Figures

Finland Investment Figures Q4 2023

January 29, 2024 2 Minute Read

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Low investment activity through tightened financial conditions in 2023

 

Finnish investment market slowed down in 2023 with higher interest rates and cost of capital caused transaction activity to dent lower. Investment volumes saw a 68% decrease year-over-year with the total investment reaching a mere €2.3 billion, the lowest volume since 2012. International investors continued to be active in the Finnish market and the share of cross-border capital remained high. 56% of total investment came from cross-border investors. The capital city region attracted 39% of total volume, marking the first time in over ten years that the Helsinki Metropolitan Area’s share was below 50% of total investment. 

 

Investors preferred I&L, residential and social infrastructure properties, while offices remained out-of-favour over the course of 2023 as the sector saw the most significant repricing of all sectors. I&L was the largest sector in the Finnish market with 26% of total investment followed by residential (22%) and social infrastructure (22%). Residential prime yield saw a 90-basis point increase to 4.50% during 2023, while logistics prime yield moved out by 75 basis points to 5.50%. The prime office yield decompressed by 115 basis points to 5.00% in 2023. In retail, shopping centre prime yield decompressed to 6.00% and big box retail prime yield to 7.25%, respectively. Hotel and social infrastructure prime yields were standing at 5.50% at the end of the year. The disconnect between buyers and sellers is starting to unravel as prime yields have seen increases of 150-200 basis points across sectors from the lows in early 2022, and the market players are becoming more and more aware and realistic about the current property values.

 

Moving forward, the outlook for the Finnish market is cautiously optimistic for 2024. Over the next 12 months, it is anticipated that the cooling of inflation and stabilization of interest rates will provide a much-needed boost to the market, pulling the investment market back into recovery mode in the second half of the year.

 

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