FINLAND - Finnish real estate still offers pension funds credible property investment opportunities despite the small size of the market, according to Aberdeen fund manager Pertti Verhanen.

Verhanen cited fundamentals which forecast continued stable growth "way above the European average" and "still attractive" yields.

The fact that Finland is the only Nordic economy to adopt the euro means the €35bn property market enables investors to hedge currency risk, he also said.

His comments came after the Nordic I property fund, invested primarily for German pension funds, acquired an office block in Turku, one of the university towns that has absorbed the liquidity overspill from the capital, Helsinki.

"Local matters a lot," said Verhanen. "Finland has local traditions and ways of doing business. You have to understand how to operate."

Finland saw property transactions worth €5.6bn last year, with around 60 international investors currently active in the market.

"It isn't comparable to the UK or German market but we expect it to be at least as active in 2007," said Verhanen.

Aberdeen is due to make further acquisitions for a bespoke opportunistic fund set up for three pension funds - Ilmarinen, the Finnish €21.6bn multi-employer pension scheme, Dutch pension fund ABP and Denmark's €49.6bn ATP fund, to invest in Finnish real estate. The fund has a target size of €500m.