What do you think of when you hear the term "residential real estate investments"? And what else do you think of when you hear the term "Finland"? An exotic combination? It may be that a holiday home in Karelia in the slowly approaching summer spontaneously comes to mind. But investors traditionally see it more rationally. An asset class and a market with clear upwards potential is the current picture they see. The combination unites exactly two aspects that have come on the radar of investors in recent years in search of attractive investments.
Did you know that
- in Europe, around € 60.5 billion were invested in residential real estate in the last year? Even more: for the first time since records of international transaction volumes began, "residential" has moved past the eternal second "retail", and will certainly stay there.
- last year's total volume in Finland, at € 8.9 billion, was the second highest ever? And the share of residential construction investments doubled in 2018? (19%, 1.69 billion €)
- Currently, the institutional housing market in Finland is in third place after office and retail with a share of 19% (€1.69 billion). A potential for the coming years can certainly be seen here.
- It is also going well economically in the far north: Finnish GDP is expected to rise by around 1.8% in 2019, with a stable forecast for 2020 and 2021.
- And last but not least: The demand for rental apartments in Finland remains high, especially for small apartments in large cities. Over the past 10 years, nominal rents in the Helsinki metropolitan area have risen by an average of around 3.8% per year. In other large cities, the increase has been somewhat lower, with the annual rent increase fluctuating on average between 2.5 and 3.5%.
It almost goes without saying that residential real estate there is less volatility than real estate in general and therefore offers a better risk-adjusted return.
In this Market Tracker, we have carried out the analysis for you. To be honest, we still have problems with the pronunciation of the place names.
We hope you enjoy reading this latest analysis.