CEO of Arco Vara: the real estate market is showing signs of recovery

Real estate developer Arco Vara saw significant revenue growth in the third quarter, surpassing the two-million-euro mark. According to the company’s CEO, the Estonian real estate market is showing signs of stabilization, with apartment transaction volumes rising compared to the previous year.

“The third quarter marked a turning point for the Estonian real estate market, indicating the first signs of stabilization and slow recovery after a long period of decline,” said Kristina Mustonen, the CEO of Arco Vara. She added that lowered base interest rates and the decreased Euribor rate had a notable impact on the market. The biggest boost to Arco Vara’s financial performance in the third quarter came from the Rannakalda development in Estonia.

Arco Vara’s third-quarter revenue reached 2.15 million euros, and the nine-month revenue exceeded 4 million euros, significantly surpassing last year’s results, when the group had no properties at the final sales stage. The net loss for the quarter was 156,000 euros, and the nine-month net loss amounted to 844,000 euros, both improvements compared to the same periods last year.

During the past quarter, Arco Vara focused primarily on the Kodulahe development near Stroomi Beach, where seven apartments were sold in the Rannakalda project. Preparations are also underway for the construction of Soodi 6, with pre-sales in progress for construction starting next year. According to Mustonen, the detailed planning of the final phase of Kodulahe at Lammi 6, with around 175 planned apartments, is also underway, with construction scheduled to begin in two years. Simultaneously, the planning for the Arcojärve development near Lake Harku continues, with construction expected to start in the second half of 2025.

In the last month of the quarter, Arco Vara also completed the construction of a six-court padel center in Northern Tallinn, which was officially opened in early October. “The padel center was completed a few months ahead of schedule and at lower-than-expected costs, which will increase profitability during the building’s lease period,” Mustonen explained.

In Bulgaria, the Botanica Lozen residential project has reached 75% completion, with construction of the first phase homes expected to be finished this year. Mustonen noted that customer interest in the project has increased, and demand is expected to rise further once the homes and landscaping are fully completed. “In contrast to the Estonian market, where interest is primarily seen during pre-sales, Bulgarian customers tend to prefer nearly finished homes,” the CEO added, highlighting the market differences.

While Mustonen acknowledged that the economic environment remains challenging, with low consumer confidence and the market still influenced by fiscal policies, falling interest rates could help stimulate the market in the near future. “Transaction volumes and prices could see modest growth, particularly in the second half of 2025,” she added.

In the coming months, Arco Vara will focus on preparing for upcoming investments and selling completed projects, with a market value of approximately 14 million euros in Estonia and 9 million euros in Bulgaria.