Lumi Capital and LHV pension funds will start investing in rental apartment buildings in Tallinn.
The first project will feature two apartment buildings in the Manufaktuuri quarter of Northern-Tallinn, a popular residential district. In Manufaktuuri there are 127 one-, two- and three-bedroom apartments with a parking house and a large courtyard planned.
The longer investment strategy of Lumi Capital and LHV is to build 500 rental apartments in different residential areas in Tallinn. So far, the Estonian private sector has not owned so voluminous rental apartment portfolio with buildings specially developed for rent. It is a good opportunity to provide residents with professional management and a wider range of additional services at a reasonable price.
Mihkel Oja, Chairman of the Management Board of LHV Varahaldus, pointed out that for pension funds this is a well guaranteed investment with a long horizon. "The aim is to have long-term tenancy and management of rental apartments for the purpose of rental income. This year, we have already made investments worth EUR 100 million in Estonia. We find it realistic that all Estonian pension funds together will make investments worth EUR 1-2 billion in Estonia in the next 5 years. Part of this money is invested in real estate. In order to fulfill this ambitious goal, other pension funds must also pay more attention to Estonia. Estonian economy wins if pension funds invest here, which in turn benefits pension fund clients, "said Mihkel Oja.
"The rental apartment buildings are aimed at people who do not want to own real estate in Tallinn but need high-quality, long-term and stable housing" said Martin Rekor, managing partner of Lumi Capital. One of the most important arguments for the residents is that they can rent an apartment for as long as they need and there will not be situation where residents must move out due to owner’s sale plan," said Martin Rekor and added that this is guaranteed by the long-term capital of pension funds. In Central Europe, as well as in neighboring countries the concept of rental properties owned and managed by larger institutional owners is successful, for Estonia this is the first development. "It will increase labor mobility and provide a high-quality housing for those who do not like or are unable to afford a mortgage," added Martin Rekor.
The first investment will feature 127 residential apartments to be completed by 2019. Buildings are constructed by Mitt & Perlebach OÜ and developed by Hepsor OÜ in cooperation with Tolaram Group. Hepsor OÜ develops nearly 300 apartments in the Manufaktuuri quarter.
The sole investor for the strategy are pension funds managed by LHV Varahaldus. Lumi Capital will manage the investments and is engaged in finding more suitable projects.