Finnish investors favour home market: INREV

Institutional investors in Finland show a significant preference for the domestic market in their real estate investments, according to INREV's Investor Universe Finland Survey 2011. Around 80% of Finland's total real estate exposure is in domestic direct core investments. Only 12% of all Finnish real estate investments are made abroad.

'Finnish real estate has proven to be relatively stable during the financial crisis. It is hardly surprising that many investors see no need to go outside their country,' said Lonneke Löwik, INREV’s director Research and Market Information.

Interestingly, though the Finnish real estate market is small by comparison to the other key markets in Europe, institutional investors in Finland hold the largest allocations with real estate accounting for around 10.8% of their total investments. This is marginally greater than the Netherlands where real estate accounts for 10.5% of the total institutional investmentuniverse.

Pension insurance companies dominate the sector accounting for more than half of the total real estate universe. They are also the largest investor group in the non-listed real estate sector, though here their share of the market slides to 36%. Pension schemes and life insurance companies make up 33% and 22% of the non-listed real estate sector, respectively.

'Real estate as an asset class in Finland is particularly attractive to pension insurance companies. It seems to suit their long-term perspectives; their long-term liabilities; and the greater resources required to manage labour intensive assets,' said Ilkka Tomperi, partner at Capman Real Estate.

Despite investor preferences for the domestic market, non-listed real estate investments remain the preferred method for investing abroad. Pension schemes hold the highest exposure to non-domestic, non-listed real estate funds, with 25% of their real estate investments held outside Finland.