Hepsor and EfTEN join forces: nearly 300 new apartments to rise in Lasnamäe

Hepsor is starting a collaboration with the reputable investment company EfTEN Capital, through its trust fund EfTEN Special Opportunities Fund, to jointly develop nearly 300 new apartments in the capital’s largest residential area. Located near the Tallinn Song Festival Grounds and the planned Tallinn Hospital, the Paevälja residential area will receive a significant addition. The new buildings will include homes and commercial spaces, forming a unified and cohesive urban quarter with carefully planned public space.

“It’s important for us to offer a sustainable and high-quality comprehensive solution that fits into a modern and people-centric urban environment—not just to construct buildings. This will be a quarter with character and green areas, yet only minutes away from the city center,” said Hepsor CEO Henri Laks.

In 2023, Hepsor successfully completed and sold the first 100 homes in the Paevälja development area. In cooperation with EfTEN, the development of the next stages in the area will continue. The first phase of the collaboration—based on the winning entry of an architectural competition by the Molumba architecture bureau—includes nearly 100 homes and new commercial spaces. The architectural design combines historical elements, such as limestone walls, with new and modern solutions. A central square with a recreational area is planned at the heart of the quarter. Construction is scheduled to begin in spring 2026. Altogether, the Paevälja area has the potential for up to 500 new homes.

“The residential development in Lasnamäe is the first investment in Estonia by the EfTEN Special Opportunities Fund—established last year—alongside three investments in Lithuania. Upon full realization, the development project will amount to €7.5 million. The EfTEN Special Opportunities Fund provides financing to real estate projects that have not yet reached the stage where bank financing becomes available. The fund has over €20 million in uninvested capital, and its largest investors include the EBRD as well as Estonian and Latvian pension funds,” commented EfTEN Capital CEO Kristjan Tamla.

According to recent statistics, there are around 2,700 new homes available for sale in new developments across the capital, with only 2% located in Lasnamäe. Yet, as of early April, nearly 120,000 people live in Tallinn’s largest district, highlighting a significant discrepancy between potential demand and supply of new developments in Lasnamäe.

“Lasnamäe is comparable in size to the city of Tartu, yet there are very few developments offering modern living conditions. We aim to contribute by creating a quarter that offers high-quality housing for the people in the area,” said Laks.

“Today, the average price per square meter for new developments in Tallinn has already exceeded €5,000, making new real estate increasingly unaffordable for many people. The new development in Lasnamäe, created through the cooperation between EfTEN Special Opportunities Fund and Hepsor, aims to offer significantly more affordable new apartments,” added Tamla.

For the development of the quarter, Hepsor joined forces with EfTEN Capital. To this end, Hepsor Finance OÜ sold a 50% stake in the development company Hepsor SOF OÜ to the EfTEN Special Opportunities Fund. The joint venture, Hepsor SOF OÜ, acquired a total of five properties from companies within the Hepsor Group, with a total value of €9 million plus VAT.

“Collaborating with EfTEN allows us to bring a new quality living environment to Lasnamäe. EfTEN is a reliable and professional partner, whose long-term experience in real estate investment adds strategic value to the project,” explained Hepsor Chairman Henri Laks.

Through this transaction, Hepsor will partially release equity from the development project to redirect it into other development projects in its core markets, thereby generating additional revenue. The sales transactions will bring Hepsor shareholders a total profit of €3.7 million, of which €1.9 million is expected to be realized in 2025.