The economy has recovered quickly since the downturn caused by the pandemic. The economic recovery was also reflected in the real estate market in 2021, and the transactions market was very active. 2021 was an exceptionally strong year for the Nordic real estate market. The transaction volume in the real estate market in the Nordic and Baltic countries was a record EUR 77 billion last year. This far eclipses the usual transaction volume of between 45–50 billion that is generally noted in the region. The year 2022 will continue very strongly for both the Nordic and Finnish real estate markets.
The transaction volume of the Finnish real estate market rose to EUR 7.0 billion and the year can be described as active and successful. The growing transaction volumes in the real estate investment market have been driven especially by logistics and residential sectors. International investors accounted for 56% of Finland's transaction volume in 2021, and interest in residential in particular continued to be strong. In 2022, Newsec estimates that Finland's transaction volume will increase from 2021, and a new record is also possible. However, the crisis in Ukraine casts a shadow over development, but the final impact is still difficult to assess at such an early stage.
In 2021, the largest transaction volume was in the residential sector which reached a new record of EUR 2.6 billion. Investments in the new housing stock covered more than half of the transaction volume.
2021 saw significant office transactions in the Helsinki Metropolitan Area, but demand for office space in cities outside the Helsinki Metropolitan Area has increased, with reasonably large office transactions completed in 2021. International investors in particular have been active in office transactions outside the capital area.
The logistics sector also benefits from the economic recovery. In 2021, the total transaction volume in logistics properties rose to the third largest, after residential and offices. In Europe, the logistics sector is a leader in terms of transaction volume. Both elsewhere in Europe and in Finland, the challenge for the sector is the lack of supply.
Retail premises is still seen as a challenging investment segment due to the pandemic, and demand for retail premises remained low in 2021. Instead, public properties continue to be an active sector and international investors have further strengthened their position in Finland.
Newsec Finnish Property Outlook highlights in a more detail the light industrial sector. Demand has been evidently increasing and light industrial properties have become a significant real estate sector in Finland in terms of transaction activity. Light industrial has become popular among institutional investors who have never invested in this submarket before.
This is because light industrial properties are very flexible and lucrative and have very promising growth prospects. In the report, Newsec’s Head of Logistics & Industrial Anita Simaza lists 3 + 1 reasons why this sector is both profitable and interesting – and the new sexy. In addition, Newsec's Senior Advisor and partner Thomas Vane-Tempest highlights the Finnish perspective on investment demand growth.
For more information, please contact:
Managing Director, Newsec Advisory in Finland
Tel. +358 40 500 1310
Managing Director, Newsec Property Asset Management in Finland
Tel. +358 40 193 1042