October 25, 2013 7:36 pm

Finland property: Helsinki seeks to attract overseas investors

The Finnish capital wants to become one of the top five European locations for foreign investment by 2020
Helsinki, Finland’s capital on the Baltic sea©David Borland

Helsinki, Finland’s capital on the Baltic sea. This year the city’s population is set to grow by 10,000

On world maps, Finland – a country of 5.4m people on the Baltic sea – and its capital city, Helsinki, look to be on the fringe of things. But appearances can be deceptive, says Micah Gland, chief executive of Helsinki Business Hub, a public body set up in 2007 to attract more overseas investors and entrepreneurs to Helsinki.

“We are around eight hours’ flying time from both New York and Beijing,” says Gland, who is tasked with making Helsinki one of the top five European locations for foreign investment by 2020 (it is currently 12th, according to IBM Plant Location International). “Plus St Petersburg is next door and we have good connections to the rest of Europe.”

There is still only a trickle of expat professionals moving to Helsinki and investing in bricks and mortar. (For the moment, this trickle is led by young Russian entrepreneurs looking for a safe haven to site their businesses.) Yet the city’s fast growth may change this. According to Hannu Penttilä, deputy mayor with responsibility for city planning and real estate, Helsinki has a population of 600,000 and will add 50,000 new residents between now and 2021; this year alone Helsinki is set to grow by 10,000 people (greater Helsinki has a population of 1.4m).

Housing in the city is marked by the country’s tradition of egalitarianism. Only 39 per cent of homes in Helsinki are owner-occupied or available for rental at market rates. With two-thirds of the land in public hands, the city’s real estate authorities have a prominent role.

Helsinki map

For example, to the northeast of the city centre at the Arabianranta housing estate – the immaculate low blocks of flats containing social rentals – homes controlled by housing associations and owner-occupied housing (the market rate for these is about €4,000 per sq metre) are impossible to tell apart from the outside. All have balconies fitted with protective glass panels, plus artwork in shared areas, such as mosaics from pieces of ceramic made at the nearby Arabia factory, set into the outside walls.

“Young couples like to live in the city and we are responding to this pronounced trend towards urban living,” says Penttilä, whose plans to meet the demand include a number of unusual prototypes, such as the group of 40 floating houses at a scheme called Kalasatama, northeast of the downtown district.

In a new “neighbourhood of lights”, where developers will agree to include artistic lighting features on new buildings to brighten up the long winter nights, residents will be able to warm up in waterside saunas.

A home in Espoo

A home in Espoo, on sale for €635,000

Both the city’s central residential neighbourhoods and parts of greater Helsinki – such as Espoo, the home of Nokia and a cluster of other blue-chip companies – contain attractive options in Finland’s unregulated sector (in which privately owned homes can either be owner-occupied or rented out at market rates, free of state control).

In the Eira neighbourhood, a quiet district with many art nouveau buildings popular with diplomats, a 227 sq metre apartment with parquet floors, three bedrooms, two bathrooms, a sauna, an office and sea views is available for €2.27m via the Kiinteistömaailma agency.

Espoo contains relative bargains: a four-bedroom detached home 23km from the centre of Helsinki, with a striking circular fireplace in the middle of an open-plan living and dining room, and a sauna, is on sale for €635,000 via the West House agency.

Computer generated image of West Harbour

A computer generated image of West Harbour, where some properties could fetch more than €8,000 per sq metre

A three-bedroom unit with a sauna and 117.5 sq metres of living space, between West Harbour – arguably Helsinki’s landmark new housing development – and the city centre, and within a few blocks of the restaurants and bars of the trendy Punavuori district, is on the market for €768,210 with the Huoneistokeskus estate agency.

Strong demand for new owner-occupied apartments in the city led to a 4.8 per cent rise in prices in 2012, compared with a 1.2 per cent increase in used units over the same period, according to Statistics Finland.

The good news for buyers is that some new high-end units, albeit in limited quantities, will be built in new districts on public land occupying the old port infrastructure close to the downtown. The former docks have been largely decommissioned, except for cruise ships and ferry traffic (a new container port opened to the east of Helsinki in 2008).

West Harbour development, Helsinki©Adactive Ltd

Aerial view of the West Harbour development in Helsinki

West Harbour will contain about 10,000 new housing units, plus offices and retail space – and even a man-made beach, at the request of residents of neighbouring districts – on a 100-hectare site. The development will include an unspecified number of 200 sq metre townhouses, some with sea views, next to a new marina with berths for pleasure boats.

The townhouses should be complete within three years and will be the most expensive options in West Harbour’s owner-occupied housing sector. (If they were on sale today they would fetch at least €8,000 per sq metre)

According to Anne Pollari of AMP Relocation, the main gripe of overseas buyers is that apartments in the city tend to have small bedrooms and not enough bathrooms. “They are often surprised that a three-bedroom apartment will have a single combined bathroom and sauna, but no second bathroom,” says Pollari.

CGI of the West Harbour development

CGI of the West Harbour development

Aspiring overseas homebuyers usually face a more immediate obstacle: there are few advertisements for apartments in English, and Finnish is a notoriously difficult language to learn. Another drawback is that although a lot of housing in the city is attractive, there is also a stock of austere-looking blocks of flats built in the 1950s and 1960s, such as in the slowly gentrifying Kallio district, north of the central station, where a lot of students live.

Expats who make Finland their permanent home sometimes do so because they want to keep their children in Finland’s good state schools.

“I’ve found Finns to be trustworthy, reliable and skilled, and the root of all this is the educational system,” says Marc Skvorc, a hotelier originally from California, who, with his Finnish wife Mia, owns and runs the Klaus K hotel in the city’s Design District, where some 120 fashion, furniture and home decoration designers and independent retailers have congregated.

The Design District itself, at the southern end of Mannerheimintie, an avenue that dissects downtown Helsinki, is a place that sums up much of the city: its broad streets have the feel of a more relaxed, less edgy – and cleaner – version of Prenzlauer Berg, Berlin’s bohemian district.

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Buying guide

● Property transfer tax is between 2 and 4 per cent

● Annual average GDP per capita in Helsinki is €46,517

● Finland occupies joint-first place in Transparency International’s corruption perceptions index

● There are 315 islands within the city limits

● Average temperatures range from 7.9C in February to 17.6C in August

What you can buy for . . .

€500,000: An 85 sq metre apartment on a low-rise housing estate 15 minutes by metro from the centre of Helsinki

€2m: A modern, six-bedroom detached house on a 950 sq metre plot in the Westend district, 10km from the city centre

€3m: A five-bedroom waterfront home needing some renovation on a 1,800 sq metre plot on an island connected by a bridge to the mainland, 9km from the city centre

Nick Foster travelled to Helsinki as a guest of Finnair, finnair.com, and Helsinki Business Hub, helsinkibusinesshub.fi

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