As stated in the Interim Report January-March 2020
Kojamo estimates that the most significant risks and uncertainties in the current review period are related to the development of the Finnish economy. The near-term risks arise particularly from the COVID-19 pandemic. The risks and their magnitude are affected by the development of the pandemic as well as the scope and duration of the measures introduced to limit the pandemic. Predicting the development of the pandemic and the impact of the restrictions is exceptionally difficult.
Economic development may affect the housing and financial markets in exceptional ways. These factors may have an impact on Kojamo’s profit and cash flow as well as the fair value of apartments. The economic downturn may lead to unemployment, which can affect the ability of residents to pay rent and, subsequently, the company’s rental income. Kojamo follows the development of rental receivables and credit losses actively.
Urbanisation is expected to continue in the longer term. The supply of rental apartments may, however, increase locally in the main areas in which Kojamo operates, and the changes in supply and demand could have an impact on Kojamo’s tenant turnover or the financial occupancy rate and, thereby, rental income. The restrictions implemented in response to the pandemic may, in the short term, also affect people’s willingness to relocate and reduce migration.
If prolonged, the pandemic may have an impact on the operations of construction companies, which could result in delays in new projects. The prolongation of the pandemic could also have broader impacts on the housing market and property market, including apartment prices, rents and yield requirements.
The weakening of the financial markets could have a negative effect on the availability of financing or lead to a higher cost of financing.
A more detailed description of Kojamo’s strategic risks and uncertainties is provided in the Financial Statements 2019.
Read more about Kojamo’s risk management here.
Page updated 7 May 2020