Summary
The study aims to compare the profitability of rental apartments in Tallinn and Tartu by calculating gross rental yield (brutotootlus), which is derived from rental income relative to the property’s sales price. Using data from real estate portal kv.ee, the author analyzed 199 apartment listings (162 from Tallinn and 37 from Tartu) and matched them with comparable sales listings to estimate yield.
Key factors examined include:
- Apartment size
- Floor number
- Heating type
- Presence of a balcony, storage, or parking
- Building year
- Brokerage/leasing fees
- Location within the city
A regression analysis was performed using the software Gretl to determine which factors significantly affect rental yield.
Main Findings:
- Micro-apartments (less than 25 m²) offered the highest yields.
- Location, apartment size, floor, heating type, and building age all had a statistically significant effect on yield.
- Although Tartu had the single highest-yielding unit, Tallinn’s apartments were more profitable on average.
- The most common gross rental yield in both cities was in the 4–5% range.
The study concludes that while yield differences exist between and within cities, a well-informed investor can identify high-yield opportunities, especially among smaller units.
You can read the full thesis here https://digikogu.taltech.ee/et/item/5573f3f3-d18d-4dd0-a118-aeb12ae60d62
