He pointed out that finding tenants and operating as a lessor has been exceptionally challenging in recent years, at the same time as property maintenance costs have surged – partly by over 20 per cent – rents have stagnated if not decreased and payment difficulties among tenants have increased.
“In this light, the news that it has become easier to find tenants is important,” he commented in a press release on Wednesday.
While the current interest rate level was perceived clearly as a diminishing risk by the over 2,200 investors who responded to the survey, over a quarter said interest rates have complicated their operations in the past six months.
“Only 14 per cent feel that the drop in interest rates has provided relief,” said Karlsson. “What is noteworthy, however, is that almost 60 per cent of respondents said interest rates or their changes in the past six months have not had an impact on their own investment activity. We know from previous studies that 60 per cent have less than 50 per cent of the value of their investment properties in debt.”
Almost two-thirds, or 61 per cent, of respondents continued to consider soaring maintenance costs as a fairly or very large risk for real estate investors.
“According to landlords, many risks have diminished and, on the whole, risks in real estate investment have decreased. This suggests that the most difficult times are in the rear-view mirror,” said Karlsson.
“On the other hand, the threat of tax increases and increased regulation is perceived to have grown.”
Slightly over a quarter of respondents said they intend to enter the investment property market over the next year, identifying properties in mid-sized cities as particularly attractive. Helsinki and Vantaa, meanwhile, were regarded as the least attractive cities in the survey.
“Purchase plans mirror rentability well. If investors feel that it is challenging to find tenants, buying an investment property becomes an even greater risk. Vantaa is precisely where oversupply is most pronounced. In mid-sized cities, in turn, it is easier to find tenants and these cities are well represented in the purchase plans of landlords,” told Karlsson.
Also the share of investors who are planning on selling some of their portfolio has risen, to 23 per cent. Such plans were widespread especially in Lappeenranta, Joensuu and Lahti.
“Overall, the results of the barometer indicate that the rental market is gradually stabilising, but changes in the markets – such as the threat of unemployment and benefit cuts, as well as the threat of tougher regulation and taxation – are continuing to keep landlords on their toes,” he summarised.
The biannual survey drew responses from 2,205 real estate investors on 6–22 September.
Aleksi Teivainen – HT
