6% return on real estate investments in Finland

Robust economies and growth have laid the foundation for the positive development of the Nordic real estate markets, according to Aberdeen Asset Management.

The average total return on real estate investment in Finland was 6.0% in 2012, according to the IPD Nordic Annual Property Index. Eric Nyman, who is responsible for Business Development at IPD Norden, believes that many investors view the Nordic real estate markets as a safe haven when the economy is in turmoil.

According to Nyman, economic growth has been more robust in the Nordic countries than in the rest of Europe and the United States, and this is also visible in the positive development of the returns from the real estate sector. IPD’s statistics show that the annual return of the Nordic housing market has been 7.6% during the past decade.

Positive outlook

Commercial properties have brought good returns in Finland, according to Aberdeen Asset Management. The positive development is likely to continue because inflation has remained low. Nordic commercial property delivered a total return of 5.6% for 2012, compared with 8.2% for 2011, according to IPD.

The housing sector is often successful in a low inflation environment, according to Nyman. When inflation is expected to remain moderate also in the future, in the short term it is very possible that that the positive trend will also continue in the housing market, he says.

Sources: Kauppalehti, IPD Norden