Russian buyers on the Finnish property market (analytical review)

The decline in activity of foreign property investors, which was caused by the global financial crisis, has not spared Finland. Nevertheless, Russians continue to invest money in Finnish housing. This is proved by the data provided by the Finnish Land Survey(Maanmittauslaitos).

Totally, 843 Finnish properties were bought by foreigners over 2008, the aggregative value of purchases works out €128 million. Russians bought 780 properties worth €98.8 million, which stands for 82% of the total number of transactions involving foreigners and 77% of the overall foreign investment in Finnish property.

In 2009, the volume of foreign investment has declined by more than a half: foreigners have acquired 634 Finnish properties worth €55.4 million. The share of transactions involving Russians has declined to 63% (403 properties), while their share of the total foreign property investment has increased to 84% (€46.4 million). Thus, Russians have remained the leaders among foreign buyers of Finnish property.

EU citizens are the second most active foreign buyers of Finnish property; in 2009 their share has amounted to 6% of the total foreign investment. The third line is occupied by the citizens of the Scandinavian states (5%). Due to the fact that Scandinavian countries have only been slightly affected by the global financial crisis, the activity of investors from these countries has not declined: in 2009, the number of transactions involving Scandinavian customers has increased in absolute terms, compared to 2008.

The report of the Finnish Land Survey does not account the acquisition of flats in apartment buildings, that said, this market segment is traditionally designated for Finnish buyers and the volume of foreign investment in it is quite insignificant .

The property market is primarily dependent on domestic demand. Since it has remained high, there were no declines in local housing prices throughout 2008 and 2009, even despite the decrease of foreign investment volumes.


Russian buyers

According to the expert of the Finnish Land Survey Juhani Väänänen, Russians are mostly buying residential property. The interest in land for construction is rather high, while, according to the expert, commercial property transactions are considerably rare.

According to a poll conducted by the Prian.ru portal, the type of Finnish property most commonly purchased by Russians is a detached house or cottage on the south-east of the country, roughly valued at €120-150 thousand. Such homes are usually purchased with recreational purposes.

The following factors are determining the attractiveness of Finnish property for the Russians:

- Proximity to Russian-Finnish border;
- Low-density development;
- Proximity to lakes and forests;
- Well-developed Infrastructure

Due to these factors, the most popular regions among Russian buyers were South Karelia and South Savo,  over 2009 Russians have purchased 272 properties worth €26.4 million there. This amounts to more than 95% of all foreign investment in these two regions. Russians’ vivid interest in the provinces of Kymenlaakso, Northern Savo, North Karelia and Päijänne-Häme is due to the same reasons.

The data on dynamics of Russian buyers’ activity on the Finnish property market is provided below in Tables #1 and 2.

The research of Russian buyers’ interest in foreign property, conducted by the analytical service of the Prian.ru portal, reveals that Finland remains among the TOP-5 markets most attractive for Russian buyers for more than a and a half already. As of February 2010, Finland occupies the fifth line in a ranking of the most popular markets (see the table below).

The dynamics of Russian buyers’ interest and transactions in Finland suggests that the volume of Russian investments in Finnish property will reamin intact within the next two years.

Author: Alexey Konovalov