and check tenant backgrounds very carefully.

Read more about the property market in Tallinn here.

The developer

Over its more than twelve years of operation, Perton Ehitus has set the creation of homely and comfortable living environments as its goal. When choosing sites for development, they pay attention to the location’s values and the opportunities that the new home could offer to its inhabitants.

Their professionalism has been acknowledged with a letter of thanks from the Cultural Heritage Department of the city of Tallinn, with the title of “Best renovated building in the area of cultural and environmental value 2016” along with many more awards.

They have built or renovated more than 40 dwellings mainly in the center of Tallinn and the surrounding subdistrict, and by doing so they have created a homely living environment for many families. Read more about their building and renovation works at www.perton.ee.

Discussion

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