The Finnish economy held up well in the first quarter of the year, with GDP growth of 2,0% y/y driven largely by strong consumption, as the labour market remains robust with unemployment falling to rates last seen in 2008. In contrast, market sentiment has fallen further to below 100 in May, reflecting worries related to the weak global trade environment, with US-China trade tensions escalating further. Finland is an open economy, heavily dependent on exports and any trade disruptions will weigh on the external sector. Looking ahead, we still expect growth to slow but remain at a solid 1.9% in 2019. Relatively robust domestic demand should ensure Finland continues to outperform the Eurozone as a whole. Low unemployment, rising wages and subdued inflation is expected to keep consumer demand healthy this year.
Whilst this might seem surprising to some, Helsinki was one of Europe’s most liquid investment markets in 2018. Though behind the likes of London, Paris, or Frankfurt, it was ahead of Amsterdam, Madrid, and Milan and also well ahead of major Scandinavian cities. Foreign buyers accounted for more than 60% of the total volumes reached in 2018. The fact that Finland is part of the Eurozone makes it very appealing to investors from other Eurozone-countries, as there is no currency risk, unlike other major Nordic markets. This strong investor demand is also reflected in the pricing, as prime office yields in Helsinki compressed further this year to 3.40%, whilst prime High Street and Shopping Center yields remained stable, at 3.50% and 4.50% respectively. Industrial yields currently stand at 5.00%.
Source: CBRE Research