Commercial Real Estate in Finland and Sweden

December 2nd, 2013 by Diane Moore

A significant increase in foreign investment over the past year, especially from North America and Asia has led to robust growth in the commercial real estate market in Europe, according to the latest research by CBRE, global property advisor.

Commercial Real Estate in Finland and Sweden

Commercial Real Estate in Finland and Sweden 

Europe is a highly exposed global region for cross-border property transactions and inflows from other continents since 2007 have an account for approximately 18% of net investment activity.


This article deals with the commercial real estate market in Europe’s Helsinki and Sweden. Both places are strongly pulling in foreign investors with many new constructions going on in a full swing.


Commercial Real Estate in Helsinki


Helsinki is the capital and also the largest city in Finland. It’s located in the southern part of the country, on the shore of the Gulf of Finland. The city has a population of roughly 610,601 (as of August 2013), which makes it the most populous municipality in Finland.



On world maps, the country of Finland and its capital Helsinki appears to be a narrow and tiny region which gives the assumption of decreased and poor activity. However, appearances are sometimes highly deceptive, according to Micah Gland, chief executive at Helsinki Business Hub, an entity established in 2007 to pull in more foreign investors and entrepreneurs to the city of Helsinki.

Commercial Real Estate in Finland and Sweden

Commercial Real Estate in Helsinki


Gland, along with his team members have taken up the tough task of placing Helsinki on the top five locations in Europe for foreign investment by the year 2020.

Economy of Finland


Finland has a largely free-market, highly industrialized economy and boasts of per capita output which is in par with countries, such as Sweden, the Netherlands, Belgium and Austria. Trade is vital, and exports account for approximately one third of the GDP now.  The country has a strong manufacturing industry-basically metals, wood, engineering, electronics industries and telecommunication.


Finland is dependent on imports on energy, raw materials and some parts for manufactured goods. The main challenge of the country is to stimulate growth in the wake of debilitated demand in exports markets in EU. The country also has to address a speedily aging population along with depleting productivity, which are both considered a threat to economic growth, fiscal sustainability and competitiveness.

Helsinki- an Expensive Place for Buying Property


In the past year, Helsinki has witnessed a significant surge in property prices, as the nation experienced a steady growth by 1.42% during Q2 2011. The figure was equally reinforced with an increase of 1.7% in Greater Helsinki and 0.6% in the rest of Finland.

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Helsinki- an Expensive Place for Buying Property


Those wishing to buy property in the city are offered a price of $ 8350 per square meter, which makes it one of the most expensive places to purchase a property. The city also has a considerably high taxation arrangement, where in the tax on rental income is issued at a flat rate of around 28%. In addition, inheritance tax is charged at a growing rate of percent 7 percent, percent 10 and 13 percent.


Finland’s rental laws have been framed in such a way so that both the landlord and the tenant can easily arrive at a mutual agreement. The judiciary, however, can take preventive steps if the asking rental rates surpass the present average market rate.


Advantages of Investing in Finland


  • Top level infrastructure
  • Strategically placed between East and West
  • Likelihood of new innovations
  • Stable macro economy
  • Easy access to Baltic, Nordic and Russian markets
  • Highly educated and affordable workforce
  • Compact, healthy and green city


Helsinki- an Important Business Hub


Helsinki is an important business center for international businesses at the cultural and geographical crossroads between the East and West. The city is also rapidly becoming a crucial business hub between Asia and Europe on account of convenient and fast flights and the award-winning airport place.


By 2021, it’s expected that Helsinki will have 50,000 new foreign residents-many of whom will be investing in the property market in the city. The central residential neighborhoods and certain regions of greater Helsinki like Espoo-home of Nokia and an array of additional blue-chip firms- have attractive alternatives in the unregulated sector of Finland.

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Helsinki- an Important Business Hub


The Financial Times recently published a report on properties in Finland, which looked at areas including Arabianranta, West Harbour, Eira and Kalasatama. Praise has been heaped on various city quarters and future developments.


For instance, Arabianranta boasts of homes with balconies that are fitted with protective glass panels along with artwork in areas that are shared. The article also touches upon the forthcoming West Harbor Developments including a man-made beach and amusing boat marina.



The only drawback for foreign investors looking to purchase a property in Helsinki is that most of the advertisements for properties are in Finnish, which in fact is a pretty tough language to learn.

How Hard Could it Be to Purchase a Property in Finland?


The Finish government in 2000 eradicated the requirement that a foreigner should obtain a permit to purchase a property in the country-putting foreign investors on the same footing as citizens of Finland. However, foreigners are not allowed to acquire property located in the Province of Aland. They have to take permission from the Finish government to buy properties in this region.


After selecting the property, the purchaser has to analyze all the documents associated to the property, such as a certificate of title. When the buyer is sure that he’ll purchase the property, the negotiation process starts. 


A notary attests the transfer of real estate. He validates the identities of the seller and buyer besides their representatives. After the buyer receives the title to the property, he has to apply for legal validation of the title. The demand for the title has to be submitted to the district court attached to the location of the real estate.


On an average, it takes around three weeks for completion of all the procedures required for registration of a property in Helsinki.

Some Important Commercial Properties in Helsinki


Pitajanmaki Tower


Kamppi Center

Commercial Real Estate in Sweden


Sweden, officially referred to as the Kingdom of Sweden, is a country in Northern Europe and is a cold place with a very hot economy-in fact it’s overheating. The inflation in the country is low, unemployment is very much on the decline and the national debt of the country is much lower than the figures of 2006.


Housing and financial bubbles were experienced in the country in the 1980s, which led to a crisis in the 1990s. The GDP went down by 5% from 1990 to 1993. In the year 1992, the central bank had to hike the interest rates to around 500%, which was clearly an unsuccessful effort to safeguard the fixed exchange rate of the country. The overall employment in the region declined by about 11% during the time of the crisis.


Still, the nation has learnt from its faulty past since the financial crisis of the last few years has had a comparatively small impact on the economy of the country. During the financial crunch, Sweden added 100,000 individuals to its workforce. Unemployment rate in the country touched 8.2% in 2012 as the number of unemployed individuals declined to 408,000 from 44,000 year-over-year.

Economy of Sweden


The Swedish economy emerged to be the most powerful in Europe ever since the crisis. A high-tech economy along with an expansive system of welfare benefits permits Sweden to have one of the highest standards of living among all countries.

Commercial Real Estate in Finland and Sweden2

Economy of Sweden


Sweden occupied the 18th spot with respect to convenience of doing business and 43rd in convenience of kicking off a business in the year 2010.

Advantages of Investing in Sweden


  • Powerful capitalist economy
  • Decreased risk of debt crisis
  • Fastest growing economy in the world
  • Low rate of unemployment
  • Low national debt
  • Uncomplicated procedure for commercial real estate investments
  • No restrictions on international investors
  • Real estate can be demarcated vertically as well as horizontally

Sweden- a Great Place for Commercial Real Estate Investment


Sweden has regained its position of having the most liquid commercial property market in Europe, according to a new research by DTZ, a global real estate adviser with its headquarters in Los Angeles. The number one position of the country could well be a surprise to many given the fact that it’s ranked eighth with respect to Europe’s largest investment market at EUR 106 billion.


All activities related to commercial real estate in Sweden has rebounded powerfully since the global financial crisis, with such transactions reaching EU 10 billion at the end of 2012.

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Sweden- a Great Place for Commercial Real Estate Investment


Based on a recent survey carried out by Ernst & Young, Sweden seems to be a very attractive location for real estate investments compared to other European nations. The transaction volume for 2013 in the country is anticipated to be much more than that witnessed in 2012.


The main target for investors in 2013 will be office real estate, whereas the demand for residential properties is expected to decrease. The survey also found that the most preferred cities for investment were Maimo (retail), Stockholm (office) and Uppsala (residential).

Buying Property in Sweden


The property laws in Sweden are so framed that it safeguards the interests of all concerned parties-creditors, tenants, investors and the public. It also strikes a great balance between reliability, transparency, cost-efficiency and security, and is best suited for cross-border investments in real estate.


The Code of Land Laws, also known as Jordabalken regulates all the important features of real estate like property fixtures, mortgages, formal requirements, usufructs (which is the right to utilize and derive profit from your property), leases, easements along with the registration of property rights.

Commercial Real Estate in Finland and Sweden3

Buying Property in Sweden


Land in Sweden is branched out into property units which are individually identified by code and name. A property unit is demarcated vertically as well as horizontally, leading to a three-dimensional unit.


The ownership is not only limited to the land. Each property unit consists of accessories like buildings or additional facilities constructed above or below the ground by the owner of the property for permanent usage. In addition, fixtures installed in the property by the owner which are meant for permanent use, form a part of the property unit.

How Hard Could it Be to Purchase a Property in Sweden?


Sweden does not have any legal restrictions for foreigners wishing to buy a property. The process of real estate transfer is easy and speedy. Initially it involves the negotiation process with respect to the purchase agreement. Simultaneously, deed validation and a property survey is carried out.


After reaching an agreement and the validation of the deed, the surveyor “clears” the property. A purchase contract/agreement is signed by both the purchaser and the seller. Following this, the buyer has to pay a deposit which ranges from 2%-10% of the price of purchase.


After the property is actually transferred, all involved parties discuss on the rent, service charges, rent and insurance premiums, following which the buyer pays the purchase price in cash.


The vendor then issues a bill of sale mentioning the completion of the transfer of the property title and that the investor has paid the purchase price. The investor then submits the bill to the Land Registration Authority which brings the transaction to an end.

Zoning and Property Regulations 


Local municipalities take up the onus for the issuance of building permits along with adopting plans for use of water and land, as mentioned in the Planning and Building Act. Zoning plans are performed on three levels and comprise of an exhaustive plan or oversiktsplanen, detailed development plan or detaljplanen and regional plan or regionplanen.


 The detailed development plan is the only one that is legally binding. Detailed development plan is applicable to a restricted portion of a municipality, and manages and organizes the usage of land (zoning). It can also regulate matters like building height, design of buildings, lot coverage and similar features.


All applications for permits of the building have to be submitted to the municipal building committee which has to be granted prior to commencing construction work.



Bottom Line


Europe will emerge as a natural home for foreign investment in commercial real estate. It is all possible as long as European markets have the features of transparency and liquidity that Finnish and Swedish markets have. 


Diane is a highly-qualified translator of the English, Italian and Spanish languages. She has studied extensively in Italy and Switzerland. She writes about a variety of financial services industries including insurance. She has a love of life and a curiosity that drives her both personally and professionally.

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