Nordicum - Real Estate Annual Finland 2020 | Page 54

Still Cruisin’
Year 2019 scored record-high rental levels
in the Helsinki downtown offices
A
The real estate market in Finland remains active, even if economy is
showing signs of slowing down. Transaction activity remains on a high
level – even though after a couple of years which featured sizeable
blockbuster deals, the year 2019 was marked by smaller transactions.
ce
ccording to real estate research com-
pany KTI Finland, property market
professionals expect investment
demand to remain high as the period of
extreme-low interest rates continues. Direc-
tor Petteri Kokko from investment bank
Advium agrees:
“As the interest rates are still low and
apparently will remain so for a while, inves-
tors are presently still finding real estate
quite attractive,” he sums up.
The flipside, of course, is that due to
the strong investment demand, prime prop-
erty yields continue to compress. “This trend
is likely to continue as well.”
Taking stock of the various asset
classes, Kokko notes that office rents are
perhaps “the most interesting” case. This
year, the office rents in Helsinki Cen-
tral Business District (CBD) have, again,
reached new records: The median rent for
new agreements started during March-
August exceeded €30 per sqm per month
for the first time ever, and the upper quar-
tile increased strongly to almost €37 per sqm
per month.
Office Glory
The outlook is positive for the near future,
as well. The respondents of the RAKLI-KTI
Property Barometer, conducted in October
2019, expected office rents to increase in all
major cities. The expectations are strong-
est in the Helsinki CBD where 65% of the
respondents expect office rents to grow dur-
ing the next six months.
“Prime location office rents have really
picked up, mirroring a trend we saw start in
Sweden a little while back,” says Kokko.
According to Kokko, there is room for
office rents to soar even higher, if certain
prerequisites are met. “Companies are look-
ing for space utilization efficiency and are
interested in modern premises. Many tenants
are ready to pay a premium for such space
right now,” he says.
Life Beyond CBD
Strong rental demand has spread from the
Helsinki CBD to the surrounding areas,
where occupancy rates and rents have con-
tinued to increase, too. The supply of high-
quality, modern office space continues to
increase also in other submarkets, due to
active new development.
54 Nordicum