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Business Conditions – Finland


According to the Economic Bulletin of the Ministry of Finance, the latest information on economic trends and measurements of business expectations indicate a return to moderate growth in the eurozone. The contraction of GDP stopped in the spring of 2013, but there was no growth during the second half of the year.

According to an estimate published in December by the Finnish Ministry of Finance, Finnish GDP declined by 1.2 per cent in 2013. The economy is expected to bottom out and take a turn to slow growth in 2014. The forecast of 0.8 per cent GDP growth for 2014 is based on increasing foreign trade. The current forecast for GDP growth in 2015 is 1.8 per cent.The turn to growth will be supported by the recovery in the eurozone, the strengthening of economic growth in Finland’s key export markets as well as an increase in services and manufacturing.

Finland’s export market seems to have returned to the growth track during the second half of 2013, but export volumes throughout the entire year are estimated to have declined by 0.8 per cent. The growth forecast for exports in 2014 is 3.6 per cent. The growth will be based on the economic growth in Finland’s key export countries and the upturn in world trade.

According to estimates, import volumes declined by 1.6 per cent in 2013. They are expected to return to a 2 per cent growth track as exports markets gain strength in 2014. Weak growth in consumption and the reduced number of investments will slow down the development of imports.

Private consumption is estimated to have declined by 0.6 per cent in 2013. The reasons for the decline were the weak development of real income and increased uncertainty. Private consumption is expected to grow by a mere 0.2 per cent in 2014, since the number of employed workforce will continue to decline and since development in real income will remain weak.

The employment situation grew weaker in 2013. According to estimates, the unemployment rate rose to 8.2 per cent during 2013. In 2014, the unemployment rate is forecast to rise to 8.4 per cent due to weakened growth expectations, weak demand in the domestic market and the compatibility problems in the job market.

The transaction market

The transaction market for properties was very sluggish for the first three quarters of 2013 and seemed to remain clearly lower than in the previous year. Transaction volumes in the fourth quarter were fairly brisk, reaching EUR 1.13 billion according to KTI. The transaction volume for the entire year was EUR 2.38 billion, representing an increase of over 11 per cent on the previous year (EUR 2.14 billion).

Transactions conducted in the metropolitan area accounted for 69 per cent of the volume. The popularity of residential unit portfolios and nursing home properties as investment targets grew and accounted for a third of the entire volume. The share of foreign buyers was 30 per cent, which represents a 7 percentage point increase on the year before.

Transactions are expected to increase slightly in 2014, along with the emerging economic growth. Some significant property sales are under way during the first half of the year and the markets are expected to become more active, also in terms of secondary properties.

The market for office premises

The increase in the vacancy rates of office premises in the metropolitan area that began in 2012 continued into 2013. The increase is the result of the economic conditions which continued to be weak and the additional supply brought by completed office premises. According to Catella, 12.4 per cent of the office premises in the metropolitan area were vacant at the end of 2013. The vacancy rate had thus increased by 1.4 percentage point.

This growth in vacancy rates is expected to slow down in 2014, as the number of new premises set for completion this year is lower and since the budding economic growth is likely to increase demand.

The vacancy rate in the central business district of Helsinki rose to 7.9 per cent during the first half of 2013, but this increase stopped during the second half of the year. The vacancy rate at the end of 2013 was 7.3 per cent, which is 0.9 percentage points higher than in 2012. The vacancy rate for the entire central district rose to 5.4 per cent during 2013.

According to Catella, the increase in the market rent levels in the very centre of Helsinki bottomed out in late 2013. The decline in the rent levels in other important office areas bottomed out, and rents remained on par with the levels prevalent in early 2013. The weak economic growth forecast for 2014 is not expected to change the current situation.

At the end of 2013, the rent level for new leases in the Helsinki city centre was, on average, approximately EUR 318/m² per year. The rents for prime premises stood at EUR 369/m² per year. The rent levels for the entire metropolitan area varied from EUR 120 to EUR 369/m² per year.

Some 82,000 square metres of new office space was completed in the metropolitan area in 2013. A further 90,000 square metres is still under construction, with some 50,000 square metres scheduled for completion in 2014.

The weak economic situation was also visible as an increase in vacancy rates in Tampere, Turku and Oulu in 2013. Vacancy rates at the end of 2013 were 9.4 per cent in Tampere, 9.6 per cent in Turku and 8.5 per cent in Oulu. Rent levels increased slightly despite the increase in vacancy rates. Rent levels in Turku varied from EUR 156 to EUR 192/m² per year, from EUR 156 to EUR 204/m² per year in Tampere and from EUR 144 to EUR 180/m² per year in Oulu.

The market for retail premises

The occupancy rate for metropolitan area retail spaces declined slightly in 2013, but supply continued to be scarce. The occupancy rate is expected to remain at a high level in 2014 due to migration flows to the Helsinki Metropolitan Area, the start of economic growth and the limited supply of new retail space. Approximately 26,000 square metres of new space was completed in 2013, with a further 55,000 square metres of retail space currently under construction.

The vacancy rates for retail properties in 2013 were 3.5 per cent in the Helsinki Metropolitan Area, 5.9 per cent in Turku, 2.7 per cent in Tampere and 2.7 per cent in Oulu.

In 2012, the vacancy rate in the metropolitan area was 2.8 per cent, meaning that the rate increased by 0.8 percentage point over the year. The vacancy rate for retail properties is expected to remain stable in 2014.

The increase in the rent levels for retail space in the central business district of Helsinki stopped during 2013. The rent level was the same as during the previous year, or EUR 900–1,920/m² per year. Rent levels in the other major cities also remained nearly unchanged. In Turku, rent levels ranged from EUR 480 to EUR 960/m² per year, in Tampere they were between EUR 600 and EUR 960/m² per year and in Oulu EUR 480–1,020/m² per year.

The market for logistics properties

The market for logistics properties in the Helsinki metropolitan area was relatively stable and inactive in 2013. The rent level at the end of 2013 remained on par with the level the year before, or approximately EUR 106/m² per year, on average.

The vacancy rate increased slightly and stood at 6.1 per cent at year end. Approximately 21,000 square metres of new logistics space was completed, with a further 42,000 square metres currently under construction.

The two-year contraction in exports and imports is now visible in the increased vacancy rates. If the growth in exports and imports forecasted for the year 2014 will realize, the key figures of the logistics market may improve at the end of the year.


Finnish Ministry of Finance
Catella Property Group
KTI Kiinteistötieto Oy