After several challenging years, Finland’s commercial real estate market is offering attractive opportunities again. Pricing has adjusted and property yields have risen, but a high yield or a low price does not necessarily make a good investment. The quality and resilience of the underlying cash flow remain key.
We spoke with Innovestor Real Estate Managing Partner Tomi Asanti about where he sees opportunities emerging – and what investors should look for beyond an attractive price or headline yield.
Repricing has created new opportunities
Finland’s property investment market is recovering, but conditions differ across sectors and locations. That makes property selection much more important than a broad bet on the market.
According to Asanti, high-quality properties can currently offer net yields in the range of 7–9% – levels that have not been available for a long time.
But the opportunity is not based on trying to predict the exact bottom of the market. At Innovestor Real Estate, each acquisition is assessed using current rental income, financing costs and expected property expenditure, with cautious assumptions about the eventual sale. The team also tests what happens if income falls or costs rise. If market conditions improve during the holding period, that is upside rather than something the investment case should depend on.
As Asanti puts it, “Market recovery is a potential upside, not our business plan.”
This distinction matters in a country where the economic outlook remains uncertain. Asanti’s view is that investors are not buying Finnish GDP growth. They are buying individual assets and, ultimately, the contractual cash flows those assets produce.
A resilient investment vs a value trap
An appealing headline yield can conceal weaknesses in the underlying investment. A property may have the right location and look attractive on paper, but weak tenant economics, poor energy performance, high operating costs or significant future investment needs can quickly change the equation.
A long lease is valuable only if the rent remains affordable and the tenant can meet its obligations. Investors therefore need to assess the company that actually signs the lease and any guarantees supporting it, not just the brand above the door.
For Asanti, this is why the focus needs to be on the cash flow behind the property: “We invest in cash flows, not walls.”
Understanding the tenant’s business and ability to pay – and maintaining a strong tenant relationship – is therefore central to assessing whether that cash flow can remain resilient over the long term.
Long leases can add further resilience, particularly when combined with inflation-linked structures that provide additional protection over a long holding period.
Three fundamentals behind a resilient investment
The strongest opportunities are concentrated in Finland’s main growth regions: the Helsinki, Tampere and Turku economic areas. Opportunities exist elsewhere, but Asanti considers them more limited and requiring greater selectivity.
Within the main growth regions, Asanti is particularly interested in modern, energy-efficient commercial properties with strong locations and financially sound tenants. Together, these fundamentals support resilient cash flow over the long term.
Energy performance is an increasingly important part of that equation. It can strengthen an already good investment through lower operating costs, greater tenant appeal and further improvements made during the ownership period. For example, solar power and battery energy storage can offer tenants more sustainable, potentially more affordable and more resilient energy, while making the property more attractive to occupiers and supporting stronger cash flow for the owner. But energy performance cannot compensate for weak fundamentals: a poor location or a property without sustainable tenant demand does not become a strong investment simply by adding energy technology.
A good acquisition is only the starting point
Finding the right property is only part of the investment case. For Asanti, resilient cash flow also needs to be actively supported throughout the ownership period.
That can mean maintaining strong tenant relationships, developing lease structures, managing financing and improving the property itself, including its energy performance. Rather than depending on market appreciation, active ownership is about strengthening the factors that keep the asset competitive over time.
This also shapes the eventual exit. The question is not only what the property is worth today, but whether its cash flow and fundamentals will remain attractive to another investor years from now.
Asanti sees evidence of this in the portfolio today: “For our investors, this approach has translated into tangible income. Most of our real estate investment projects have continued to make annual cash distributions through the market downturn, with some even increasing their annual payouts.”
The objective is to build that resilience beyond the current ownership period: “We build cash flows that work for the investor today and for the next owner tomorrow.”