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 Nordicum 55