Russian investors’ eagerness to invest in Finnish property is losing steam

Sellers' price expectations now unrealistically high

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The current decline in the economic outlook has decreased Russian investors’ interest in Finnish property.
      According to some realtors, fewer buyers are coming to Southeastern Finland from across the eastern border and fewer sales contracts are signed these days.
     
”The number of prospective buyers has decreased significantly”, says Managing Director Ari Punnonen from the Op real estate agency in Lappeenranta.
      ”Their share has come down clearly, and I believe that the same applies to the entire region”, estimates Managing Director Marjut Konsti from the real estate agency Huoneistokeskus in Savonlinna.
      Particularly holiday cottages and lakefront properties in Southeastern Finland have been sold to Russian buyers.
     
The same reasons are likely to be behind the deceleration of the Russian investment zeal as are behind the slowing down of all consumption today. The cost of loans has gone up, and buyers are waiting for better times.
      ”In Russia the interests on loans are rather high, and those Finnish banks who have financed Russian buyers with loans have now become more cautious”, says Peter Henriksson from Domfinland, a real estate agency handling Russian buyers’ property transactions.
     
The prices paid by Russian buyers for Finnish holiday homes have been manyfold compared with the purchases made by Finnish clients. On the other hand, the properties ending up in Russian hands have generally been at the high end of the market.
      According to Henriksson, the price expectations of sellers have also skyrocketed.
      ”Last spring and summer I was forced to tell many sellers that unfortunately their price demands were too high”, says Henriksson.
      Marjut Konsti also reports that the prices asked for many holiday villas have been higher than any Finns were expected to pay.
      ”There are still certain properties for sale which are clearly ear-marked for Russian markets, even though this trend has been declining”, Konsti concludes.
     
Last year, the transactions with Russians showed an explosive increase. For example in Sulkava in South Savo, nearly half of the euros in real estate transactions came from behind the eastern border.
      Based on the first half of the current year, the National Land Survey of Finland still estimated that the number of Russian property transactions would increase to more than 700 from last year’s 620.


Previously in HS International Edition:
  Surge in property buying by Russian citizens in Saimaa region (15.1.2008)
  Rouble investors keeping step with growing tourist trade from the east (1.8.2007)

Links:
  National Land Survey of Finland

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