The KTI Property Index, which measures the total return on investment properties held by professional investors in Finland, recorded a total return of 1.9% in 2024. This index is based on data from 54 professionally managed real estate investment portfolios with a combined value of approximately 37 billion euros, representing 39% of Finland’s total property investment market.
In 2024, although market values continued to decline, the pace of this depreciation slowed compared to the previous two years. The average income return increased to 4.8%, a rise that was largely supported by the softer drop in market values. However, the two largest property sectors residential and office properties underperformed relative to others, which moderated the overall returns.
Residential properties, which make up around 35% of the professional property investment market, experienced significant declines in market values in 2022 and 2023, resulting in negative total returns during those years. In 2024, however, the slower decline in values and a slight increase in income returns helped lift the sector into positive territory, achieving a total return of 1.2%.
Industrial properties maintained their position as the best-performing sector for the third year in a row, delivering a total return of 4.9%. Here, a strong income return compensated for the modest negative capital growth.
Retail properties produced an average total return of 3.9%, with the decline in market values limited to less than 2%. Despite this, the average income return for retail properties fell – particularly for shopping centre properties, which were adversely affected by increased operational costs – leading to more pronounced negative capital growth for these centres compared to other retail assets.
Public use properties saw their total return rise to 4.6%, thanks to a modest average decline in market values of around 1%. Supported by a more moderate decline in market values, educational properties outperformed nursing home and healthcare properties in 2024.
In contrast, office properties were the only sector that finished the year with a negative total return, ending at -0.7%. While the income return in the office sector improved over the previous year, market values dropped more sharply due to rising yields, highlighting the specific challenges faced by office investments in the current market environment.