Finland's €10bn RE investment record in 2017 unlikely to be repeated - KTI

Managing Director at KTI Property Information ltd Hanna Kaleva © LinkedIn

Real estate investment in Finland soared in 2017 to €10.2bn, beating by 38% the prior record set in 2016, according to research group KTI. But two large deals boosted the total, and peak volume is therefore unlikely to be repeated, CEO Hanna Kaleva told Business Immo Europe.

Investment in third quarter 2017 was supported by the largest-ever property transaction in Finland, the Blackstone unit Polar Bidco acquiring listed company Sponda. Another large deal closed in fourth quarter when China Investment Corporation and co-investors bought the logistics property company Logicor from a Blackstone fund. Of Logicor’s 13m sqm total European portfolio, 1.1m is located in Finland. The largest single deal of the year was the €250m purchase of a 50% stake in the Kamppi shopping centre in Helsinki by TH Real Estate European Cities Fund.

"Investor interest remains strong, and the number of players in the market continues to increase both through the establishment of new domestic structures and the market entry of foreign investors," Kaleva told BIE. During the year, several new foreign investors entered so that cross-border capital accounted for 68% of total volume.

Office properties were the most traded property type, accounting for €4.1bn or some 40% of the total. Retail and industrial properties accounted for 26% and 15%, respectively.

In 2018, deals to match the two exceptionally large transactions of 2017 are unlikely to appear however. "It is unlikely that there will be many other transactions of this scale, therefore breaking the record again in 2018 seems very challenging," Kaleva said. But she added: "Property yields remain attractive compared to most other markets, and as overall economic conditions improved markedly during the year, there’s now also more positive outlook in the rental markets... Active new development is also increasing the total market both in size and activity."

For the longer term, one interesting prospect is a plan to build a 50km tunnel under the Baltic Sea linking Helsinki to Estonian capital Tallinn on the European mainland, she added. "Some official preliminary plans and investigations are being carried out so it is definitely more than just a dream. But whether / when / how it will materialise still remains to be seen." she told BIE.

Business Immo