Record Year
Finnish real estate highly attractive to foreign investors
The year 2017 is sure to clinch a new record in transaction volume Finland. The previous record level in transaction volume – € 7.4 billion reached in 2016 – was exceeded already by the end of October 2017. Contributing to the high times, there is the largest-ever property transaction in Finland: Polar Bidco acquiring the listed company Sponda, with its property port folio of € 3.7 billion. Delisting of the Sponda shares will decrease the market capitalisation of the Finnish listed property companies by more than one third.
Janne Larma, CEO of Advium Corporate Finance, is not surprised by the record year, since investing on real estate is a global trend that keeps gaining momentum.“ With interest rates down, and stock market losing traction, the real estate market becomes more attractive.”
Presently, the share of foreign investors of all transactions is historically high in Finland: 73 % at the end of the third quarter. Naturally, the Sponda transaction is a large
54 Nordicum factor in this, but there have also been many other significant transactions with foreign investors heavily involved. In 2017, more than 10 new foreign investors have entered the Finnish market.
Nordic Number One
According to KTI Property Information, the attractiveness of the Finnish market is sustained by higher yields in comparison to most other markets. Janne Larma agrees:
“ In many regards, Finland is now a more attractive market than other Nordic targets or European ones, for that matter.”
Also, the improving outlook of the economy strengthens the position of the Finnish property market. As it stands, the spectrum of strategies of foreign investors is broad; both core players looking for prime properties with low but stable cash flows and opportunistic players with two-digit return expectations have been active in Finland in recent months.
However, as the future liquidity of investment targets is held in high regard by especially the foreign investors, the attractiveness of the“ rural” markets remains limited.
It’ s noteworthy that in addition to the“ usual suspects” – Europeans and Americans – also Asian investors have shown an interest in Finnish markets. Chinese are leading the way in this, with CIC( China Investment Corporation) eyeing logistics real estate assets.
The attractiveness of property investment is also apparent in the number of new property funds being launched. In 2017, new mutual property investment funds have been founded by, for example Fennia, Trevian and CapMan.
Star Performance
The megatrend pushing property investment is urbanisation – and the largest cities in Finland are growing strongly. So far, the foreign investors target their main interest in