EUROPE - Finnish property firm Sponda has issued a positive outlook for the Russian market in anticipation of prime rents falling off in its domestic Finland.

Posting revenues of €183.3m for the first three quarters of 2011 - up 6% over the same period the previous year - the firm, whose major stakeholders include government-controlled Solidium, as well as pension insurers Ilmarinen and Varma, attributed continued growth in its domestic market to a lag in macroeconomic uncertainty reaching the property market.

Despite forecast Finnish GDP growth of 3%, chief executive Kari Inkinen said he expected to see positive rental rate trends falling off in the fourth quarter.

Both the size of Sponda's portfolio - now valued at €3.1bn - and prime rents increased over the first three quarters, though he pointed out that, already, potential tenants were "spending more time deliberating on the decision to move".

Inkinen added: "Properties in secondary locations will face a weakened market position in the coming years due to the development of new properties, as well as relatively high vacancy rates.

"The gap between better and weaker areas will grow as long as the prevailing economic conditions continue." 

In contrast, rising rents, falling vacancy rates and a commodity-driven 4% macroeconomic growth forecast have resulted in "positive developments" in the Russian market, especially Moscow.

Although the company acknowledged political risks - euphemistically described as "differences between Russian and Finnish legislation and the way the authorities operate in the two countries" - Inkinen also cited likely continued rent increases as a result of lack of new supply after 2013.

Meanwhile, Sponda announced that it would sell "non-strategic" office and logistics assets to finance growth through acquisitions.

Its other avenue for growth - new development projects - has already filled its 15% profitability target via two projects scheduled for completion this year: the Zeppelin shopping centre project in Oulu and a central business district, mixed office/retail development in Tampere.