According to Newsec's forecasts, the 2016 sales volume will come close to EUR 7 billion, of which an estimated 40 percent will be rental residential transactions. In 2007, these amounted to only two percent of the record total volume of EUR 6.3 billion, while last year the relative share from apartment buildings was 20 percent.
The office market does not play a major role in increasing the liquidity of major transactions and its pricing is not showing signs of overheating either. We believe that the office market investment demand will remain strong at least for the following year, and that there will be a growing number of large-scale portfolio arrangements this autumn.
We predict that interest rates will not experience significant changes during this year or next.
The rental residential market has also opened to international investors. Housing investment company Sato Oyj's largest current owner, for example, is Swedish, while the second largest is from the Netherlands. German investment capital has also found its way into our rental residential market.
As rental apartment prices in rental residential transactions in larger growth centres have gone up by more than 10 percent in the last two years – which is considerably more than the increase of owner-occupied apartment prices – more moderate development is expected in this sector in the future. Housing demand remains strong due to the urbanisation caused by migration and investors consider this sector fairly stable. We have witnessed a significant increase in international interest in large-scale rental residential portfolio transactions, so we do not believe that the price peak has yet been reached.
Finnish capital investors have founded unlisted property funds in the office market in the last couple of years, attracting investments from international investors. This has ramped up property investment demand and diversified our property market, which, in turn, has increased competition and supply. When selecting an office space, for example, the tenant no longer has to settle for work environments with non-adaptable layouts and no air conditioning, as there are plenty of moderately priced modern work environments available in various locations.
Rent trends seem modest in all sectors at the moment. Even the apartment sector is closer to a market balance than it has been in decades. The high demand for small rental apartments in larger growth centres keeps the rent trend of such apartments above the inflation rate, at least for the foreseeable future.
The Rental Residential Market is Buzzing in Finland
Finland —
This year will break the 2007 record number of major property transactions in Finland. The previous peak was brought on by international investors surging into the Finnish market as well as banks' lax lending policy. At that time, foreign investors accounted for approximately 60 percent of the sales volume, and loans amounted to as much as 70–90 percent of the transaction value. Now, foreign investors' share of completed transactions is approximately 20 percent and the loan-to-value ratio is 50–
2016-09-09
Axel Ohlsson
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