The Finnish Property Market 2012 - KTI

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The year 2012 has, again, started quietly with only a few transactions, with a total volume of ca. 200 million, published by mid-February. In the quiet market, the yield levels have remained opaque, as this information has only been published on very few transactions. The market is still, due to investors’ focus on prime properties, characterised by increasing yield gaps between core and non-core properties. The results of the KTI-RAKLI Property Barometer, carried out in October 2011, were well in line with the few published yield quotations, indicating a 5.75% yield for a prime office property in the Helsinki central business district. Helsinki centre was also expected to retain its attractiveness and show stable yield levels also in the near future. However, yields in all other market areas showed greater divergence and opaqueness, and were also expected to increase within the next year. Measured by the KTI Index, the total return on the Finnish property market amounted to 6.0% in 2011. Total return consisted of net income of 6.2% and slightly negative capital growth of -0.2%. The total return was characterised by increasing divergence between property sectors. Prime office yields in major Finnish cities Total returns by property sector 2001-2011 Helsinki Espoo Vantaa Tampere Turku Oulu Jyväskylä All property Office Retail Industrial Residential % 10 % 20 15 8 10 6 5 4 autumn 1995 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: KTI Index Source: RAKLI-KTI barometer survey 34 The Finnish Property Market 2012 autumn 1996 autumn 1997 autumn 1998 autumn 1999 autumn 2000 autumn 2001 autumn 2002 autumn 2003 autumn 2004 autumn 2005 autumn 2006 autumn 2007 autumn 2008 autumn 2009 autumn 2010 autumn 2011 (autumn 2012) Photo: NCC / Sini Pennanen
5. Property sectors – market structure and practices 5.1 The office market Stock The total stock of office space in Finland’s major cities amounts to some 11 million square metres. Of this, more than eight million square metres is located in the Helsinki metropolitan area, the dominance of which in the Finnish economy and commercial property market is greater than in many other European centres of the same size. Office stock in the Helsinki region has increased significantly in recent years through completions of newly or redeveloped office space. However, due to increase in stock, as well as challenges caused by the economic turbulence, high vacancy rates remain a major problem for the Helsinki metropolitan area office market. Players Offices have typically played a dominant role in Finnish institutional property portfolios. In the KTI Index, for example, offices currently represent some 36% of the total database. Almost 80% of this is located in the Helsinki metropolitan area. The largest proportion of investable office stock is multitenant office buildings, typically located in city centres and recognised office areas. The second category is single-tenant buildings used typically by company headquarters. These can be found both in the Helsinki central business district (CBD) and in some other areas in the Helsinki metropolitan area. In the past, headquarter properties were typically owner-occupied, but this is not necessarily the case any more. During the recent years, several companies have sold their headquarter properties to investors, and, in the case of new development, offices are typically developed together with investors. The third office category is business-parktype properties located near good traffic connections, mainly in the Helsinki metropolitan area. The supply of office premises in business parks, in particular, has been Main office areas in the Helsinki metropolitan area 35 The Finnish Property Market 2012
Page 1: The Finnish Property Market 2012 1
Page 5: Contents Preface 7 1. Basic facts a
Page 8 and 9: 1. Basic facts about Finland 2. The
Page 10 and 11: Photo: Skanska / Pauliina Munukka 1
Page 12 and 13: Retail sales and consumers' expecta
Page 14 and 15: 3. Institutional aspects of the Fin
Page 16 and 17: Rental practices Rental practices v
Page 18 and 19: In some cases, the rental agreement
Page 20 and 21: Tax on real property Real property
Page 22 and 23: 3.5 Legislation for indirect proper
Page 24 and 25: The Finnish pension system is a mix
Page 26 and 27: Finnish pension institutions intere
Page 28 and 29: Photo: NCC / Sini Pennanen 28 The F
Page 30 and 31: 30 The Finnish Property Market 2012
Page 36 and 37: increasing quite rapidly in recent
Page 38 and 39: During the past five years, some 74
Page 40 and 41: The retail space stock increased in
Page 42 and 43: Total return on retail investments,
Page 44 and 45: Government committee calls for mode
Page 46 and 47: Total return on residential propert
Page 48 and 49: 5.5 Hotels Stock There are 742 hote
Page 50 and 51: Expected development of office rent
Page 54 and 55: Leppävaara Photo: SATO / Antonin H
Page 56 and 57: 6.2 Other growth centres: Tampere,
Page 62 and 63: The Finnish Association of Building
Page 65 and 66: in co-operation with: 65 Publisher

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