Nordicum - Real Estate Annual Finland 2011 | Page 68

Real estate market picking up but

Office space still hard to fill

Photo: City of Helsinki Picture Bank / Mika Lappalainen

The business is still slow in the real estate
investment market. The first three quarters of 2010
tell a sobering story: the volume of property trade
was about EUR 1.4 billion which is a far cry from
the 6 billion mark breached during the crazy days
of the market. Foreign investment now accounts
for little over one thirds and one can see that tables
have turned – previously, it was the Finns who
bought 1/3.

W

hat’s stopping the deals
from
materialising?
According to KTI Property
Information, the interests of the
buyers and sellers do not meet
– as they have not done for a
while now. Potential buyers are
only interested in the best, safest assets out there – but anybody who happens to own property meeting this description is
likely to sit on it for now. When
it comes to less clear-cut cases, there are differing perspec66 Nordicum

tives relating to risk assessment
– buyers and sellers rarely
see eye to eye on the price although sellers are slowly accepting the shift in secondary properties.
However, there are some
rays of light in the mix. In many
European markets, business has
picked up as the finance markets have thawed and Finland
should be no different in this regard – it’s really just a question
of when.

Office Woes
The biggest bottleneck in Finnish real estate is still the capital region office premises market. However, it seems that the
growth in the number of vacant premises has halted. In the
lease market, the “tale of two
cities” continues: there are vibrant, dynamic areas with modern office space and then there
are areas which feature old and
worn-out facilities and a lot of

‘vacant’ signs. In the best corporate neighborhoods, both the
rents and the occupancy rates
are back on the growth path,
while the less fortunate areas
have more and more empty offices and rent levels are dropping.
With regards to office
space, the bar has been raised
high in the minds of the investors. Prime assets should feature
long leases (preferably 10 years)
and strong tenant credit. If the