EIB Advisory Partnership with Estonia Targets Financing Solutions to Expand Affordable Homes Beyond Major Cities

EIB Advisory Partnership with Estonia Targets Financing Solutions to Expand Affordable Homes Beyond Major Cities

(IN BRIEF) The EIB and Estonia have launched a 13-month advisory partnership designed to expand affordable rental housing and stimulate residential investment outside the country’s largest counties. With only a small fraction of new homes currently being built in regional areas, the programme will assess market challenges, develop financing solutions and propose strategies to reduce risks for private developers. The collaboration aims to enable concrete housing projects through cooperation with local authorities and investors while supporting labour mobility and balanced economic development. By drawing on EU-wide experience and aligning with broader European housing initiatives, the effort seeks to establish a sustainable, market-oriented framework for delivering modern rental homes across Estonia.

(PRESS RELEASE) LUXEMBOURG, 17-Feb-2026 — /EuropaWire/ — The European Investment Bank (EIB) and the Government of Estonia have initiated a joint effort to address the country’s growing shortage of rental housing and to stimulate investment in regions beyond the main urban centres. The collaboration focuses on expanding the supply of modern, affordable homes in smaller cities and towns, where new residential development has remained limited despite significant population levels.

Currently, only a small share of Estonia’s new housing construction — roughly 2% — takes place outside the counties of Harju, Tartu and Pärnu, even though about one-third of the population resides elsewhere. This imbalance has created challenges for regional development, labour mobility and economic competitiveness, as private developers often view projects in less populated areas as financially risky.

Through a 13-month advisory programme, the EIB will analyse Estonia’s housing market in depth, identify structural barriers to investment and design a sustainable financing framework aimed at encouraging private-sector participation. The goal is to create conditions in which rental housing development can operate on a largely market-driven basis while minimising the need for direct state intervention.

The initiative is expected to pave the way for tangible housing projects developed in partnership with municipalities and private investors. By introducing tailored financial instruments and risk-mitigation solutions, the cooperation seeks to unlock construction activity in underserved areas and support balanced national growth.

Research conducted by the University of Tartu and the Estonian Academy of Arts has already highlighted how disparities in housing availability across regions can limit workforce mobility and hinder long-term economic performance. The new programme builds on these findings by translating analysis into actionable investment strategies.

The EIB brings extensive experience from supporting affordable and social housing schemes across the European Union. Drawing on proven models, the Bank aims to help Estonia establish a durable rental-housing ecosystem aligned with broader European efforts to expand access to quality homes. This work complements the EIB’s wider housing initiatives, including its Action Plan to scale up support for residential development and programmes such as the €400 million HousingTechEU initiative.

Background information  

The EIB Group

The European Investment Bank (ElB) Group is the long-term financing institution of the European Union, owned by its Member States. In 2025, the EIB Group signed €100 billion of new financing for over 870 high-impact projects in eight core priorities that support EU policy objectives, including €336 million in Estonia. In addition to financing, the EIB Group offers advisory services that help public and private clients develop markets, build capacity and support high-impact investment projects.

Photos of the EIB Group’s spokespeople and headquarters, logo files and video B-roll for media use are available here.

Media contacts:

Kristiina Randmaa
k.randmaa@ext.eib.org
+352 4379 – 72894

Press Office
press@eib.org
+352 43791

SOURCE: European Investment Bank