Finland MarketBeat

Ville Suominen • 7/21/2021

The Finnish economy has hit a minor slowdown at the start of 2021 after already recovering towards the end of last the year. The modest recovery is set to continue in the second half of 2021. The spring lockdowns were a success and sent covid-19 cases into a steep decline while vaccination rollout accelerated. GDP decreased -2.7% in 2020 and is set to grow 2.7% in 2021 and 2.4% in 2022. Together with GDP, CPI is set to accelerate in H2 but to remain below 2%. Finland has navigated well through the pandemic, but the economy is not completely in the clear yet. Low infection rates have allowed Finland to remain mostly open without major lockdowns or harsh restrictions. A significant contribution to GDP growth will be attributed to private consumption, improved consumer sentiment and a release of held back demand. 


Retail Property in Finland

According to Statistics Finland, consumer confidence improved to 4.6 in June 2021 (March 2021 at -3.0, long-term average at -1.8). In 2020 the total sales in the shopping centers decreased by 11.6% compared to 2019 (Finnish Council of Shopping Centers). 

 Compared to initial lockdown period in spring 2020, the demand was on a healthier level in early Q2. After the restrictions were eased, the retail occupier demand has notably increased. Companies are now more ready to make decisions regarding their business premises compared to 2020 and early 2021. Overall demand for retail premises has improved in May-June 2021. New international brands have opened new stores during the pandemic and are looking to further expand in the Finnish market. New entrants include KFC, Olivia, Lager 123, and Bestseller with their Normal-concept. This is mainly driven by the increasing Finnish purchasing power and significantly increased private consumption compared to the low activity during spring lockdown. 

Approximately 14,000 sq m of new retail premises have been completed in H1 2021. Also, there are currently 90,000 sq m of retail premises under construction in the HMA expected to be completed in 2021-2022, with the new Lippulaiva shopping centre in Espoo being the most notable development (44,000sq.m). 

A well progressing vaccination rollout, strong expected domestic tourism and bottled-up private consumption is expected to bring strong results for retailers. The summer will be make-it-or-break-it time for many retailers, defining the next steps according to profitability. 


Industrial Property in Finland

Exports are projected to continue to lag as the rest of the economy moves forward. Finland is forecast to be a net importer for the foreseeable future with help from a strong euro, which will continue to gain ground on the dollar for the next few years. 

Occupier market in the industrial and the logistics sectors remained mainly stable and unchanged during 2020. As the Finnish economy overall, the industrial operators in general survived the pandemic relatively unscathed. During the first half of 2021, occupier demand for industrial premises have gained some momentum, however, there was no evidence of prime rent level movement. 

In 2021 so far, some 10,000 sq.m of new logistics premises were completed in the Helsinki Metropolitan Area. In addition, there are currently some 60,000 sq m of logistics premises under construction in Vantaa. The developments are estimated to be completed during 2021 and 2022. The developments consist mostly of build-to-suit buildings, although some parts of the premises in developments are built speculatively. 

Export driven businesses might still face challenges due to the pandemic although the economy in general is starting to gain momentum during H2 2021. On the other hand, the occupier demand is expected to further improve in selected logistics segments and areas going forward as the consumers have been forced to get accustomed to e-commerce even for grocery shopping. The individual operators, often occupying the properties alone, might experience the remaining COVID-19 related challenges rather differently. Still, the outlook for the industrial properties can be seen as warily positive.  


Office Space Helsinki

Compared to the initial lockdown period in spring 2020, demand was at a healthier level in early Q2. After the restrictions were eased, the office occupier demand has notably increased. Companies are now more ready to make decisions regarding their business premises compared to 2020 and early 2021. In the office occupier market modern premises and flexible lease agreements are sought after.  

According to the Helsinki Research Forum, the vacancy in the twelve key office areas in the Helsinki Metropolitan Area (HMA) was 12.8% in Q2 2021. In H1 2021 som 4,500 sq.m of new office premises were completed. There is currently some 115,000 sqm under construction in the HMA due to be completed in 2021-2024.  

The expectations for occupier demand after the summer period is good, if no step back regarding the COVID-19 occurs. However, a step back is highly unlikely, as by the end of June 2021 Finland has already reached the +70% vaccination rate for the over 18-year-old population. It is fairly certain that remote working will remain at a higher level compared to pre-COVID time, but on the other hand companies will most likely make changes to their office concepts, making them healthier and capable to adopt in a potential new respiratory tract infection situation. Therefore, it remains uncertain what the total effect on office demand will be in the "new normal". 


Commercial Real Estate Investment Market Finland

In Q2 2021 total real estate investment volume was approximately €1.7bn, resulting in some €2.5bn transaction volume for the first half of 2021. Existing residential, logistics, and public use properties are very actively sought after, and demand is exceeding supply pushing yields to record levels.  

Also, appetite for office transactions has returned to a healthy level with international players completing multiple deals during Q2. In addition, activity in the retail segment has gained some momentum, especially in grocery store assets and big box units – although still behind the volumes of pre-COVID years. 

The most traded sectors in H1 2021 was the residential (42%), office (18%), and public use (16%) sectors. The share of international investors was some 40% in the first half of 2021. 

According to recent completed transactions and discussions with active investors, capital allocation targets for the Nordics & the Finnish market are very ambitious for the rest of 2021. This combined with well progressing vaccination rollout raises the expectation on the Finnish investment activity to a high level for 2021. 

Current MarketBeat

Europa office building, Brussels
Finland Office data

Office Marketbeat is a summary of the Finland office property sector providing comment on recent trends as well as market data and analysis.


Nice, France
Finland Retail data

Retail Marketbeat is a summary of the Finland retail property sector providing comment on recent trends as well as market data and analysis.


loading bay, Vienna, Austria
Finland Industrial data

Industrial Marketbeat is a summary of the Finland industrial property sector providing comment on recent trends as well as market data and analysis.


Finland Investment data

Investment Marketbeat is a summary of the Finland investment sector providing comment on recent trends as well as market data and analysis.


More Insights


Commodities Volatility

UPDATED SEPTEMBER 2021: Increasing demand for construction materials, limited product inventory and supply chain disruptions are driving up construction costs and resulting in longer lead times for obtaining materials
David Smith • 9/16/2021
Research • Multifamily

US Multifamily Fast Facts

Revenue Management systems are an effective pricing tool in any economic cycle, giving multifamily managers and operators the data necessary to make informed decisions about rental rates.
Christie Bennett • 9/16/2021
Research • Office

Research Spotlight: New U.S. Office Building Performance

Our Spotlight report reviews past and current performance of newer office buildings in the U.S.
Rebecca Rockey • 9/15/2021


Get in touch with one of our professionals.