The Finnish Real Estate Agents Association (SKVL) has released a forecast indicating that the housing market is starting 2024 with a capital drive. Demand for small apartments, which has been subdued for some time, is now on the rise. In Helsinki, the demand for newer and well-maintained single-family houses continues to be the strongest of all housing types.
SKVL's member professionals predict that the beginning of 2024 will continue to be a period of growth, compared to the strong fourth quarter at the end of 2023. Actual figures for 2023 reveal the sale of old dwellings experienced the most significant changes in small dwellings. Nevertheless, sales of family homes were much better than expected on average. During the last quarter of 2023, sales of small dwellings also increased as first-time homebuyers took advantage of attractive price levels.
Helsinki housing prices and safety overview
According to Numbeo, Helsinki's property price-to-rent ratio is significantly above the global average, standing at around 32.75. This ratio implies that it would take 33 years of paying rent to own a property in Helsinki.
The latest data from Statistics Finland shows that the average cost of purchasing a property in Helsinki is roughly €6,960 per m2. However, the value of a square meter for a waterfront property in Helsinki could differ from that of a suburban house in Espoo.
The most expensive neighbourhoods in Helsinki are likely to be Etu-Toolo, Kaartinkaupunki, and Punavuori, while the cheapest are Kontula, Vuosaari, and Malmi.
For instance, a 1-bedroom property with 60m2 of space in Helsinki would cost approximately €417,997, and a 2-bedroom with 85m2 of space would cost around €592,010. However, prices will change depending on the property and its location.
Expect to find steeper prices in the more upscale areas of Helsinki, such as Eira, where a house could cost around €1,316,601, and Toolo, where a house might be priced at €1,215,324. However, some locations cost less, such as Kallio, where you could find an apartment for €230,175, or Vallila, where one could be priced at only €184,140.
Compared to other parts of the country, the cost of living in Helsinki is generally higher. Prices for housing, transportation, and food are all relatively high, although it's still lower than in many other European cities.
Helsinki is one of the safest cities globally, with an impressive Crime Index. Helsinki's culture of respect for the law, combined with its strong economic and social infrastructure, has created an environment of safety and security, resulting in almost no crime.
Helsinki has an extensive and comprehensive mass rapid transit system that includes trams, buses, metro, and commuter rail.
Office market in Helsinki Metropolitan Area
In the latter half of 2023, there was increased uncertainty in the office occupier market, as noted in a report by Cushman & Wakefield. This uncertainty hurt decision-making, ultimately resulting in a decrease in demand. However, there was still a strong demand for prime offices and premises with excellent amenities that add value to employees. On the other hand, the demand for secondary assets remained weak, and it is expected that rental levels for secondary properties will continue to decline.
According to the Helsinki Research Forum, there was a vacancy rate of 14.6% in the thirteen key office areas in the Helsinki Metropolitan Area (HMA) in Q4 2023. This was an increase of 0.2 percentage points compared to the previous quarter, resulting in an 11,000m2 increase in vacancy. The growth in vacancy has slowed down compared to the previous two quarters. In 2023, nearly 50,000m2 of new office space was delivered to the HMA. There is also about 140,000m2 of office space currently under construction, which is expected to be completed between 2024-2026, including projects like We Land in Ruoholahti, Ilmalan Aura in Pasila (Ilmala), Nordea Campus extension in Vallila.
High demand for logistics spaces in Helsinki Metropolitan Area
The demand for occupier spaces in primary logistics submarkets is expected to remain high due to the growing trend of e-commerce. In particular, Vantaa and other top logistics areas in the Helsinki Metropolitan area have seen strong rental growth due to the limited availability of prime logistics premises and land. Vacancies are at their lowest levels due to high demand and limited opportunities. The population growth in the Helsinki Metropolitan Area and other major cities is expected to boost the demand for urban services and logistics and light industrial premises. Despite challenging market conditions, the outlook for industrial and logistics properties in key locations is expected to be positive.
In 2023, around 110,000m2 of new logistics premises were completed in the Helsinki Region, with about 20,000m2 in the Helsinki Metropolitan Area. Also, about 230,000m2 of logistics premises are currently under construction in the Helsinki Region, with the largest projects underway in Hyvinkaa, Tuusula, and Sipoo. These developments are expected to be completed between 2024-2025. Additionally, nearly 150,000m2 of other industrial space is currently under construction.
Keva and Mrec Investment Management Oy (Mrec IM) have established a joint company named Logian, focusing on Finnish, advanced logistics, warehouse, and industrial properties. Current investment commitments allow Logian to expand its portfolio to €300 million in the near future. Logian aims to invest in and develop logistics centre networks in key transportation hubs in the Helsinki metropolitan area, Turku, and Tampere, attracting high-quality users with excellent solutions.
Retail expansion and challenges in Helsinki Metropolitan Area
Around 30,000m2 of retail space was completed in the Helsinki Metropolitan Area in 2023. The new Kivis SC contributed 12,000m2 to the total completions. Currently, there are approximately 45,000m2 retail properties under construction in the HMA, which are expected to be completed between 2024 and 2026.
The discount store category is expected to experience steady demand in the big box sector, but there is still uncertainty in the fashion, hardware, and furnishing categories. Due to lower consumer spending, high-street retail and F&B are expected to face pressure. In the future, an increase in retail vacancies and a downward pressure on prime high street rents is anticipated to persist.
For more information, please see:
Cushman & Wakefield Marketbeat Helsinki Office Q4 2023
Cushman & Wakefield Marketbeat Finland Industrial Q4 2023
Cushman & Wakefield Marketbeat Finland Retail Q4 2023
Image source - Pexels.
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