Investing in housing becomes popular in Rovaniemi

With investment in housing becoming a vogue, Finland's largest housing fund OP Rental Income is building a 53-apartment block in Rovaniemi.

Investing in housing has become popular among both big-time investors and individuals. Individual households buy apartments while big investors buy complete housing associations.

“Provincial towns such as Rovaniemi yield greater cash flow in relation to price of acquisition which means rental income is somewhat better than in the capital region,” supervisor of YIT Konsta Rapo told the Daily Finland.

OP Rental Income's block of flats will be located in Kiela of downtown Rovaniemi. It will be built by YIT, he said.

The better rental income is due to the lower cost of building and land plots, while the rent is not significantly different from the capital region, OP Rental Income Portfolio Manager Antero Tenhunen told Finnish language daily Lapin Kansa.

Housing funds have different strategies for choosing their target localities of investment. OP Rental Income's strategy includes buying the ownership of complete housing associations.

“A typical project size is roughly 50 apartments, which usually means the whole association. Then the control and authority are in your own hands,” said Tenhunen.

Tenhunen said the company’s choices of localities include “University towns or places with economic growth and some smaller towns.”

Rovaniemi is not an entirely new target. OP Rental Income has for a year had a housing association for construction in Viirinkangas. In addition, the fund had major acquisitions in a few older blocks of flats in Rovaniemi, some of which have already been sold.

“We intend on staying with Kiela block for at least another 10 years,” said Tanhunen.

Pellervo's economic research last year looked at the profits housing investors may expect in different towns in 2015 to 2019. The study concluded that the gross income is better in lower price-range towns. In towns where the prices are significantly lower than in Helsinki, rent is not as much lower in relation. In larger towns and in the capital region, the accumulation of value is better, nonetheless.

Just by gross income, Rovaniemi was placed in top 5 in PTT's research which compared about 20 towns in different parts of the country.

PTT also estimated the cities' appeal in terms of regional development. The better the predicted population development, the larger is the median income, and the larger the portion of students in the population the better is the lookout for lessors. In this category, Rovaniemi was placed 6th after Oulu, Jyväskylä, Kuopio, Vaasa, and Helsinki.

Housing funds' income has been good in the past years – seven to 10 per cent after expenses.