With low interest rates, stability in the Nordic economies and consumer confidence at a record high level, the Finnish property market is on its way to recovery concluded the speakers at the Sponda Capital Markets Day in Helsinki on Tuesday September 21.
Property investment company Sponda Plc has been increasing cash flow by improving occupancy rates and through active portfolio management said Kari Inkinen, the CEO of Sponda Plc.
The company will also be looking for new investments in both Finnish and Russian markets. Sponda estimates that the positive development in occupancy rates, which started in Q2 2010, will continue for the rest of 2010 and values of the prime properties are expected to go up.
Penna Urrila from the Confederation of Finnish Industries stated that the growth figures for Finland this year will be higher than forecasted, and with a reasonable exchange rate, relatively stable labor market, low interest rates and consumers' optimistic expectations, the business outlook is relatively favorable.
Peter Rostrup-Nielsen, CRO from the Danske Bank, said there are indications of macroeconomic improvement, but higher capitalization is required to boost the economy. All the Nordic banks passed the EU stress test and the new regulation is intended to lead to more and better capital and increased disclosure.
Timo Ritakallio from the mutual pension insurance company Ilmarinen, the second largest owner and a long-term shareholder of Sponda, told the investment returns of Ilmarinen to be 3.7% in January - June 2010. Ilmarinen is planning to increase the property investment share from the current 10% to the level of 15% in the near future, with the inflation pressure and rising rental rates giving more reasons to invest in real estate.
In the Moscow City area, over 4,000,000 m² of office space is scheduled to be completed in the next five years according to Christopher Peters from CB Richard Ellis in Moscow. Even with low occupancy rate, the rental rates show signs of steady growth in the prime sector.