The main reasons for the slowdown in the market are higher interest rates and economic uncertainty. As a result of rising interest rates, investors' requirements for return have risen, which has created a price disconnect between buyers and sellers.
The slowdown in trade has impacted all real estate sectors, but demand for office properties in particular has fallen. In 2024, the trade volume of office properties remained historically low, at only about EUR 150 million. The rise of teleworking has reduced the need for office facilities, which is reflected on the market as polarisation.
High demand for quality properties in key locations
Demand for high-quality, centrally-located properties has remained at a good level, but office facilities in older and weaker areas have lost their prestige. The combined underutilisation rate of the most important office submarkets in the Helsinki Metropolitan Area rose to more than 15% in 2024. Even in downtown Helsinki, more than 15% of the office space supply went unused at the end of 2024.
In a slow market, investors have focused on residential and production properties. The largest number of trades were made in residential properties, but on average, the trades were relatively small. The production facility sector reached the highest volume, with a trading volume of approximately EUR 700 million. Production facilities was the only real estate sector where trade volume grew from the previous year. The demand for production and warehouse properties is supported by, for example, the growth of e-commerce and the development of production and supply chains.
Helsinki's position in the real estate investment market remains strong
Despite the decline in trading volume, the Helsinki Metropolitan Area maintains a strong position in Finland’s real estate investment market. In 2024, 54% of real estate trades were made in the Helsinki Metropolitan Area and Helsinki accounted for 23% of the total volume of the country. Helsinki's attractiveness in the real estate sector is reinforced by the fact that the country's most valuable business premises can be found in the centre of Helsinki.
