Helsinki, the capital of Finland is also the largest city in the country. Therefore, it is also being recognized as the focal point of the Finnish real estate market, attracting constant demand from both domestic and international investors, as well as producing the most important real estate transaction deals every year. The city is evolving incessantly and is set to remain one of the most important market areas in Northern Europe.
The export-driven Finnish economy is estimated to grow slightly during 2014. However, the forecasts have not been too encouraging with most of them predicting only a low rise in GDP. This can be attributed to the international context, the relatively shy growth in the Euro countries, and also some structural long-term challenges in the Finnish economy. A major boost to the economy would require a higher level of demand for Finnish products and exports. The difficulties in the paper and forest industry have also been a setback to the recovery process.
@Antti Yrj & Ânen
Helsinki remains the most attractive city in the Finnish real estate market in terms of investment activity. Traditionally, the biggest players in the investment market have been domestic pension funds and listed real estate companies. Foreign investors as well as some non-listed real estate companies have contributed to the investment market in the past. It has been estimated that the transaction volume in Finland may rise in 2014 compared to the previous years and the figure could be boosted by some large transactions taking place in Helsinki.
The office market in Helsinki has remained relatively stable through the years, although some secondary office areas outside the city center have been suffering from high vacancy. For example, the average vacancy rate in the Helsinki CBD is approximately 7% but in the Herttoniemi area the vacancy rate stands at almost 21%. Although oversupply exists in some areas, the development activity in Helsinki has remained and several large schemes have evolved in the past couple of years. Moreover, some old office buildings are being converted to residential use in the Helsinki CBD. Yields have remained stable in core assets and the trend is expected to continue in the near future. However, there has recently been some movement in secondary yields as the tenant focus is switching more and more to the core locations.
The retail market in Helsinki has traditionally been one of the most active segments of the commercial property market. There is only a limited amount of high-street locations in the whole country and most of them are located in Helsinki. In addition, there are several shopping centers located either in the heart of Helsinki, such as Forum, City Center, and Galleria Esplanad, or very close to the city center such as Kamppi and Kluuvi. Department store Stockmann has also traditionally been recognized as an important player in the Helsinki retail scene. Investors have remained keen on core assets, whereas many international retail brands continue to be interested in the market. Helsinki also boasts some impressive out of town shopping centers, such as Wereldhave-driven Itis in the eastern part of Helsinki.
The most popular logistic area in the city of Helsinki is located in Vuosaari Harbour. Moreover, Helsinki International Airport, which is located in Vantaa just a few kilometers outside Helsinki, is one if not the most important logistic areas in the whole country. The biggest players in the market are SOK, Kesko, Itella, Schenker, DHL, and DSV. Vacancy levels are low, with the average vacancy rate being approximately 5% in Helsinki. However, there has been a slight growth in vacancy levels, as a result of increasing demand for efficient spaces. Unlike logistics properties, industrial properties have again attracted the interest of owner-occupiers instead of institutional investors. New development projects are initiated cautiously and speculative developments are currently on hold.
The hotel market in Helsinki has remained stable for the past few years. Demand is limited, but there are a few chains competing for tourists, such as SOK, Scandic, and Restel. There are also some budget hotels such as the Omena hotels chain, which aims to attract people by offering cheaper prices. Helsinki is the main area for hotel developments. The newest trend in the hotel market has been to convert older office buildings to hotels. There are a few development projects underway, for example, an old multi-story building in the Helsinki CBD previously occupied by the Finnish Police will be converted to a hotel. Furthermore, a number of apartment hotels have been established in the Helsinki CBD, with the healthy number of Russian tourists which has increased the need for hotel beds.
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