Near-term risks and uncertainties

As stated in the Kojamo plc’s Interim Report 1 January–31 March 2022

There were no significant changes in Kojamo’s near-term risks and uncertainties during the review period, except for the possible effects of the Ukrainian war. Kojamo estimates that the most significant risks and uncertainties in the current review period are related to the effects of the war in Ukraine on the development of the Finnish economy.

Russia’s invasion of Ukraine and the resulting sanctions against Russia have weakened Finland’s economic growth and created uncertainty about the economic outlook. 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, 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. However, the continued COVID-19 pandemic and the possible restrictions may, in the short term, affect people’s willingness to relocate 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.

The near-term risks arise particularly from the Ukrainian war, 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 continues to accelerate or remains high for longer than previously estimated, 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 weakening of the financial markets could have a negative effect on the availability of financing or lead to a higher cost of financing. In addition, tightening monetary policy may increase financing costs.

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 12 May 2022