13 February 2025, Finland | Corporate Finance, Investment Management | News
The downward trend in real estate transaction volume continued in 2024. Since the increase in interest rates, which began in the summer of 2022, transaction volumes have been exceptionally low, and capital allocation into real estate has been minimal compared to previous years. The real estate transaction volume was only around EUR 2.0 billion in 2024, matching levels seen in the years following the financial crisis.
Property values continued to decline last year due to higher yield requirements, but the first signs of stabilizing yield requirements have now been witnessed for residential properties. Prime residential properties traded at yield levels of approximately 3.0% in 2021. Thereafter, the yields for prime residential properties increased to approximately 5.0%, but during 2024, the prime residential yields stabilized to 4.5%-5.0% based on several transactions.
The most active buyers were international investors, including Blackstone/Mileway, Slättö, Niam, and Swiss Life, who made several acquisitions in 2024. The most active domestic buyers were Keva and Sirius Capital Partners. The most active sellers were domestic special investment funds. The largest transaction in 2024 was Nrep's divestment of a light industrial portfolio to Blackstone for EUR 135 million.
We expect real estate yield requirements to soon reach their peak, which could narrow the price gap between buyers and sellers and stimulate transaction activity. However, the recovery will be slowed by the reduced presence of active core and core+ buyers, as domestic open-ended funds and some foreign investors remain on the sidelines. However, it is important to remember that the market turnaround is closer than before, and even in a challenging investment environment, excellent long-term acquisitions are possible.
The Catella Market Indicator can be ordered by clients and co-operators for free from the following e-mail: info@catella.fi.
For more information, contact:
Petteri Kokko
Managing Director
tel. +358 40 8222 580
petteri.kokko@catella.fi