Offices in the Helsinki CBD performed strongly in 2015 amid a climate of challenging economic conditions and overall market depreciation.
According to new research from KTI, market values of office properties depreciated in most areas in the Helsinki metropolitan area in 2015, pressured by high vacancy rates. However, the Helsinki CBD offices continued to attract both investors and occupiers, and market values increased by 6.7%. The increase was supported by both decreasing yields and increasing rental values.
However, income return in the Helsinki CBD fell, mainly pressured by decreasing occupancy rates and increasing values. The average capital growth for offices for whole Finland was 0.2%. Income return decreased to 5.9% as both occupancy rates and rents decreased.
The office sector was the only commercial market to show signs of positivity according to the KTI Index. Retail property performance was weak with the total return only amounting to 3.9%, due to decreasing market values, and capital growth was -2.3% for the whole of Finland. However, market values of shopping centre properties in the Helsinki metropolitan area remained stable. This was supported by increasing number of visitors and sales, due to which occupancy rates remained high and yields decreased. The income return for all retail properties stood at 6.3%. Income return for shopping centres remains lower than for other retail, mainly due to higher market values.
The industrial property sector delivered a total return of 6.2% in 2015. Market values continued decreasing by 1.7%, mainly due to a decrease in rental values. Income return was 8%. Declining market values supported the level of income return, since rents also decreased and occupancy rates deteriorated slightly. Warehouse properties produced lower returns than other industrial and logistic properties in 2015, due to more negative capital growth. Values of logistics properties remained stable and income return was the highest among industrial properties.
Market values of commercial properties decreased by 1% on average, while values of residential properties continued to increase. The residential sector has been the best performing property sector in the KTI Index every year since 2008.; in 2015, it delivered a total return of 8.9%.
