EfTEN Capital recently announced that they had established a new fund to start investing in rental apartment buildings. The first rental building with 112 apartments will be built by the real estate developer Hepsor.
According to member of the Hepsor management board Henri Laks, rental developments is a new trend for both the company and the real estate market in general.
According to the Hepsor management board member, to date institutional investors have made only two major investments in rental residential buildings in Estonia. „However, in Scandinavia a sizable share of the total private rental real estate market belongs to institutional funds,” Laks said.
„Hepsor cooperated with Tolaram Group to complete Estonia’s first rental buildings in the Sitsi Õunaaia area in 2019 for the LHV pension funds and Lumi Capital. This time we have agreed to develop rental apartments as „turnkey” solutions in Tallinn’s Kadaka Metsapark development for EfTEN,” he noted.
Laks said that Hepsor was in negotiations concerning a few other sites for developing rental buildings. „All in all we are talking about 200 apartments to be sold to institutional investors as a „turnkey” service,” Laks explained and added that so far all rental buildings in Estonia had actually been developed by Hepsor and constructed by Mitt & Perlebach, placing the pair in a unique position when it came to experience and knowledge.
„Rental buildings are not like ordinary apartment blocks, there are quite many differences between them. Both the common areas in the buildings as well as the apartments themselves must be able to withstand more wear and tear, the access and alarm systems are more complex and last but not least, carefully considered and smart design must ensure effective use of the living space,” he explained.
According to EfTEN Capital the new EfTEN Residential Fund aims at becoming the largest residential property fund in the Baltics, by attracting in the inaugural stage 60 million euros of equity investments. Their plan is to start renting out the first apartments next autumn.
40% of the energy efficient homes of the Kadaka Metsapark development will be acquired by EfTEN as rental apartments. Mitt & Perlebach is the main contractor of the building with 112 apartments and 93 parking places. The building is to be completed by next autumn.
Hepsor is one of Estonia’s leading real estate developers. In addition to many residential properties, they have also developed Tallinn’s first office blocks based on the green thinking concept.