Finland Market Overview
The Finnish economy decreased slightly in 2023 with sectors significantly affected by the increased interest rates throughout 2023 suffering the most. Investments, building sector and the housing market saw major decreases in 2023 and weak development of the global economy has affected the export sector negatively. This trend is expected to continue in 2024. Inflation reduced rapidly in Finland during H2/2023 and this trend is set to continue in the early stages of 2024 before reaching and stabilizing around the ECB target level of 2% in the second half of 2024.Office
Increased uncertainty in the office occupier market was evident in the latter half of 2023. Demand for prime offices and premises with strong amenities that bring additional value to employees remains strong, but demand for secondary assets remained sluggish and further downward pressure on the secondary rental levels is expected going forward. Vacancy in the HMA was 14.6% in Q4 2023 - an increase of by 0.2 percentage points compared to the previous quarter. In 2023, close to 50,000 sqm of new office space was delivered in the HMA, with around 140,000 sqm under construction due to be completed in 2024-2026.Retail
Shopping centres continued minor growth in Q3 2023 with total sales being 4.8% higher compared to Q3 2022. The footfall of shopping centres also grew by 5.5% in Q2 compared to previous year. During Q3 the retail occupier sentiment worsened, and more cautiousness was evident. This continued in the last quarter of the year. Up until Q3 the demand in the big box sector was still solid, but in Q4 a decrease in the demand was noted, especially among fashion retailers. Lower consumer spending is expected to put pressure on high street retail and F&B, resulting in increases in retail vacancies and downward pressure on prime high street rents.
