In Helsinki, oversupply of rental flats is putting off investors

THERE is an oversupply of rental housing in Helsinki.

Helsingin Sanomat on Tuesday wrote that property developers and managers have turned to various campaigns to find tenants. Retta Management, the management company behind a newly completed high-rise in Kalasatama, Helsinki, is presently offering new tenants a 50-per-cent discount on rent for the first month.

The company has earlier sought to attract tenants to the building by offering a 500-euro gift card to the Mall of Tripla. Its website indicates that 48 of the 240 flats in the building, which was completed at the end of last year, are vacant.

“That’s an indication of the general market situation especially in the capital region,” analysed Eemeli Karlsson, an economist at the Finnish Landlord Association. “The supply is considerably greater than it’s been for decades. The situation is completely different than four years ago, when people were waiting for flats.”

Karlsson told the newspaper that the number of vacant flats has more than tripled from fewer than 2,000 in early 2020 to over 6,000 in June 2024. The situation is therefore opportune for those looking for a rental flat: they can inspect a number of flats choose whichever happens to suit their needs and budgets.

“That’s a totally healthy phenomenon,” he said.

Quality, price and location are the key considerations for tenants, according to Karlsson.

In spite of the oversupply, the Finnish capital remains by far the most expensive city for renters in Finland. One-room flats are 7 per cent, two-room flats 11 per cent and three-room flats 10 per cent more expensive than in the second most expensive city to rent in, Espoo. In Helsinki, the median rent for a one-room flat is 759 euros, that for a two-room flat 975 euros and that for a three-room flat 1,313 euros.

Helsinki is Finland’s 11th most attractive city for property investors

Helsingin Sanomat reported in June that Helsinki has lost its shine in the eyes of property investors due to recent challenges in the rental market.

The Finnish Landlord Association’s annual ranking of the most appealing cities for investors saw the capital fall five spots from 6th to 11th. Tampere retained its spot at the top of the ranking for the fourth consecutive year, followed – also for the fourth consecutive time – by Turku. The third place was clinched by Rovaniemi.

Along with Helsinki, Kajaani was the biggest faller.

The capital’s decline is attributable especially to an increase in advertising times, analysed Karlsson. “There’s oversupply in the capital region. You can’t rent out flats as quickly as you used to and the increase in advertising times can cause vacant months,” he said to Helsingin Sanomat on 26 June.

Helsinki has lost it shine also due to a decline in house prices, which last year were steeper in relative terms than anywhere else in Finland. In terms of property appreciation for the period between 2019 and 2023, though, the city ranked second behind Turku.

Karlsson told that Turku, Tampere and Oulu stood out positively from the three other large cities in terms of rent development, advertising times and market outlook. Tampere and Turku performed almost identically, the former claiming the top spot due to more rapid population growth and favourable development outlook.

The ranking is based on investment return calculations by Pellervo Economic Research (PTT) and advertising times on Vuokraovi.com. It also took into account demographic forecasts, the proportion of renters and outlook based on a barometer by the Finnish Landlord Association.

Aleksi Teivainen – HT