New development is slowing in Helsinki after 2020
Office construction is slowing down as economic growth expectations fall. More than 100,000 sqm of new office premises will complete in the Helsinki Metropolitan Area this year, but the pace of this growth will slow considerably in subsequent years.
The most significant office projects being completed this year in the Helsinki Metropolitan Area include the Tripla Workery office properties in Pasila; the Urban Environment House in Kalasatama; and Fredriksberg’s B and C office buildings in Vallila, which NCC has sold to a fund managed by the German KanAm Grund Group for approximately €64m.
High demand for prime submarkets outside CBD
The low yields in the Helsinki city centre led international and domestic inves-tors to turn towards other strong and traditional submarkets. The Leppävaara and Perkkaa office markets, for example, were active in 2019; there were 12 major office transactions with a total volume exceeding €300m. A major deal at the end of last year occurred when Special Investment Fund eQ Real Estate bought the Alberga Business Park buildings B and C from a fund managed by Amundi Real Estate.
The traditional prime office market, Keilaniemi, is also attracting investors, as it will develop in the future as a new mixed- use service hub. Here in autumn 2019, Construction Company YIT and HGR Property Partners’ joint venture Regenero sold the Accountor Tower, Keilalampi and the Keilaniemenranta pavilions located in Keilaniemi to an international investor. In addition, at the end of last year, HANSAINVEST sold the 7,300 sqm current headquarter of Kone Corporation to Evli Rental Yield (AIF) Fund.
Union Investment acquired office and retail property located in the CBD from Sponda. The property comprises 8,300 sqm and transaction price was approximately €148m. In addition, Union In-vestment bought 5,700 sqm office property in Eteläesplanadi 12 in CBD from OP Life Assurance Company Ltd for approximately €50m.
The outcome of these deals mean that the yield level for prime office properties in Helsinki CBD decreased close to 3%.