Nordicum - Real Estate Annual Finland 2018 | Page 55

the Helsinki Metropolitan Area (HMA): in
the three first quarters of 2017, the share of
the HMA of all transactions amounted to
over 70 percent. (And, if you add the run-
ner-ups, Tampere and Turku regions, that
share increases to over 80%.)
Janne Larma argues that Tampere and
Turku are already well-established on inves-
tors’ map, and urbanisation is constantly ele-
vating other city centres, too, into the “big
leagues”.
“Still, looking at the big picture, the
market will continue to be very HMA and
city centre driven.”
Yields Down
In the RAKLI-KTI Property Barometer sur-
vey carried out in October, property yields
were assessed at lower levels than ever
before. The yield for a prime office prop-
erty in the Helsinki CBD was at 4.2 per cent,
which shows compression of 0.35 percent-
ages compared to the previous survey in
April. In the very best properties, yields
might be clearly lower than this.
Larma predicts that the yield levels
will stay – more or less – the same for the
time being.
“New foreign investors will continue
to enter the Finnish market, since the growth
prospects are so good and political risk is
minimal,” he says. “Finland may not be the
top pick for a foreign player, but it’s cer-
tainly on the list.”
In addition to the high investment
demand, the outlook for office rental mar-
kets is also turning more positive. The KTI
Office Rent Index for the Helsinki CBD
increased by 3.5 % during the past year.
Office rents have increased to record-high
levels: the median rent in new agreements
during March-August increased to €29.6
per sqm.
Tale of Two Cities
However, the differences between the
office submarkets in the HMA have contin-
ued to widen. For example, in the Pitäjän-
mäki district, the median office rent for new
agreements decreased to €12 per sqm, while
in the Ruoholahti and Leppävaara submar-
kets the median levels have remained rather
stable.
In Helsinki, the office occupancy rate
has remained stable at 82.5 per cent. The
amount of vacant space has decreased for
example in the Helsinki CBD, where the
occupancy rate stood at 86.5 per cent. The
occupancy rate has increased in Pasila, but
decreased in Vallila, for example.
The current trend is for companies to
go after smaller, modern, multipurpose facil-
ities – and sacrifice space for improved effi-
ciency. According to Larma, there is nothing
new here: as companies’ needs keep chang-
ing, they are quick to make decisions about
more suitable office space.
“Still, as there are different companies
out there, there’s need for various types of
real estate in the market.” l
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