Finland's Sponda to focus exclusively on prime real estate
FINLAND - Pension-owned Finnish property firm Sponda has confirmed that it is to focus exclusively on Helsinki prime, citing a 6% rapid rental increase for central business district assets.
Posting revenues of €120.2m for 2011 - compared with €115.9m in 2010 - the firm, which is 10% owned by pension insurer Ilmarinen, announced that it would invest 1-2% of the value of a portfolio valued at €3.1bn in maintaining and upgrading existing assets, as well as investing in development projects.
Sponda counts pension firms Varma and Fennia and the state pension fund among its top 10 shareholders. The pension scheme of Finnish dairy firm Valio is also a shareholder.
Amid a corporate switch to higher-quality buildings, Sponda said it would sell off non-strategic assets on the periphery of the capital, where high vacancy rates have held back rental increases.
Although it held its occupancy rate at 88% in 2011, Sponda said it expected to reduce vacancies further this year.
Against a positive domestic macroeconomic environment with 4% GDP growth forecast this year, Sponda chief executive Kari Inkinen pointed to the potential negative impact of global economic uncertainty, both on business operations and vacancy rates.
Politico-economic risk will continue to be a factor both in the domestic market and in Russia, he said.
Even in prime, increased business demand for office is vulnerable to euro-zone volatility.
Meanwhile, despite keeping its target of investing 10-20% of the company's balance sheet in Russia, Inkinen said the firm would "take the unstable nature of the Russian market into account" and that it had not yet set a specific deadline for its investments.
Against forecast GDP growth equal to Finland's, an expected decline in vacancies and undersupply of A-grade assets, the Moscow market is still dominated by local players.
"The transaction market is still awaiting foreign investors," Inkinen said.