Housing investment|Apartment investors have started to go shopping. Some of them are already preparing for the future rental housing shortage.
Although consumer sales of apartments are still sticky, some apartment investors have already started to go shopping. The drop in prices is tempting.
One of the buyers is Heikki Pajunenwho owns more than a hundred apartments through his company.
“Prices probably won’t go down because of this,” says Pajunen.
He believes that the next price movement will be upwards – at least that’s what the experts think, according to him.
According to him, the prices are now at such a level that if he had plenty of money in his cash register to buy everything extra, he would now buy even more apartments than he has already bought so far.
Even now, Pajunen has been making purchases all the time. At the same time, he has also sold older apartments from the 1970s to replace them with newer ones.
Pajunen does not want to say in more detail how much cheaper he has now been able to buy apartments. It’s a trade secret. According to him, it is clear that the prices are clearly cheaper than two years ago. A buyer’s market is underway.
“In a few years, there may be a shortage of rental apartments, when the new apartments that are ready now have been sold and no new ones are being built,” Pajunen estimates.
The apartments owned by Pajunen are located in the capital region, Tampere and other bigger cities. He rents them out through his company called Kompasskodit.
Before The Sijoituasunnot.com company has also been more active in shopping.
Managing director Henri Neuvonen according to the company has already bought 330 apartments between January and June. The buying pace has been stronger than in previous years.
In recent years, the company has bought 300–400 apartments per year, and now Neuvonen predicts that the number will rise to more than 400 apartments. In total, the company owns more than 800 apartments.
At the same time as the purchases, the company has sold a couple of hundred apartments.
“Buying has been easier now that the competition has not been so fierce. The sales have also been successful”, Neuvonen estimates.
According to Neuvonen, used apartments are now about 10–20 percent cheaper than at the top of the market. According to him, buying is worthwhile because, like Pajunen, he believes that there will be a shortage of rental apartments in the future.
The shopping list has included entire apartment buildings or apartment portfolios that cities, foundations and, more than before, funds have put up for sale.
Some of the apartments are kept by the company, some are sold individually or in bundles to private, smaller apartment investors.
According to Neuvonen, the company’s apartments are not empty right now. In the rest of Finland, the state of the rental market is not as challenging as in the capital region, where there is an oversupply.
According to Neuvonen, the company has recently acquired its own apartments in the suburbs of cities such as Jyväskylä, Hämeenlinna, Lahti, Kuopio and Oulu.
“We buy a lot of affordable apartments, they do better in this market than expensive apartments. They are particularly appealing to smaller apartment investors, as the returns clearly exceed the interest rate,” says Neuvonen.
Helsinki housing investor Heikki Karu says he’s looking a little wistfully at the market right now. He has not gone out to buy more apartments himself because he wants to accumulate a little buffer for personal reasons.
“If my own situation were different, I would probably go through the market with both hands now and look for potential purchase targets,” says Karu.
He says that he has increasingly noticed small signs that other housing investors are slowly getting started. Some try ice with a stick by making purchase offers briskly below the catch prices.
Karu has fifty investment apartments in the capital region and decades of experience.
Right now, according to Karu, the situation in the rental market is at a standstill, there is no demand. Like other apartment investors, he is waiting for July–August and for students to enter the market. The demand at that time anticipates the future outlook of the entire market.
Karu himself has found a tenant for all his apartments by being ready to negotiate the rent.
The Landlords Association the most recent barometer, taken between March and April, shows that the interest of apartment investors in buying apartments has increased slightly, but is still at a low level.
Almost a quarter, or 23.5 percent, of apartment investors have purchase intentions in the next 12 months. Of these, five percent definitely intended to go shopping, others possibly.
The increase from the bottom readings a year ago is a couple of percentage points. When purchase intentions were at their highest four years ago, close to a third of investors planned to buy.
Economist for Landlords Eemeli Karlssonin according to the largest investors now have the most purchase intentions. They are usually more experienced and know when to buy and when not to buy.
However, the differences between the cities are big. Investors have the fewest purchase intentions in Uusimaa and the most in Vaasa, Pori and Hämeenlinna.
According to Karlsson, in Vaasa, for example, the city’s development prospects have improved, as has the balance of the rental and housing markets. Uusimaa, on the other hand, has more oversupply of rental apartments. It’s not tempting to buy.
HS said last week that large professional real estate investors have started hoarding apartments at prices that are even lower than the construction costs. Prices have been reduced by up to 30 percent.
More than a third of the deals made by professional real estate investors this year have been residential real estate deals.
June 19, 2024 at 4:42 p.m.: Clarified in the caption that it is the Vermonniity residential area in Espoo’s Perkkaa. Previously, the area was described as Perkka’s residential area.
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