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Rise of the midnight sun

Winter night scenery of Helsinki, Finland

The birthplace of Nokia and Linux, Finland is a world leader in the telecommunications and information technology industries. Its capital Helsinki is expanding rapidly as new development areas are taking shape around the city’s inner core.

April 2015

Whilst most widely known for its lakes and forests, picturesque winter landscapes and high-tech telecommunications & information technology, Finland is also known for having one of the best established and most developed social systems in the world. Finland has an excellent education system and, measured on its GDP, invests more in research and development than the United States.

Finland is also a pioneer with regards to the area of equal opportunity; it is not uncommon for Finnish men to stay home to look after the children while the mother is the family’s breadwinner. Tarja Halonen was Finland’s first female president (2000-2012) and at the time, one of the very few women in Europe leading their countries.

The economy

According to the latest DTZ Investment Market Update on Finland, Finnish GDP is estimated to increase by 0.2% in 2015. The Finnish export sector is estimated to improve during the latter part of 2015 as a result of global economic growth and a weaker euro, compared to the dollar and other major currencies.

The prolonged Ukraine crisis and the sanctions directed at Russia have caused uncertainty for the Finnish export sector and weakened the export to Russia, which in turn has kept GDP growth down, the DTZ report says.

In 2015 private spending is estimated to continue to decrease by 0.1%, due to modest salary increases, weak employment situation, and slightly higher taxes. The inflation rate estimated at 0.9% in 2015.

Real estate investment landscape

However, despite a stagnant economy, things in the Finnish real estate investment market look different. In 2014, the total transaction volume of published deals was some EUR 4 billion, whilst in Q4, the activity of international investors was at its highest level since 2008, says the DTZ report.

With interest rates expected to remain low, the investment market expected to remain active throughout 2015. Geographically speaking, Southern Finland, especially the Helsinki Metropolitan Area, has clearly been the most active region in the Finnish property investment market. In Q4 2014, over 60% of the transaction volume occurred in Southern Finland, says DTZ.

Helsinki’s strong foundations

Finland has a population of 5.3 million. With a little more than half a million residents, the capital Helsinki is Finland’s most populated area.

Helsinki is a forerunner in energy efficiency and a strong hub for start-up activities. It offers an open and flexible operational environment, where the population is well educated; Helsinki was ranked second best in World Economic Forum’s 2013 Human Capital Index.

The Finnish capital also reached the second place after London on the Financial Times’ fDi Intelligence European Cities of the Future 2014/2015 ranking, which measures the ability of areas and cities to attract foreign direct investments. Helsinki has been receiving increased attention for its efforts to attract FDI and scored particularly well for FDI Strategy. According to the Financial Times study, Helsinki highlighted its focus on three key areas to promote investment: Research, development and innovation; growth capital and hi-tech start-ups; and transnational functions, such as sea and air links.

Development in Helsinki

The Finnish capital is one of the fastest growing cities in Europe and is expanding powerfully in the inner city on land vacated from former industrial and port operations.

Many of Europe’s biggest urban development projects are underway in Helsinki and the city will continue to expand faster than ever before in coming decades. According to the City of Helsinki, the next few decades will see the construction of a number of new districts – both on the shores of Helsinki and further inland – along with the expansion of a number of older neighbourhoods.

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