Municipalities outsourcing their property holdings

13.2.2019

The public sector and municipalities, in particular, are in the process of changing their property strategy and not all municipal property investments are necessarily recorded in their own balance sheets any longer. A major driver in this change was the EUR 165 million transaction between the City of Helsinki and Union Investment signed in December last year regarding the urban environment house to be erected in Kalasatama, Helsinki. Newsec acted as the city's advisor in the transaction and the related analyses, and the insights into the new municipal policies in managing property risks were confirmed. Affordable loans were no longer the main reason for owning properties. Instead, thinking based on the management of property risks showed that renting is the cheaper option for the city.

The future arrangements between The Counties' Service Centre for Facilities and Real Estate Management and municipalities concerning social welfare and health care properties have already contributed to fresh thinking in municipalities' property risk management. Several municipalities have rearranged the ownership of their social welfare and health care properties to comply with the market conditions and sold or leased them.

Transactions in care and school properties reached record numbers last year and the trend remains strong this year. Swedish Hemsö and Finnish eQ property funds are particularly active buyers in this sector.

Read more in Newsec's spring Property Outlook Finland. Sign up to receive a download link to your email at www.newsec.com/insights/reports/finnish-property-outlook-spring-2019/.