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