CBRE Research | Finland Real Estate Market Outlook 2020
| February 14, 2020
Property markets remain buoyant in Finland amid a two-speed European economy
Global trading conditions continue to weigh on European growth, including Finland. The two-speed European economy, weaker manufacturing being off-set by a stronger services sector and resilient consumer demand, is expected to become more pronounced in 2020.
Property markets remain buoyant in Finland, particularly for Helsinki. Finland is economically stable and remains an extraordinarily reliable investment location. The Bank of Finland is predicting GDP growth to be in the order of 1% in 2020. Despite slowing export growth and capital investment rates, the unemployment rate is well below the 10-year average (6.7% vs. 8.2%). These economic fundamentals help maintain occupier demand and rental levels, particularly in the office and industrial & logistics sectors in the greater Helsinki Metropolitan Area. Overall, Finland is in very good shape and 2020 is expected to be another prosperous year.
The office market the most dominant investment sector
Investment volumes decreased from the previous year to €6.86 billion in 2019 but were still above the 10-year average of €5.1 billion. The office market remains the most dominant investment sector with a 35% share of commercial real estate investment followed by the residential and retail sectors. Office take-up was well above the 12-year average (374,000 vs. 354,000 sq m) and the large number of office projects under construction provides a further 196.000 sq m of stock.
Hotels sector growth expected to continue
CBRE expects the Hotels and Hospitality sector to grow as business and tourism demand helps develop investible product and there are over 9,000 rooms in the pipeline with 2,500 rooms scheduled for completion in the next two years. There are a growing number of institutional investors in Europe who are becoming more comfortable with the Hotel sector and typical international-grade management agreements with recognised operators as they continue their search for yield.