Tallinn's Skyline Set for Dramatic Change with Manufaktuuri High-Rise

TALLINN, ESTONIA – December 19, 2025 – Real estate developer Hepsor AS and Tolaram Group's AS Phoenix Land are deepening their strategic alliance to reshape a historic industrial area of Tallinn, culminating in a plan that could introduce a 60-storey skyscraper to the city’s skyline. The partners formalized their continued cooperation this week, signing a shareholders' agreement on December 18 to launch the next major phase of the ambitious Manufaktuuri quarter development.

A new equally-owned joint venture, Hepsor PHX5 OÜ, has been established to spearhead the development of residential and commercial property at the Manufaktuuri 3 address. The project is underpinned by a significant non-monetary contribution from AS Phoenix Land, which has vested the prime property into the new entity at a value of EUR 5.8 million.

This latest phase marks a significant escalation in the quarter's transformation, moving from successful residential blocks to a potential landmark tower that promises to become a new focal point for the capital. While a valid detailed plan already permits a high-rise of up to 60 storeys, the developers are proceeding with caution and creativity.

“The cooperation between Hepsor and the Tolaram Group in the Manufaktuuri quarter has been consistent and successful,” said Mihkel Mäger, Country Manager of Hepsor Estonia, in a statement. “Through the new joint venture, we will continue developing the next phase of the quarter to create high-quality and diverse residential and commercial real estate for Tallinn’s urban space.”

An Architectural Vision for a New Era

The final architectural form of the Manufaktuuri 3 development will be determined through a planned architectural competition. This approach is intended to solicit the most innovative and contextually appropriate design, ensuring the project not only maximizes its potential but also contributes positively to Tallinn's urban fabric. The decision to pursue a competition underscores the significance of the site and the developers' ambition to create a building of architectural merit.

A 60-storey tower would represent a monumental addition to Tallinn, a city known more for its medieval old town and mid-century districts than for towering skyscrapers. Such a structure would dramatically alter sightlines and establish the Manufaktuuri quarter as a modern, high-density hub. This move aligns with Tallinn's broader urban planning goals, which aim to accommodate a growing population by encouraging denser, more vertical development in designated zones, thereby preserving green spaces and preventing urban sprawl.

The project joins other large-scale transformations underway in the city, reflecting a period of dynamic growth and a willingness to embrace bold architectural statements. The successful integration of such a large structure will depend heavily on the winning design's ability to manage public space, transportation links, and its relationship with the surrounding environment.

A Partnership Forging a New District

The Manufaktuuri 3 project is the fifth joint endeavor between Hepsor and Tolaram in the quarter, a testament to a partnership that has already proven highly effective. Previous phases have successfully delivered 421 homes through the Sitsi Õunaaed and M7 projects, with an impressive 97% of these units already sold. This high sales rate signals strong market confidence in the quality and location of the developments.

The momentum is ongoing. Construction is currently active on two other projects within the quarter: the first phase of the Manufaktuuri Vabrik, which will add 152 new homes, and the M12 development, set to deliver another 49 residences. Combined, these projects are steadily building a vibrant residential community from the ground up.

This sustained, phased approach has allowed the partners to build a strong market presence and incrementally realize their master plan for the area. The ultimate vision for the Manufaktuuri quarter is a complete, self-sustaining neighborhood comprising approximately 1,100 new homes alongside integrated commercial and retail spaces. The establishment of Hepsor PHX5 OÜ, with its significant asset base, solidifies the financial foundation for this next, and most ambitious, chapter.

Meeting the Demands of a Thriving Capital

The expansion of the Manufaktuuri quarter is strategically timed to meet the robust demands of Tallinn's real estate market. The city's property sector has shown remarkable resilience and growth, with apartment prices seeing a year-on-year increase of between 7% and 11% in 2025. New, energy-efficient apartments, in particular, command premium prices, with the average cost reaching approximately €4,205 per square meter.

This demand is fueled by Tallinn's positive demographic trends, with forecasts predicting the arrival of over 20,000 new residents in the coming decade. Such growth places immense pressure on the existing housing stock, making large-scale residential projects like the Manufaktuuri quarter essential for maintaining housing accessibility and quality of life.

Hepsor, a developer with a portfolio spanning Estonia, Latvia, and Canada, has built a reputation for its focus on sustainability and innovation. The company was among the first in the Baltics to implement advanced engineering solutions to enhance energy efficiency. This 'green thinking' approach is a key part of its brand and aligns with growing consumer and regulatory demand for environmentally responsible buildings. Projects in the quarter, such as the transformation of a former factory into a Class A energy-efficient building with geothermal heating and cooling, exemplify this commitment. It is expected that the new high-rise at Manufaktuuri 3 will adhere to these same high standards, integrating cutting-edge sustainable technology and design principles sought after in the modern market.