Find yourself a bolthole in the Baltics

Canny buyers have already snapped up flats in Tallinn's well-preserved Old Town. Katy Pownall looks for the new best buys
Click to follow

Most of us would need to consult a map to locate Estonia, but canny investors have had this Republic in their sights for some time. Like many countries that acceded to the EU last year, it has seen rapid price growth in the main cities and all the indications are that this will continue for the next few years.

Estonia enjoys annual growth of 5.5 per cent GDP, inflation and interest rates are at an all-time low, and employment is improving. But its past has not always been so rosy; most recently the USSR forcibly incorporated the Baltic state into its territories in 1940. Having become independent in 1991, Estonia has embraced the free market and opened its doors to tourists and investors.

Estonia has a refreshing lack of bureaucracy, and the Land Registry is fully computerised. Provided you can read Estonian, any buyer can browse plots all over the country. This has resulted in a straight-forward, easy buying process, and entire transactions can be completed in two weeks.

One of the best preserved medieval cities in Europe, Tallinn's Old Town was awarded World Heritage status in 1997 and is now a vibrant hang-out for artisans, expat workers, wealthy Estonians and tourists. Unsurprisingly, it has seen price rises of up to 20 per cent in recent years. Still, £100,000 is enough to buy you apied-a-terre in the Old Town. For £200,000, you can get a beautiful apartment in the prime areas.

Steve Murphy of Property Invest OU comments: "Capital appreciation is likely to continue at a slower pace but due to the finite supply of these old properties, it's always going to continue going up. There is also a good rental market." His firm is selling a restored 75sqm two-bedroom apartment in a historic building in the Old Town's main square for £145,000.

In the city centre, prices are much cheaper than in the Old Town, a five-minute walk away. Agents Ober Haus estimate rental yields to be between 7 and 8 per cent, driven by local people wanting to live in new apartments rather than socialist-era blocks. Ober Haus is selling 55 units in the new City Residence development on the main business street of Liivalaia; from £64,000 to £100,000.

The other Estonian city considered a potential goldmine is Parnu. Established in the 13th century as a spa and beach resort, its beach has a certain rugged charm, which nets it around 30,000 visitors a day during the summer months.

In addition, investment is on the rise: golf courses, promenades and spa hotels are planned. Churchill has two developments in Parnu. The first is Churchill Beach Resort, where one-bed apartments start from £27,500. The second one is comprised of 50 luxury log cabins on half-acre plots on Tahkuranna Beach; two-bed cabins from £40,000.

Churchill Properties Overseas: 01983 550 400,

Property Invest: 00372 648 0388,

Ober Haus: 00372 665 9700,