Sector briefing Construction Opportunities in Estonia Why Estonia? Previously, high economic growth and low interest rates for loans fuelled a construction and real estate boom in Estonia. The situation changed for the worse from 2008 onwards as the effects of global economic crises impacted the market severely. While in 2010, the sector has shown gradual signs of stabilisation, it still remains partly hampered due to lack of private sector initiative. Recent announcements from developers introducing new projects and plans may however mark a positive turn in the near future. Currently, Estonian construction market is boosted mainly by large-scale civil engineering projects, financed by EU structural funds. In addition different regeneration projects as well ?Estonian construction as projects to increase energy efficiency of market is boosted mainly by buildings are of importance. EU-funded large-scale civil Find general information on the Estonian engineering projects? market conditions on UKTI?s website. The Doing Business Guide for Estonia gives an overview of Estonia?s economy, business culture, potential opportunities and an introduction to other relevant issues. UK Trade & Investment Sector briefing: Construction opportunities in Estonia energy efficiency. Building energy efficiency Opportunities levels are estimated to be up to 30% lower in Estonia compared to the developed countries? There are several opportunities for UK average. Improvements are needed on companies - key areas are detailed below: constructions, isolation, electrical, heating and gas systems. To a smaller extent, renovation Transport Infrastructure work will also be required to more recently Estonian connections with foreign countries are built housing, as during the construction boom partly under-developed. quality was often compromised. At present, Estonia has one of the lowest public Measures to ensure energy efficiency of railway densities in Europe and has no proper housing are financed by means of EU green rail connection with other EU countries. With 2 emission trading scheme CO quota sales. the help of EU structural funding, the Rail Depending on the scale of the intended energy Baltica project is currently being implemented savings, available support may cover up to with an aim to connect Estonian railway to 35% of renovation costs. Europe via Latvia, Lithuania and Poland. As a final stage of the project to connect Estonian 2 In addition, revenue from CO quota sales will railway with neighbouring regions, the be used to ensure the wider use of renewable construction of a European gauge railway and energy sources and ambient air protection. In an interconnecting tunnel connecting the essence, this will enable boiler houses to be Finnish and Estonian capital cities has also built or reconstructed for renewable energy been envisaged, though no final decisions on purposes and to improve the energy networks. implementation has been taken yet. Investments are also needed to increase the Regeneration Projects in the Capital City quality of railways to make them faster, safer The City of Tallinn is planning several and reduce the negative effects on the regeneration projects of which the majority are environment. linked to the overall aim of making better use of the capital city shoreline and access to the Though the network of domestic roads is sea. Some of these projects are briefly comparatively dense, the actual quality of described below: roads is quite low. In the recent years road construction works have focused on main roads 1. Opening of Tallinn to the Sea. During the and the average age of road surfaces remains Soviet decades the Tallinn coastal area was over 20 years. In addition, the rising number of largely closed to the public as a border cars on the streets calls for advanced solutions zone, mainly serving border guard in complex intersections and new road operations and industry. With a goal to constructions in and around the capital. open Tallinn to the sea and exploit the great potential of the substantial territory During the EU funding period 2007-2013, close to the city centre and old town, the strategically important transportation city of Tallinn has developed a block plan investments, primarily the improvement and for the area stretching 20 km along the development of railways and roads belonging seashore covering about 500 ha. According to the European primary infrastructure, are to the block plan, residential, office, receiving GBP 0.46 billion from EU funds. commercial buildings and an industrial park will be erected, additional recreational In addition regional infrastructure is being areas developed, a marina constructed, supported with GBP 83 million. Supported infrastructure for residents and industry fields may include local airports, harbours, and evolved, and a nature protection area for surroundings of railways as well as leisure and birds designated. sports facilities. 2. Patarei Sea Fortress. The historical fortress Energy Projects and Reconstruction of was initially built in 1828. It has had Residential Buildings several functions during its existence up to About 70% of dwellings in Estonia were built in date, most recently as a prison between the period of 1960-1990. It was a time for low- 1920 and 2002. The building complex is quality mass-production. Now these buildings located on a total land area covering are in need of renovation and reconstruction 41,050 sq m. works, especially with regard to increasing UK Trade & Investment Sector briefing: Construction opportunities in Estonia considered an indication that the market Current plans entail turning the fortress conditions are further improving. Several into a cultural and leisure centre. developers have announced continuing with private housing projects th at have previously 3. Linnahall Arena. Completed in time for the been postponed or are commencing with new 1980 Moscow Olympics, the sailing events developments. Most likely, the motivation for of which were held in Tallinn, the Linnahall initiation of projects at this stage is linked both arena (seating 4,200 persons with an to the anticipation of higher consumer demand additional 6,000 sq m lobby) and the in the future as well as a wish to capitalise on adjoining ice arena are a large landmark in the current potentially favourable market Tallinn's harbour area that now stand situation where construction prices are still unused. relatively low. US investor is considering participating in the regeneration project, but so far there If you have any questions on the opportunities has been a lack of clarity in requirements above, contact the UKTI contacts named in this for a proposed loan of approximately GBP report. Business opportunities aimed 156 million to cover costs of renovation. A specifically at UK companies are added daily to new contract between Tallinn and the US UKTI?s website. These leads are sourced by our Investor was signed at the end of April staff overseas in British Embassies, High giving the city another six months to take Commissions and Consulates, across all sectors care of necessary preparations for the and in over 100 markets. development project. You can be alerted to business opportunities on 4. Ecological Campus. There are plans to a regular basis by registering on the UKTI cover current wasteland with an ecological website. Find out more on UKTI?s business campus. The total construction volume opportunities service on the UKTI website envisioned is 40,000 sq m, providing housing for around 6,000 people. In additions to dwellings, the plans also foresee a golf course, SPA and hotel as well as commercial and business spaces. 5. Re-location of Tallinn Horse Race Stadium. The current horse race stadium is set to be re-located from the relatively central location in the capital city to a neighbouring municipality. This in turn opens up substantial opportunities for new project development once the old horse race stadium has been vacated. Current plans involve the construction of ca 100,000 sq m of apartment buildings, 50,000 sq m office space and commercial space, sport facilities and playgrounds for an approximate value of GBP 200 ? 250 million. The development will only start once the new horse race stadium has been built (today only in planning phase) and the development on location is expected to be carried out over a 10-year period. Real-Estate Development Projects Recent news about potential up-coming private real-estate development projects may be UK Trade & Investment Sector briefing: Construction opportunities in Estonia Major events and activities UKTI contacts Indrek Pällo Estbuild 2011 Regional Trade Manager, Baltics Contact: Epp Sultsmann, Project Manager British Embassy Tallinn Email: epp@fair.ee Tel: (00372) 667 4712 Time: April 2011 Email: indrek.pallo@fco.gov.uk www.ukti.gov.uk Tartu Building Fair Contact: Terje Sõna, Project Manager Maarika Põldes Email: terje@tartunaitused.ee Trade Adviser Time: October 2011 British Embassy Tallinn Tel: (00372) 667 4737 Find full details of all events in this Email: maarika.poldes@fco.gov.uk country and sector on the UKTI website. www.ukti.gov.uk New export events are added daily to the site and you can register to be alerted to them on a Lynn Sutt daily, weekly or monthly basis Trade Adviser British Embassy Tallinn UKTI?s Tradeshow Access Programme (TAP) Tel: (00372) 667 4737 provides grant support for eligible Small & Email: lynn.sutt@fco.gov.uk Medium Sized Enterprises (SME's) to attend www.ukti.gov.uk trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: Construction opportunities in Estonia Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the Estonian market are advised you to meet contacts and promote your to undertake as much market research and company in the Estonian market planning as possible in the UK. UKTI?s team in Estonia, with its wide local knowledge and This work is available via our Overseas Market experience, can provide a range of services to Introduction Service (OMIS) a chargeable British-based companies wishing to grow their service which assists British-based companies business in global markets. wishing to enter or expand their business in overseas markets. This can include: ? Provision of market information To find out more about commissioning this ? Validated lists of agents/distributors work, or accessing other UKTI services and ? Key market players or potential specialist advice, please visit the UKTI website customers in the Estonian market to find contact details for your local UKTI ? Establishment of interest of such office. contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Construction opportunities in Estonia