Operating environment and trends
As Kojamo operates in the residential real estate sector, the company is affected particularly by the situation in the residential property market and development in Finnish growth centres. The company is also affected by macroeconomic factors, such as economic growth, employment, disposable income, inflation, regional population growth and household sizes.
According to the economic survey published by the Ministry of Finance in June, the continuation of Russia’s war of aggression in Ukraine, rising energy prices and the subsequent acceleration of inflation are overshadowing the outlook for the global economy and economic growth is slowing down widely. The eurozone’s economy is also suffering from the Russia’s war of aggression and the outlook is very uncertain. The continuation of the war has increased the possibility of recession. The tightening monetary policy and consumer caution will continue to slow down economic growth next year. At the same time, the energy market is in an unstable state.
The forecast for Finland’s economic growth has been lowered from the previous one and the inflation forecast has been revised upwards since June 2022. The rise in consumer prices reduces household purchasing power and undermines the prospects for private consumption. However, the employment growth sustains households’ real incomes and the decreasing saving rate supports consumption this year.
The economic outlook for construction has clearly deteriorated due to Russia’s war of aggression. The Confederation of Finnish Construction Industries CFCI expects construction to continue to grow by a few per cent this year, but to turn to a decline next year. The volume of new housing production is still supported by last year’s good start-up pace, but the number of residential construction start-ups is predicted to decrease from last year’s record-high levels to 39,000 apartments.
According to the Ministry of Finance’s economic survey, more than 20% fewer building permits were granted in the early part of the year compared to the previous year. Next year, the number of start-ups is expected to stabilise at the level of long-term housing needs, which is 35,000 apartments.
According to CFCI’s housing production survey in May 2022, the main concern is the increase in costs caused by the reduced availability of raw materials. The increased uncertainty surrounding future construction investments may postpone the investments. The demand for residential construction is also weakened by the slowdown in economic growth.
According to the population forecast published by MDI in June 2021, the capital region will continue to attract people in the future. The forecasts present three growth scenarios that also take the impacts of the COVID-19 pandemic into account. The population of the capital region is predicted to grow by 13–21 per cent during the period 2020–2040 in the three scenarios. Turku and Tampere will also grow by more than 10 per cent in all three scenarios.
According to Nordea’s housing market review, published in June, rental demand is expected to improve in the future as services recover and employees and customers return to cities. The short-term rental market is also expected to pick up as tourism recovers. Housing sales are expected to stabilise from last year’s record-high figures. The increase in interest rates makes rental housing relatively more attractive than owner-occupied housing due to the increase in financing costs.
Kojamo responds to the trends of urbanisation, digitalisation and communality in accordance with its strategy. Kojamo offers rental apartments and living services for residents in Finnish growth centres.
Page updated 1 March 2023