Thesis on the Finnish Residential Property Investments

There are no hindrances to foreigners buying of properties in the real estate sector of Finland. Foreigners are considered from a similar perspective as their natural counterparts in Finland. In essence, the Finland state plays a pivotal role in the real estate market in Finland. There are approximately 800,000 rental homes across Finland. From the huge proportion of rental houses, about half of the entire housing units constructed through the state subsidies mainly channeled via the Housing Finance and the Development Centre of Finland. The municipalities own the majority of the subsidized dwellings while they are managed via the municipal companies, limited-for-profit organizations and the local authorities. The houses are only released into the public domain for management after 10-45 years. In this regard, the free market for the foreign investors remains principally limited.

Besides, the best returns on the Finnish residential property investments are found in small apartments within the central region of Helsinki. Besides, these areas undergoing gentrification including Kallio, an area located a few miles from the city center. The area offers an exclusively good investment opportunity for both local and international investors. The proportion of investments in the modern economic climate on large properties does not tend to constitute of a major gain while the markets are less lucrative compared to smaller apartment market (Grinblatt & Keloharju, 2000). Nevertheless, the general Fin real estate market remains a lucrative area of investment to the local and international investments.

The larger Helsinki also renowned Helsinki Metropolitan Area constitutes of the Helsinki cities, Kauniainen and the Vantaa. This region has a dominant position in the Finland real estate sector that accommodates about 25 percent of the Finnish population while at the same time creating more than a third of the entire job positions in the country. The sector delivers slightly above one-third of the country's GDP. The proportion of the private sector employment opportunity is also significantly larger than any other region in Finland. The world economy has a major effect on the Fin's Helsinki regional growth than any other region. This implies that majority of the foreign investments in Finland takes place in the Helsinki area. From property investments point of view, the central location of Helsinki is the most desirable area of investment with not only wherewithal but also more attractive returns than other parts of Finland (Lumme & Suomi, 2013).

However, other investments also take place outside Helsinki. If one is interested in buying property past Helsinki, the local real estate agents contain any property data regarding the different regions of the country where aspects of attractiveness can be traced and undertaken for decision-making issues. The agents also provide good advice regarding some of the best investments prospects by size, location, and types of property. Furthermore, it has been shown that language is not a critical aspect of investment consideration in Finland. In general, Finland real estate investment sector has been identified as an efficient, ethical and straightforward. This aspect makes it quite attractive to the overseas investment in addition to the local investments compared to other regions like Manhattan. In many sectors such as Manhattan, there are high-pressure affairs, and valuable considerations are fundamental factors that make investment quite challenging for both local and international parties (Lumme & Suomi, 2013).

It is important to note however that the residential investments properties in the central region of the Helsinki may be challenging to identify particularly in the lower tier of the market. In recent times however, there are significant efforts in Helsinki regions to attract more foreign investments with advertisement and development posts on platforms such as the Financial Times. These books perpetuate information regarding the developments in both Helsinki and the elaborate property market segment.

The focus sections however are the central Helsinki regions and Espoo where prices may be high for any good consumers. However, low-cost housing investments segments are also available in the Fin market. It has been projected that only about 39 percent of the Helsinki homes are owner-occupied or available at market rates for rental offers. It has been projected that the increasing attractiveness of the Helsinki real estate market has been driven by the growth in the population with the current stand at 600,000 and has been anticipating about 650,000 persons as at 2021 (KTI, 2017). The Helsinki's central residential neighborhood and sections of the larger Helsinki constitutes of an attractive option for investment. It has also been a sort after the region in Finland for real estate investors.

1.2. Background

Finland is a relatively open and well-functioning economy. This factor is quite essential for investment. The country's level of industrialization is immense to propel progressive growth. In particular, the country's industrialization began late compared to the majority of OECD countries, but the actual growth has surpassed some of the countries of its caliber on the global scale. In essence, the rapid increase in industrialization has made the country to be a potential investment for local and international investors. Innovations, high growth, and structural reforms have transformed Finn's economy into one of the most competitive economies in the late 1990s as well as early 2000s (Dietrich, 2012).

In essence, the country's service sector is the Finn's biggest economic sector with large investment capacity as per the 2015 statistical findings. For instance, the country's service sector accounted for approximately 70 percent of its GDP. The private services also comprise of two-thirds of the entire service area with the largest sector being transportation, trade, and information and communication services (Lumme & Suomi, 2013). These aspects map the main investment areas for both local and international investments.

In 2016, Fin accounted for 28 percent of the entire transactions made by the foreign investors in the country. Besides, the absolute level of foreign investments also increased from the level in the last few years. The relative share was also lower than their records. The overall growth in investments in transactions was attributed to the domestic players. The highest level recorded for the investment transactions in the country's history was the 2007 level where foreign investment's operations comprised of 60 percent of the entire operations in the country. In 2016, the total sales of the foreign investors were stated at 1 billion of property value. Besides, their total investments in the Fin market was marked on the rise based on the KTI statistics. Besides, the research by KTI also indicated eight major new foreign investors ventured into Finland property market in the 2016 (KTI, 2017).

The majority of new investments were based on new types of partnerships as well as co-investments structures comprising of the domestic players. Increased activities in the market transactions contributed immensely to the countrys proportional turnover within the vast property market. Relative to the entire market size, the volume of transaction also increased to about 13.1 percent of the total invested property stock. This level was the highest reached volumes historically (KTI, 2017).

The main investment demands have pressured the country's yield in several established office sub market within Helsinki area of Finland's metropolitan region. Recently, the yield compression has also spread widely into other cities while the yield has decreased by more than 0.5 percent. Besides, international and institutional investments demands, however, has been targeting Helsinki region and investments have remained relatively lower than other areas (Ireland & Hitt, et al. 2011). This factor among others explains the dynamics in the investment portfolio of the Finland by the foreign and local investors. Besides, sluggish demands and the high rates of vacancy, the performances of the investments in offices have declined recently in the Finland market, an aspect that has constrained the dev...