Better prospects for construction business

The manufacture of building materials, most of which is carried out in Virumaa, decreased rapidly in the early 1990s as a result of a fourfold drop in construction volumes during 1989-1994. The seasonal nature of local construction activities, the fact that the Eastern markets were no longer available, and out-of-date technology all contributed to a sudden decline in the sales of prefabricated structures made of reinforced concrete, wall materials, soft roofing materials and building bricks. As the volume of renovating and decorating work increased, demand for finish materials, insulation products, floor coverings and roofing materials grew as well. The main products in this industry are cement, roof tiles, baked-clay bricks and lightweight blocks.

Even though the building materials industry has been partly modernised with the support of foreign capital, fluctuations have occurred during the last few years. In 2002, the manufacture of building materials went on the rise again as a result of more trading in the construction market and a stabilisation of prices. Exports account for one-third of the manufacture of building materials. For example, cement manufactured in Kunda and clay roof tiles and bricks made in Aseri are being exported.

After a major slump during the first years of independence, construction volumes have been increasing 14 per cent per annum on the average, with minor fluctuations, since the mid-1990s. Following modest growth of a few per cent last year, activity in the construction market suddenly increased by at least one-fourth in the first half of 2002.

Construction work abroad constituted almost one-tenth of the total turnover of 16.7 billion kroons by Estonian building contractors last year; in previous years the figure had been 5 per cent. Besides Russia, building contractors have expanded their activities to Latvia and Lithuania.

While the construction of non-residential buildings has been continually increasing in Estonia, the building of homes has decreased. Since the beginning of the 1990s, the state has not been investing in residential building construction and local governments’ resources are limited.

The volumes of industrial construction work and residential building construction in Estonia were much larger during Soviet times than at any time since because industries were established in an expansive manner and masses of foreign workers were brought in from other regions of the Soviet Union to work in the expanding industries. As the agricultural sector was mass-producing for the Soviet market, apartment buildings with several storeys, normally built in towns, were built in the countryside, in settlements around collective farms. Some of those buildings have now been abandoned as a result of a slowdown in agricultural activity and are slowly crumbling. Besides apartment buildings, large cattle farms, tractor pools, etc. are also falling apart in rural areas. A lot of abandoned industrial buildings are falling into ruin in towns and cities as well.

In 2001, the number of new residences built was only one-fifth of that in 1992. Still, the number of small residential terraced and detached houses being built has continually increased. More houses are still being built in towns as compared to rural areas – more than three-fourths of residences taken into use in 2001 were located in towns. Over a half of those residences are located in Tallinn; the same applies to non-residential buildings. As a result of Estonia’s rapid economic growth, increases in residents’ income and low interest rates, more and more single family residences are being built – real estate developers are creating whole new residential areas in Tallinn.

Since the second half of the 1990s, major cities have acquired numerous modern high-rise buildings intended as hotels, banks and office buildings. The building of roads and streets in towns and the construction of shopping centres have been gaining momentum in recent years. Plants are being built outside of towns and cities, and enterprises in the food industry are being renovated in order to conform to European Union standards. The renovation and expansion of the main roads of the country and the establishment of environmental objects have also taken off with the help of European Union aid and international loans.

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