The real estate market is in a strong transition both in Finland and internationally. The polarization of the market has led to an increasing influence on the location and the functionality of the property. Demand for modern facilities in the best locations is growing and the value of second-tier real estate knocks.
The real estate market has traditionally developed steadily without major upheavals. However, the situation has changed over the last few years. The webshop has taken customers from many retailers and the company’s wishes for office space have changed. For many, the traditional office space is no longer worthwhile, as a growing number of companies want to offer relaxed communal spaces to their employees.
“The role of business premises in recruiting is growing all the time. Key arguments in addition to the location are comfort and versatility, “notes Tero Lehtonen, Director of the Finnish Evaluation and Consulting Unit for JLL’s international real estate advisory services .
Offices built in the 1980s often have low-rise rooms and small windows, and therefore can not easily be converted into modern facilities. Changing such a property to meet today’s requirements is generally worthwhile only if its location is excellent.
Regional differences are, according to Lehtonen, in a strong growth. For example, big cities and well-placed shopping centers generally perform well, while in smaller locations outside the traffic streams they lose their customers. The rental level for office space in several tier two offices has dropped significantly.
Some cities have, through their own decisions, helped to overcome the center. The construction of large shopping centers outside the city has changed customer habits.
“Many cities are now thinking about how to restore vitality to the center. A few cities have built a toripark so that more people will shop in the center of the city, “says Lehtonen.
The real estate market today offers wider opportunities than before, which also facilitates risk diversification. In addition to residential buildings, there are alternatives to office space, warehouses and retail business premises.
The popularity of e-commerce has increased investors’ interest in storage space and their share in investor passports is steadily rising. However, large international online stores do not need to build large central warehouses in Finland, as a few smaller centers are usually enough to control logistics flows.
According to Lehtonen, the Finnish real estate market has significantly increased international capital. In the first wave came Swedish and German real estate investment companies. Then came British, American and French companies. The latest phenomenon is the entry of Asian investors.
Today there are several non-UCITS funds that invest in real estate. These funds are also available to private individuals.
The valuation of the value of the special funds investing in real estate is carried out by real estate appraisers (AKAs) authorized by the Central Chamber of Commerce and approved real estate appraisers (KHK). Definition of value is usually done once in the quarter. About 200 property valuers in Finland specialize in the valuation of real estate.
According to Lehtonen, changes in the property market place new demands on real estate appraisers. Market fragmentation leads to differences in the different regions and different real estate. Another factor affecting the work of evaluators is digitalisation.