Transaction volume fell to €2.6 billion in 2023

January 16, 2024

According to the KTI statistics, the property transaction volume amounted to €2.6 billion in 2023, which was the lowest volume since 2013. Both in 2021 and 2022, the annual volume exceeded €7 billion. The average size of the transactions was clearly lower compared to previous years, and the number of transactions decreased markedly. In 2023, approximately 180 professional property transactions exceeding one million euro were carried out, while in previous years the number has varied between 250-350 transactions.

In the last quarter of the year, transaction volume amounted to €820 million, which was 38% lower than in the corresponding period in 2022. The highest quarterly volume in 2023 was recorded in April-June, which was the only quarter when the volume exceeded €1 billion. Both in the first and third quarters, the volume remained at only about €400 million.

Residential properties the most traded property sector

Residential properties were the most traded property sector for the third consecutive year, accounting for 27% of the total volume in 2023. However, the volume of residential property transactions only amounted to slightly over €700 million, which was the lowest volume in this sector since 2014. The largest residential portfolio transaction of the year was recorded in late spring, when the US investor KKR acquired 1,200 rental apartments across Finland from Kruunuasunnot. Avant Capital Partners acted as KKR’s investment partner in the transaction.

Both industrial and public use properties accounted for 22% of the total volume. In the industrial property sector, the volume was boosted especially by logistics property transactions. Public use property transaction volume decreased by 65% compared to record-high volume of 2022, but a couple of large public use property portfolios were sold also in 2023. In the last quarter of 2023, eQ Community Properties Fund sold two care property portfolios to Nrep and Northern Horizon’s fund for a total price of approximately €175 million. Also Kinland was active in the transaction market in 2023.

Office and retail property transaction volumes remained low, and they accounted for 17% and 10% of the total volume, respectively. Swedish investor Niam acquired three significant office assets in Finland in 2023 and was the most active player in the office market.

Foreign investors carried out transactions in all property sectors

Foreign investors continued to be active in all property sectors in 2023. In total, foreign investors acquired properties worth over €1.4 bn, while their sales totalled less than €0.5 bn. More than half of foreign investors’ investments were originated from other Nordic countries. KKR was the only newcomer, who entered the Finnish market during the year. Of the domestic property investor groups, property funds were, once again, the most active buyers, accounting for 21% of the total volume. The shares of other domestic investor groups remained low.

More detailed information and analysis on property transactions in Finland can be found in the KTI Transactions information service. For more information, contact: Mikko Soutamo (mikko.soutamo(a)kti.fi, +358 50 548 0480).

KTI Market Review and Rakli-KTI Commercial Property Barometer Autumn 2023: Property transaction volume remains low

The adjustment of the Finnish property market to the rapid increase in interest rates during the past year and a half is still in progress. Property transaction volume remains low, only at €1.8 billion in the first three quarters of 2023. Property yields continue to increase, although real market evidence for yields remains very scarce. Outlook for rental markets remains subdued in office and retail markets, whereas in industrial space markets, rents are expected to continue increasing. In the rental residential markets, the rapid increase in supply in Helsinki metropolitan area in particular has limited rental growth in recent years, but the construction volumes are now decreasing sharply, which is expected to melt down the oversupply. 

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Kati Paatela has started as a Director at KTI Property Information Ltd in August

Kati Paatela (M.Sc. Tech, BA(Hons)) has started as a Director at KTI Property Information Ltd in August.  Her responsibilities include client coverage and service concepts.  Kati returns to KTI from Elo Mutual Pension Insurance Company where she was Portfolio Manager responsible for international real estate investments.  Kati’s previous experience includes Portfolio Management at Sampo Plc and an Analyst role at SEB.  

KTI Market Review and Rakli-KTI Commercial Property Barometer spring 2023: The overall economic and financial market conditions are reflected in the property market

The property investment market sentiment is dominated by the change in the financial and investment markets and the uncertainty of the overall economic outlook.  Property market transaction activity has slowed down dramatically in recent months. Differing price perceptions of potential buyers and sellers effectively prevent transactions from happening. In the rental markets, residential market is characterised by an increasing supply of small apartments, especially in the Helsinki metropolitan area, due to which the increase in rents has been significantly lower than inflation during the past year. In the commercial property rental markets, the economic uncertainty is holding back the renting of office and retail premises. The strongest rental market situation is in logistics premises, where occupancy rates remain high and rents still have room for growth.

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Transaction volume amounted to €7.2 billion in 2022

Property investment activity decreased in the latter half of 2022 in the Finnish property market due to the increased economic uncertainty. The transaction volume of the first half of 2022 amounted to almost €4.5 billion, which was the highest H1 volume ever. In Q3 and Q4, transaction volumes reached €1.5 billion and €1.2 billion, respectively. The total transaction volume of 2022 amounted to €7.2 billion, and the volume increased by 2% from the previous year. The largest transaction of the year was the acquisition of the Stockmann department store property in the Helsinki CBD by Keva for €400 million in the first quarter of the year.

Residential and public use properties most traded property sectors

Residential properties were the most traded property sector for the second consecutive year, accounting for 29% of the total volume (€2.1 billion) in 2022. Public use properties accounted for 21% of the total volume, and they reached a new record annual volume of more than €1.5 billion. Sector’s transaction volume was boosted by several transactions, where municipalities sold their service properties to property investors. Transaction activity of hospital and other healthcare properties in particular was high in 2022.

Despite of a few large office property transactions in Helsinki, the office property transaction volume decreased to €1.2 billion, which was the lowest annual volume since 2014. Also the volumes of retail and industrial property transactions amounted to approximately €1.2 billion. All these three commercial property sectors accounted for some 16% of the total volume in 2022.

Share of foreign investors decreased slightly compared to 2021

Foreign investors’ activity decreased towards the end of 2022, but, however, their share of the total volume in the latter half of the year increased markedly compared to the beginning of the year. In total, foreign investors accounted for 48% of the total volume in 2022 (€3.5 billion), while their share was more than 50% in both 2020 and 2021. Some 45% of foreign investors’ investments were originated from other Nordic countries. Five new foreign property investors entered the Finnish market during the year. The most significant newcomer was the Dutch Orange Capital Partners, which acquired over 4,000 rental apartments in two large portfolio transactions, together with Singaporean GIC. Of the domestic property investor groups, property funds were, again, the most active buyers, accounting for 31% of the total volume.

More detailed information and analysis on property transactions in Finland can be found in the KTI Transactions information service. For more information, contact: Mikko Soutamo (mikko.soutamo(a)kti.fi, +358 50 548 0480) or Olli-Pekka Virkola (olli-pekka.virkola(a)kti.fi, +358 50 330 5287).

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The Finnish property market developed positively on almost all fronts in 2021: the transaction market was brisk, positive economic developments supported the rental market, and strong investment and rental demand boosted construction. Expectations for 2022 were also positive at the beginning of the year, until the war in Ukraine changed the outlook.

However, the war does not seem to have any immediate severe effects on the Finnish property market: the transaction volume for the first four months of the year clearly exceeds that of the previous year, and investor interest extends widely to various property sectors. However, the effects of the war will extend to the Finnish property market, at least indirectly, through increased uncertainty and a deteriorating economic outlook. Over time, the changing economic and investment market environment will be reflected in both real estate investment demand and the space needs in different property sectors.

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