Near-term risks and uncertainties

As stated in the Kojamo plc’s Interim Report 1 January–30 September 2022

Kojamo estimates that the most significant near-term risks and uncertainties are caused by Russia’s war of aggression in Ukraine and its impact on the development of the economy. Russia’s war of aggression in Ukraine has caused economic uncertainty and weakened Finland’s economic growth prospects. The war has pushed consumer prices up, as a result of which consumer purchasing power and economic growth have slowed down. The rise has been particularly sharp in the prices of energy and raw materials.

The continuing war will also cause uncertainty in the coming months, which can have impacts on the housing market and property market, including apartment prices, rents and yield requirements as well as on the operations of the construction companies. In addition, the economic sanctions and their extent may have an impact on the availability and prices of building materials.

If inflation remains high, costs will generally increase, which could affect Kojamo’s result and cash flow as well as the fair value of apartments. Rising construction costs may have an impact on the profitability of new development projects and thereby slow down development investments.

The development of the Finnish economy 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. A general downturn may lead to unemployment and reduce household purchasing power, which can affect the ability of residents to pay rent and, subsequently, the company’s rental income.

Urbanisation is expected to continue in the longer term. The COVID-19 pandemic continues to cause uncertainty. In the short term, possible restrictions can affect people’s willingness to move and reduce migration. The supply of rental apartments may 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.

A more detailed description of Kojamo’s strategic risks and uncertainties is provided in the Financial Statements 2021.

Read more about Kojamo’s risk management here.

Page updated 3 November 2022