The slowing economy does not yet seem to be impacting the sentiment in the Finnish real estate investment or rental markets. Transaction activity remains high, although, due to the smaller average size of transactions, year-to-date volume is clearly lower than in the corresponding period in two previous years. Property market professionals expect investment demand to remain high as the period of extreme-low interest rates continues. Due to the strong investment demand, prime property yields continue to compress.
In the Helsinki Central Business District (CBD) offices, rents have, again, reached new records, and the outlook is positive for the near future. Strong rental demand has spread from the Helsinki CBD to the surrounding areas, where occupancy rates and rents have continued to increase. The supply of high-quality, modern office space continues to increase also in other submarkets, due to active new development.
Despite the challenging outlook of retail trade and shopping centre markets, property market professionals’ expectations for retail rents are now more positive than in the spring. The increasing shopping centre supply in the Helsinki metropolitan area, is however, increasing the uncertainty in the market, and pressuring the outlook for rents and occupancy rates.
Residential rents continue to increase in all major cities despite the rapid increase in supply. In 2020, a record number of new rental apartments will be completed in the Helsinki metropolitan area. Strong rental demand supports the attractiveness of residential properties in the investment market.