Finland Real Estate Market Outlook 2025

After over two years of challenging economic conditions, the Finnish economy is poised for growth in 2025, driven by decreasing interest rates, improving real disposable incomes and slowing inflation. Recent data indicates a notable improvement in confidence indicators in Finland and this positive trend reflects growing optimism among businesses regarding future economic conditions, driven by stable domestic demand and favorable export prospects. Finnish economy is expected to grow by 1.8% and inflation will cool down further to 1.5% in 2025. The rebound in growth in 2025 is supported by two key factors, cyclical industry recovery and infrastructure investment, especially in the artificial intelligence led data centre investment.

The Finnish real estate investment market bottomed out in 2024, with total investment reaching €2.46 billion, up 8% year-over-year. Industrial and logistics was the largest sector with 27% of total investment followed by residential (22%) and social infrastructure (22%) in 2024. Yields stabilized and the gap between buyers and sellers narrowed. The sector repricing saw prime capital values bottoming in 2024, and current pricing levels are starting to see traction in new investment. Nordic banks were active in restructuring and refinancing for commercial real estate, and the much-anticipated distress did not surface for Finnish and Nordic real estate investors in 2024. The opening of the financing market is a clear positive for the real estate market and is indicating optimism towards further recovery, even though, the commercial real estate fundraising market has not yet seen a widespread turn to better. 

Living and industrial and logistics (I&L) are topping investor preferences, but we expect the appetite for larger transactions to boost recovery in other sectors, such as retail, as well in 2025. Alternatives, including social infrastructure and more recently data centres, will continue to see growing interest from international investors. Although still liquidity constraint and selective, the investment market is back on the growth track and the Finnish investment market will see +15% year-over-year growth in 2025.