Growing role of international property investors in Helsinki Metropolitan Area

During the first three quarters of 2018, almost two-thirds of property investment transactions in Finland were made by foreign investors. Property investors were interested in, above all, the Helsinki Metropolitan Area, where over 60 per cent of real estate purchases or sales in Finland were made that year. International property investors’ interest towards, especially, Finland was due to slightly higher net returns and a slightly better economic trend in Finland than in comparable countries, as also to Finland’s economic cycle lagging slightly behind that of many other European countries. A stable, safe and transparent business environment and Finland’s membership in the Euro currency zone were important factors, too. These findings are presented in a fresh statistical publication from Helsinki City Executive Office.

The presence of international investors in the Helsinki Metropolitan Area helps develop and boosts the local real estate market. In addition, liquidity improves in the market, the real estate investment sector becomes more professional, and new jobs are created in the real estate sector. The international investors come from many parts of the world, and Asian and North-American investors are increasing in number.

Lively business premises market and high occupancy rates in retail or wholesale premises in the Helsinki Region

Recent economic growth has stimulated the market for rented business premises in Helsinki. In the real estate investment market, too, trade has continued to be lively in the Helsinki Metropolitan Area. The effects of economic growth appear especially in the form of rising rents for premises in the most central areas and of improved occupancy rates. Premises for wholesale or retail trade show high occupancy rates, 94 per cent, in the Helsinki Region, as also in Helsinki proper: 94.8 per cent.

At the same time, however, a growing supply of wholesale or retail premises along with changing consumer behaviour have caused uncertainty on the market. The most important changes in this market these last few years include growing online shopping, increasing focus on liability aspects, and the impact of these on consumption. Yet another factor is consumers’ increasing orientation towards ever larger and more accessible shopping outlets.

There are still plenty of business premises being built in the Helsinki Region, but a weakening is expected as some large developments such as Pasila and Kalasatama are gradually completed. The index for office rents rose in 2018 in Helsinki’s central business district, but the vacancy rate of offices premises has not declined noticeably. The highest occupancy rates are found in central Helsinki and in Pasila, whilst vacancies are most common in Herttoniemi and Pitäjänmäki.

Old business premises are turned into dwellings or hotels whilst new premises are also built

In 2018, over 100,000 square metres of office premises were taken out of office use in the Helsinki Region. This is a high figure compared with the average of the last ten years, which is 54,000 sq.m.. Over half of these premises were turned into dwellings, and roughly one-third into hotels.

In 2017-2019, the total floor area of new wholesale or retail premises built in the Helsinki Metropolitan Area will also exceed 100,000 sq.m. per annum. This is more than twice as much as the average of the last ten years. Construction of production facilities in the Helsinki Metropolitan Area is still focused on Vantaa.

Real estate investment market still lively in Helsinki Metropolitan Area

In 2018, the volume of real estate transactions in the Helsinki Metropolitan Area was almost larger than ever, second only to the record year of 2017. Office premises, most of all, were the ones changing owners – around one-third of transactions. In the care sector, especially, the turnover in euros of real estate transactions was higher than ever before.

The Helsinki Metropolitan Area has a very strong position and role on the property investment market in Finland. By Christmas 2018, no less than 61 per cent of all real estate transactions in Finland that year had been concluded in the Helsinki Metropolitan Area.

The publication on the business premise market in Helsinki and the Helsinki Metropolitan Area in 2018 describes the situation and trend in autumn 2018. The main focus is on the level of rents for office premises and wholesale or retail premises in Helsinki, but the analysis also includes the essential sub-markets of Espoo and Vantaa as well as a comparison with other European capitals. The report is chiefly based on data from the independent information business KTI Kiinteistötieto Oy Ltd.

Publication:

Anu Henriksson: Toimitilamarkkinat Helsingissä ja pääkaupunkiseudulla syksyllä 2018, Helsinki City Executive Office’s statistics 2019:1, pdf publication. (in Finnish)

Queries:

Researcher Anu Henriksson, +358 40 3344 783, e-mail: anu.henriksson(at)hel.fi