Financing Real Estate Acquisitions in Finland

In little more than two years the Finnish real estate investment market has virtually exploded in an astonishingly rapid development from a dormant domestic market to one of the most dynamic real estate markets in northern Europe. While this has inevitably led to a certain rise in prices and a corresponding fall in yield levels, Finland continues to be an interesting market for foreign leveraged investors. In a recent market commentary, Finnish investment advisors have estimated that the number of foreign investors active in the Finnish real estate market had between 2004 and 2005 gone up from 17 to 80. The rising prices have also had the effect of bringing new sellers to the market.

Another clear trend is the increasing role of leverage and, with that, external financing. More and more companies and properties are being purchased by highly leveraged professional investors. In real estate transactions, leverage is often expressed in terms of LTV (Loan to Value) ratio. The higher the