Nordicum - Real Estate Annual Finland 2015 - Page 63

Photo: Ari Talusén Back in the Game Property transaction volumes have bounced back – will the trend last? In 2014, the total volume was close to EUR 4 billion, marking – by far – the highest volume since 2008. T he largest individual transaction of 2014 was the foundation of a new logistics and industrial property investment company Certeum Ltd (portfolio value EUR 917 million), but even without the Certeum transaction, last year’s total volume would have been up 60 percent from previous year. Janne Larma from Advium Corporate Finance comments that what we’re seeing now is, largely, things getting back to normal. “In addition, the property market has become more active partly because of the exceptionally attractive yields that real estate can provide in comparison to other alternatives.” investors have made several purchases in the Finnish market,” he points out. According to Larma, the Swedes are also keen on the neighbour since the market is easy enough for them to relate to. Also Germans, French and even Italians have been shopping around in Finland recently; and, according to Larma, also Danes and Norwegians are eager to get a piece of the action, too. Larma observes that as European main markets have seen prices go up pretty quickly, an attractive fringe market like Finland is bound to draw some attention. Foreign Power The strong interest of foreign investors is expected to continue also in the future. Of the respondents of RAKLI-KTI Property Barometer at the end of last year, some 60 percent believed that foreign investment demand will increase in the coming 12 months. This lends support to the total transactions volumes, which are also expected to increase, especially in the office and retail property sectors. Janne Larma is one of those who believe in the positive trend: he perceives for the upward trend to stay strong a long way into 2015 – and if the Finnish economy were to catch a break, at some point, those volumes would go up even more. “Already we know of several significant transactions that will take place in early 2015 and many interesting transactions are now entering preparation phase. We believe that taken as a whole the year 2015 will be at least as active as 2014 was.” Also, foreign investors have increased their activity of late; the share of foreign investors amounts to 38 percent of all transactions. Measured in euros, the volume of foreign investors’ transactions last year was higher than any annual volume since 2008. The biggest newcomer in the Finnish market is the Swiss Partners Group, which purchased all remaining retail and office properties of the Niam III fund for EUR 240 million. Another active player is Swedish investor Redito. At least for the moment, it seems that “Helsinki is the new Stockholm” in the market. According to KTI Market Review (autumn 2014) net yield for a prime office in Helsinki is some 100 basis points higher than in Stockholm, which is a strong sales argument in current market conditions, where investors do appreciate annual cash flows. In the world of turbulent currencies, the euro also strengthens the competitiveness of Finland compared to the other Nordic markets. Sweden Leads Shoppers Janne Larma agrees: as Sweden has witnessed elevated prices lately, Finland is becoming more attractive in the eyes of Swedish investors, too. “During the last two years Swedish Optimistic Outlook Construction Woes Still, not everything is sunshine and flowers in the land. KTI Market Review states that due to negative economic development, construction activity is decreasing in 2014 and 2015. Residential construction has slowed down due to weak consumer demand; residential property funds are trying to lower the hurdle for new construction st