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Helsinki Real Estate: Where to Invest in Property

Helsinki, as well as the surrounding metropolitan area (Greater Helsinki), is growing steadily as more people move to Southern Finland, mostly to work and study. Therefore, the current, significant, demand in the Helsinki real estate market will continue as more people are looking for a place to live. An intelligent real estate investor has an opportunity. In this article, we examine the best neighborhoods to invest in Helsinki real estate.

Helsinki, Finland street scene.
Sunset in Helsinki, Finland.

Best locations for Helsinki real estate investment

House prices in Helsinki vary a lot depending on the location and the status of the neighborhood. There are lots of prosperous areas in Helsinki where house prices have risen through the roof. These areas are located close to the city centre and/or by the sea. The farther from the city centre one looks, the more the house prices drop, especially in East Helsinki.

Here are some areas that are worth to look into when planning to invest in the Helsinki real estate market:

A park and apartment buildings in Jätkäsaari, Helsinki, Finland.
Helsinki, Finland at dusk.

1. Laajasalo

Already known for its beautiful nature and easy access to Helsinki city centre, the prices in Laajasalo in the south-east of the city have been steadily on the rise. The new crown bridge alliance project-which will commerce work in 2021-will make the connection to the city centre even faster and increase real estate prices even more. Currently one needs to take a metro to Herttoniemi and then a bus (if you don’t want to be stuck in a slow bus the whole journey) to reach Laajasalo. After the bridge is functioning, you can reach Helsinki quicker. A specific area in Laajasalo to look at is Kruunuvuorenranta. 

2. Viikki

Viikki has a reputation as a university neighborhood since one of the big university campuses is located in the area. The transportation links are getting better since Helsinki-Espoo cities have planned a joint transportation link called Raide Jokeri. The light rail link should be ready this year. Also, Malmi and Viikki will be connected to the city centre by a fast railway connection called VIIMA. These improved transportation links are likely to make Viikki and Malmi interesting areas to look at for Helsinki real estate.

3. Areas close to Pasila

Pasila is already getting more expensive since Tripla Mall opened at the end of 2019. Also, all trains coming from Helsinki stop in Pasila, meaning you are only minutes away from the city centre. Still the per square meter price of properties are substantially lower than in Kallio, Töölö or other centrally located Helsinki neighborhoods. Prices will most certainly grow. There is still a lot of development happening in Pasila and the surrounding areas are likely to increase in value. Some improved transportation links are being built in Ilmala direction as well.

4. Tapiola

Tapiola, located in Espoo city, is on the rise. It is already linked by metro to Helsinki city. A new shopping mall named Ainoa just opened up in the Tapiola metro station. The area is full of development and once done will add value to the neighborhood. Worth taking a look! You can reach Helsinki city in 15 mins. Additionally, Raide-Jokeri will improve Tapiola’s transportation links as well. 

5. Pajamäki 

One word: Raide-Jokeri. This connection link that was mentioned above in point number 2 has made Pajamäki-neighbourhood in west Helsinki-one of the top spots to look at in terms of real estate investment in Helsinki region. 

6. East Helsinki

East Helsinki, especially Kontula and Mellunmäki, have had pretty bad reputations in the past but are slowly on the rise. So far, prices aren’t moving, especially in Kontula region. Helsinki city has plenty of plans to improve the area. Better transportation links and shopping mall projects make us hopeful that these areas have a bright future ahead. The plans are still works in progress, and it will take time to improve the reputation of these areas, but it will be interesting to watch. If the plans come to reality, then there is huge potential for Helsinki real estate investment in the city’s east, where prices are still relatively low. 

Metro train tracks in East Helsinki Finland.
East Helsinki. Check it out. Don’t like it? Leave on a metro.

How to predict the rise in value in Helsinki real estate?

In real estate investing, one should never trust that property will appreciate over time. House prices can get higher, which is always good for real estate investors, but there is no guarantee that it will happen. Indeed, house prices usually rise, but it seems to be true in Finland only if the house is in a big (university) city located near services. House prices grew in only three major city regions in 2018: Helsinki, Turku and Tampere. 

Apartment buildings in Jätkäsaari, Helsinki, Finland.
Jätkäsaari, Helsinki, Finland.

Increased urbanization is a global trend that is also happening in Finland: people (especially young adults) don’t want to live in the countryside anymore. Instead, they appreciate a good location over a big house. A good location is key when buying an investment property. However, the risk of buying a house from the “wrong neighbourhood” is not that high in Helsinki because there are not bad neighbourhoods and the population of Helsinki is growing all the time. 

Real estate investors should aim for high rental income

An investment property is an investment asset that generates cash for the investor. It should be bought only after careful calculations and risk-assessment. As we said above, there is no guarantee that house prices are going to rise (as they have mostly done in the past decades) in Helsinki. That is why the most important aspect to look when investing into real estate is the income from rents. Manage your risk by getting a steady tenant who can pay a nice rent. 

In the most prosperous suburbs of Helsinki, such as Eira, house prices are very high. That is why it’s very hard to get a good average return solely from rents in these suburbs. And you need more money to buy real estate from these areas, which is never a good thing, especially if you are an average investor. Of course, these prosperous areas will likely hold (or rise in) their value, but there is no guarantee of it as the house prices are already so high in these areas. 

Have kids? Consider living near the friendly Fallkulla Animal Farm in Helsinki, Finland.

Intelligent real estate investors should look outside the city center

In Finland, the best cities for high rental income are outside of Helsinki. Helsinki is the worst city for the real estate investor who is looking for a good rental income. By rental income, I mean rental income in relation to the price of the apartment. On the other hand, Helsinki is probably the best city in Finland for real estate investors who want their house to appreciate.  

The more expensive the house, the worse the rental income is in relation to the price of the apartment (usually). That is why the best rental income lies outside of prosperous and expensive cities and suburbs. 

In Helsinki, real estate investors should look outside the city center and other prosperous areas. That is, simply because the house prices are much more affordable outside the centrum, such as in Eastern Helsinki or Northern Helsinki. Eastern Helsinki especially is attracting real estate investors. It is relatively close to the city centre and there has traditionally been a more affordable cost of living than elsewhere in Helsinki. 

An apartment building in Helsinki, Finland.
Want to live over a restaurant in Helsinki city center?

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Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

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Economy finland Investing

Finland Economy: Where is it going over the next two years?

Both Finland’s Central Bank and Finance Ministry have recently released updated forecasts for the next two years. The news isn’t great. In case you don’t understand subtlety, the Central Bank’s headlined their press release: Finland’s economic boom is over. A quote:

Finland’s economic boom is over and growth is temporarily losing momentum amid weaker global economic activity.

Will Finland’s economy crash? No. Even if finding a job in Finland will be more difficult than usual, these regular periods of slower growth and greater pressure on government finances tend to foster innovation and creativity. Instead of running to the hills maybe it’s time to look for an affordable investment opportunity? Of course, that’s if you can keep the cash coming in to pay your rent and buy food…

We’ll get into the details below. First, a little history on Finland’s economy.

Poor to rich

For most of the 1900s, Finland was a relatively poor country. Finland declared its independence in 1917. The following year, 1918, Finland had its own civil war. After that, Finland was a pretty stable, yet poor country until the Soviet Union attacked Finland in 1939. Finland fought two wars against the Soviet Union, the Winter War and the Continuation War. In 1945, after Finland had lost some of its Eastern parts to Soviet Union, the Continuation War ended.

Part of the peace treaty deal between Finland and the Soviet Union was that Finland had to pay war reparations to the Soviet Union. Finland managed to pay its reparations to Soviet Union on time which helped the development of various industries in Finland. Since the WW2, the economy of Finland has been growing quite steadily. According to the following statistic graph (from Tilastokeskus- Statistics Finland), the gross domestic product (GDP) of Finland has been growing steadily for the past decades.

However, there has been two major recessions during the last 50 years; the first one happened in the early 1990s and the second recession occurred after the Great Recession in 2008. Even though the Great Recession started in the United States, Finland, among other countries, suffered badly because of it.

Finland’s economy 2020 – 2022: Growth will slow

For the last 10 years, Finland has suffered economic challenges. After the Great Depression, a European Debt Crisis followed. It peaked between the years 2010 and 2012. Both of these crises affected Finland. Since 2009, Finland has had four different years when its gross domestic product (GDP) has declined: 2009 and 2012-2014. The highest growth in GDP occurred in 2016 (2.6%) and 2017 (3.1%).

However, the party doesn’t seem to last very long in Finland. The Bank of Finland forecast for Finnish GDP growth is less than 1% next year:

  • 1.3% – 2019
  • 0.9% – 2020
  • 1.1% – 2021
  • 1.3% – 2022

The Finance Ministry has a slightly different forecast, but basically the numbers show a consensus.

  • 1.6% – 2019
  • 1% -2020
  • 1.1% 2021
  • 1.2% 2022

It is always hard to predict the future, especially when there are so many uncertainties and factors that determine the global economy trend. As a small fish in the sea, Finland’s economy is prone to various global economic threats and risks. Finns have always relied on their export sectors which is also the reason why the Finnish economy goes hand in hand, up or down, with the global economy.

So want to know how the Finnish economy is going to do? Look at the global economic outlook.

Aging population & adventurous young professionals: Challenging mix

Finland will be facing many challenges in the future. One of the biggest challenge for Finland’s economy is the fact that our population is aging fast. After the WW2 in 1945-1955, there was a baby boom in Finland (and across Europe) and many children were born in that time period. In Finland, we call these people “the great generations” (baby boomers). These people are already retired or just retiring now. That means that there are lots of older people who need support and care.

Sunset on the Finnish economy for now?

While Finland is aging fast, the total fertility rate (TFR) per average woman reached a record low numbers in 2018 (1,41). It is hard to figure out all of the reasons why the average fertility rate per woman has declined in Finland during the past 10 years, but it will sure has its effects. As if it was not enough, more and more talented young professionals are moving abroad from Finland. There are many reasons for that, such as wanting to experience different cultures or pay less taxes. Luckily, professionals from other countries also come to Finland to work.

In order to keep Finland’s economy and welfare state strong and stable, we definitely need more workers here in Finland. There is great talent shortage especially in the tech and IT field, but we need workers in all kind of field (such as elderly care). There are just not enough young Finns anymore which is why we have to rely on foreign labor.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

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finland

Personal finance tips and tricks for Finnish university students

Overall Finland is a good country for students. We get a free education (even university is free) in one of the best school systems of the world and some really nice social benefits as a student, such as financial aid, housing allowance and a student loan that we don’t even have to pay fully. 

However, at the same time Finland is one of the most expensive countries in the world which means that as a student with limited income, you have to play your (financial) cards wisely. 

How to obtain financial advantage while studying at university? 

Usually, when people think about studying at university, they think about all that freedom enjoyed by young people, but also how expensive it is. In Finland, studying in university or in polytechnic (university of applied sciences) is generally free, but still, most people end up taking student loans and/or rely on their parents for financial aid. Social benefits for students are simply not enough for most students in Finland. 

However, students can learn valuable financial skills for the future during their university years. There are many ways how students can obtain a financial advantage while studying. I have personally been a Finnish university student. So I know from my own (and friends’) experiences some tips & tricks for how you can make the most of your studies financially.

Tip 1: Take student loan

If you are going to graduate from a Finnish university or from a Polytechnic on time (or even 0.5-1 year late), you should definitely take advantage of the Finnish student loan system. This is a no-brainer because of the student loan compensation. The student loan is a government-guaranteed loan for which you can get a maximum of €650 per month. However, I would advise to not take more than €18,000 (the maximum amount which is covered by the compensation) of student debt (unless you use it as an investment loan). 

The student loan compensation means that Kela (Finnish social service agency) pays back part of your student loan if you graduate from university in 6 years and from Polytechnic in 3.5 years. The maximum amount of compensation is €6,200 (- interest which is less than 0.5% yearly). To be able to claim €6,200 (- interests) of compensation, you need to take no more than €18,000 of student loan and graduate on time. 

Tip 2: Learn budgeting and track your expenses – and buy your groceries from big supermarkets or from Lidl

Do you know how much you spend every month? Probably not. Learn how to make yourself a monthly budget and track your spending so you know if you hit your targets or not. Here are some great tips for budgeting. There are many ways to track your expenses. You can your online bank statements, wallet apps or simply Excel. If you’re as obnoxious meticulous as some people at sulonorth, use YNAB

Food is expensive in Finland, and it is especially expensive in small, urban grocery stores. Bigger supermarkets like Prisma or the German grocery store Lidl are the best options. The more often you got to a grocery (or any other) store, the more stuff you buy on impulse. That is why it’s good to have a list and go to a grocery store only once per week if you can 🙂

Tip 3: Find a cheap accommodation

Your rent is probably the biggest monthly single expense you will have during your studies. The cost of living is rising in big cities in Finland. Luckily, every city with a university or a polytechnic has a student housing foundation. However, it might be hard to get a studio apartment in your freshman year through a student housing foundation. Dorm rooms are easier to get and they are very cost-friendly. On top of that, you get to meet new and interesting people. Outside of student houses, there are still many options for housing.

As a student in Finland, you are also entitled to get a general housing allowance that covers some of the housing costs depending on where you live and do you live alone. Note: if you move in with someone (e.g. your partner, friend), you are seen as one household (unless you have separate rental agreements, like in student dorms), thus you only get one housing allowance per household. 

Tip 4: Find yourself a part-time work or work full-time during summers

In Finland, studying at University or at Polytechnic is nearly free which means that you have plenty of free time. Of course it depends on your field of study and major, but generally, you don’t have many mandatory lectures and classes during the week. However, there are quite a lot of independent work you have on your own. 

So, you have plenty of time to work part-time if you want during your studies. If you don’t want to work during academic months, I would suggest you to at least work during the summer. But, be careful that you don’t earn too much!  If you receive a (and who wouldn’t!?) study grant (a basic financial aid for students), you have certain earning limits every year, depending on the amount of study grant you will receive during the year. For example, if you study for 9 months and receive study grant from these 9 months, your yearly earning limit is €12,498 in 2020. 

Tip 5: Think twice before buying anything new – and be careful with subscription services

As a student, you don’t have extra money that could be wasted on stupid things you don’t even need. Still, many of us fall into the trap of random shopping too often. Whenever you think about something that you would like to buy, you should ask yourself whether you really need the item that you think you need. Don’t believe commercials because only you know what you really need. 

Also, borrowing is a good way to avoid spending money on items you might only need on occasion. For example, if you plan to go play tennis a couple of times for fun, rather than buying a racket you could ask around to see if your friends can lent you one.

Other good way to avoid buying stuff are libraries. On top of books many libraries also lent out summer sporting equipment. So do check them out! There also many cheap second-hand markets in Helsinki that sell fashionable, quality clothing for a very reasonable price. 

Subscription services like Netflix and Spotify are great services, but these kind of services can insidiously increase your expenses before you even notice. 

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

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Finnish Posti (postal workers) strike reflects Finnish values better than anything

The Posti strike is still on. Finnish postal workers have been on strike since Monday, 11 November. Two weeks is a long time for a strike that has some serious effects for mail letter and package deliveries: package deliveries are late for days while delays in mail letter can be much longer. And all that in the midst of high-season, just before Christmas. 

As if the Posti workers’ strike was not enough, other workers’ unions are organizing sympathy strikes to support Posti workers. For example, the Transport Workers’ Union AKT announced a sympathy strike that would stop public transport in Helsinki region for 24 hours if the Posti strike continues without resolution. Other workers’ unions that are supporting the Posti strike with concrete actions are The Finnish Aviation Union, Service Union United, The Finnish Food Workers’ Union and Finnish Seafarers’ Union

Monday, 25 November could see major transport disruptions throughout Helsinki if Posti workers do not have their demands met. A good day to work at home? How many people can really do that?

Finland is the safest country in the world. It’s notable though that the potential action on Monday is being reported by services that warn international business travelers of delays and disruptions. Usually, Helsinki only appears on these services when Donald Trump or Vladimir Putin visits the city.

The Posti office in central Helsinki.

What is the problem? 

Finnish postal workers (PAU union) are fighting against Posti, the government-owned postal monopoly, over a new deal covering wages, terms and conditions in the sector. According to PAU union’s chairman, Heidi Nieminen:

“Posti is seeking such drastic weakening of terms and conditions that there is not really any other option but to answer with industrial action and try to get a reasonable contract on time”.

PAU union asked other unions from blue-collar confederations to support the Posti strike, and that is what threatens to disrupt daily life in Helsinki on 25 November as the strike continues for the second week in a row without an agreement.

Spending and inequality within Posti 

The Posti strike has gathered an increasing amount of sympathy among the Finnish public following media coverage of the huge wage gaps between the blue-collar postal workers and the former head of Posti, Heikki Malinen.

Malinen banked nearly one million euros in 2018. His 2018 salary included a staggering €376,841 bonus which alone is equivalent to an annual average salary of 16 postmen

Malinen resigned at the beginning of October amid rising controversy over Posti’s excessive spending on senior figures, such as himself. For example, the leaders of Posti have enjoyed expensive memberships at Sarfvik Golf Club in Kirkkonummi, west of Helsinki. The membership was proposed by Malinen in 2015 and it cost €30,000 – more than a year’s salary for the average postal worker.

In mid-August, 15 Posti board members and leadership team members travelled to California for a nine-day all-inclusive luxury trip. Posti has refused to specify the exact cost of the trip but it is estimated to be over €100,000.

Only two weeks after this trip, details of the new deal lowering employment benefits and wages were released. According to Helsingin Sanomat, PAU union has estimated that the new proposed employment contract would mean that postal workers earning around €24,000 annually are facing a 30-50% pay decreases.

Amid increasing backlash, Malinen agreed to forgo two months pay but most people felt that this was adding insult to injury considering his high salary and benefits. Following his departure from Posti, Mallinen will still gain four month’s salary.

A Posti truck on the streets of Helsinki.

The strike represents Finnish values

In a country of low income inequality, it is not a big surprise that this kind of industrial action has taken place. In Finland, rich people don’t boast with their money because that is simply against our moral values. In Finland, people get jealous very easily if someone happens to have little bit more money. 

Finnish journalists celebrate a  “National Jealousy Day” with sensational headlines once a year when the government publishes the taxable income of all its citizens. Searching for rich people’s income has been made super easy with specific “tax search engines” that are available in in every major newspaper’s website. Thank god, the tax search engine shows only the information of those who earned more than 100,000 Euros last year. 

At the same time, Finns like to show support for those who don’t have that much. Surprisingly many Finns are happy to pay high taxes in order to get nearly free education, healthcare, low-crime rates and to be just overall happy people.

For most of the 1800s and 1900s, Finland was just a tiny Northern country that nobody knew of. Of course, we had our wars and Olympics and some sports achievements. Nowadays, Finland is a relatively “rich” country, which is great, but at the same time, our moral values have not changed in the past decades. That is why most Finns have some sympathy towards these postal workers who fight for themselves in order to get adequate rights and rewards.

A Posti worker wearing their recognisable orange jackets in central Helsinki.

An end to paper mail?

Ending deliveries of paper mail be a tempting option when confronted with the Posti workers’ strike. There’s been some public discussion of this recently. Finland is a very digital country with medical, tax, and government-related documents also available online, secured by bank codes. Paper mail is still widely used, however, with accessing online documents a slow and cumbersome process, especially for the elderly, the less tech savvy, and those without strong internet connections.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

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Finland’s business interest in the Arctic

Unlike Norway, Russia, Iceland, Greenland, Canada and the USA, Finland’s territory does not border the Arctic Ocean. However, the northern parts of Finland (Lapland) are considered to be part of the Arctic Region, a polar area covered in ice and snow for most of the year.

Why is this region getting more attention from business people in Finland? In this article, we’ll take a look at the Finnish Arctic strategy.

Finland’s vision is to be an active and responsible Arctic actor in the midst of change 

According to a publication from the Prime Minister’s Office of Finland, Finland declared its own Arctic vision in 2012:

Finland is an active Arctic actor with the ability to reconcile the limitations imposed and business opportunities provided by the Arctic environment in a sustainable manner while drawing upon international cooperation”.

What does this mean? Essentially, the significance of the Arctic region has increased and Finland possesses relevant expertise. Finland wants to contribute to the sustainable development of the Arctic region. At the same time, Finland is engaged in the international efforts to exploit the economic opportunities emerging in the northern region.

An Arctic railway?

One of the ways that Finland could be part of the Arctic business ecosystem is by building a railway that would connect Finland to the Arctic Sea through Norway. In 2018, the Finnish and Norwegian governments announced their plans for this kind of connected railway.

Both the Finnish and Norwegian governments see the potential for an avenue that could provide a more direct route for exporting Arctic resources, and also help a booming tourist industry in northern Europe.

Yle reported this May that tourism in Finnish Lapland increased by 3% in 1Q2019 compared to the previous year. American tourists are visiting Lapland at a particularly increasing rate and the amount of American tourists increased by staggering 66% in that period compared to 1Q2018.

Focus on Food, Maritime and Mining

Besides tourism, Finland sees much potential in the Arctic food industry as food from this region has a pure and healthy reputation globally. Especially Arctic berries are being used and sold as a superfood in powder form all over the world. Just earlier this month, a Tampere University study released promising data on the health benefits of lingonberries. We love lingonberries! The demand for these types of food products has increased in Asia, according to Natural Resources Institute Finland.

Mining is also a large industry in Finland’s Arctic region. According to House of Lapland – a publicly owned destination marketing company, Lapland counts for half of the total quarrying and mining industry volume of Finland and has more than €4 billion of investment potential. Several thousand new jobs are likely to be created in Lapland by potentially two new mines in the next few years, according to Lapin Kansa.

Another area of expertise and focus for Finland is Arctic maritime technologies. Finland has been a world leader in building icebreakers and ships for the extreme Arctic weather conditions. In May it was reported that Finland was bidding to be an icebreaker subcontractor for the USA, which is planning to update its icebreakers in the Arctic region.

The Arctic sea ice is vanishing –  New shipping routes are emerging

There’s another side to the Arctic story. And it’s not exactly all Euros and lingonberries.

You probably know the story: global warming has impacted the Arctic region more than any other place in the world. During the past decades, the Arctic region has changed radically, with higher temperatures having a great impact on the environment. As the climate has warmed steadily for decades, the Arctic sea ice has melted simultaneously, as the graph shows. 

In the future, when the Arctic summers will most likely be free of sea ice (in a matter of decades, according to experts), there will be lots more interest in this Arctic region, especially from the economic point of view.

Take the Northeast passage, for example. It has traditionally been open for sea traffic for only two months in a year. But with the help of icebreakers, it is open from July to November in 2019. The Northeast passage shortens the distances of shipping between Asia and Europe by thousands of kilometers. 

You can make money when you save money. Finland will have plenty of company up in the, previously, desolate north.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

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finland Politics

The Finns, a right-wing political party, has gained popularity among educated business people in Finland

Earlier this week, a poll showed that populist Perussuomalaiset (the Finns / True Finns) remained the most popular political party in Finland. 23% of the 3,414 people surveyed over the course of about one-month supported the Finns, while 17.3% backed Kokoomus (the National Coalition Party), the second most popular party.

So soon after the spring parliamentary polls, it’s too early to think about new elections in Finland. However, the popularity of the Finns will be of concern to moderate-minded individuals, given the party’s anti-immigrant stance and critical views of the EU. Along with these factors, the Finns’ policies towards environmentalism, for example downplaying the importance of taking action to prevent climate change, may also be concerning to some. Yet these policies are winning over voters.     

Who are the Finns? 

The Finns became one of the most popular parties in Finnish politics after their election win in 2011. In 2019 parliament elections, they were the second-most popular party (17.5 % of all votes) after the Finnish Social Democratic Party (17.7% of all votes). The SDP’s popularity has since dropped to 13.9%, according to the poll mentioned above, mainly due to frustration with a lack of concrete steps by the government

It definitely looks like the Finns party has established themselves on the Finnish political map. One of the reasons for their success and popularity is their anti-immigrant and Eurosceptic political views. Having shown their popularity during the spring elections, the Finns are now sitting comfortably in the opposition, able to critique the slow-to-perform coalition government.

Who supports the Finns?

The Finns have traditionally been most popular among more nationalist men with lower levels of education.

They’ve also been popular among those who would like to keep ‘Finland for Finnish people,’ individuals who see globalism as a threat, not as an opportunity. According to a survey that was conducted in 2016, 75% of the members of the Finns party were men, and 30% of the members had  a degree in higher education (university or polytechnic). Only 10% of Finns party voters had a degree in higher education.

As in other countries, right-wing populism has gained momentum in Finland in recent years. Perussuomalaiset (ie the Finns party) became famous after their “Jytky” (it’s how they named their election win) in 2011. After the great recession in 2008, right-wing populism has grown in many countries (see the graph below). There has also been more “Jytkys”  in the 2010s than just the Finns’ election win in 2011: the UK’s vote for Brexit and the election of Donald Trump as US president in 2016 for example.

Today, the Finns are increasingly supported by young men under the age of 25 and those who are aged 35-64.  

Business people are also starting to like the Finns party 

According to Helsingin Sanomat, the most popular newspaper in Finland,  people who voted for the Finns party in this year’s parlamentary elections were more right-wing and more educated than in previous elections. According to Suomen Uutiset, engineers, chief financial officers and ITC experts and other educated professionals share more and more of the worldview of the Finns party.

A typical example of a new supporter or member of the Finns could be Veikko Vallin, “The Trump of Tampere”, who joined the Finns party in 2017. He is a Member of Finnish Parliament, an entrepreneur and a millionaire who is against “bad” immigration and who would like to tax corporations and businesses less in Finland. He supports Donald Trump, the US president.

More and more municipal politicians have also become supporters of the Finns party after becoming unhappy with their previous party. The “Trump of Tampere” also claims that “many bankers and CEOs have patted my shoulder”.

Supporters of the Finns party are not only lower income people, at least not anymore. It will be very interesting to see if the Finns can attract more business people to support them in the future.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

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finland Investing

Nordic equity markets: positioning for a tough economic outlook

The Nordic economic outlook isn’t exactly rosy. Cue layoffs and downbeat growth expectations. Where to invest if you want a little more defense in your financial strategy?

Our bottom-line suggestion is to investigate discount retailers. Maybe Finland’s Tokmanni? If you’re really adventurous start your own company offering budget prices to deal-hungry consumers. Or are you more of a shark? Hold your cash, wait for equity prices to drop, then spend, spend, spend. 

How long will the party go on? 

Since the great recession in 2008-2009, we have witnessed a 10-year “bull run” in stock markets, especially in the United States. Other countries have witnessed similar results. Never before in the history of stock investing have we seen such a long period without a recession. Only one other bull market has lasted longer than seven straight years, and it was the bull run after WW2

(In this article, we are taking a look into the current economic situation and thinking about future decisions when it comes to retail investing.) 

So how long will the party continue? 

This is the million dollar question that no one really knows. Looking at the current equity prices (such as OMX Nordic 40 or the S&P 500), it can be tempting for individual investors to sell at least some of their shares, taking profits while they’re still there. However, by not holding  investments, or selling too early, investors can also lose some big gains that might just come to their portfolios. There is always risks and rewards, and everyone acts according to their own investing strategy.

In the past 10 years, US stocks have performed better than Nordic European stocks.

Economic growth is likely going to slow down

We have witnessed steady economic growth globally in the 2010s. Finland struggled quite badly after the great recession and the following European debt crisis. However, since 2015 the Finnish economy has recovered. According to Statistics Finland, Finnish Gross Domestic Product (GDP) has grown for four consecutive years, although the growth is expected to slow.

The Bank of Finland Forecast for Finnish GDP Growth:

  • 2019: 1.6%
  • 2020: 1.5%
  • 2021: 1.3%

It is always hard to predict the future, especially when there are so many uncertainties and factors that determine the global economy trend. As a small fish in the sea, the Finnish economy is prone to various global economic threats and risks. Finns have always relied on their export sectors which is also the reason why the Finnish economy goes hand in hand, up or down, with the global economy.

So want to know how the Finnish economy is going to do? Look at global economic outlook.

Whats should intelligent investors do?

Many of us are thinking ‘what should we do in this new situation’: equity prices are at all-time highs, everyone is talking about the next recession, but still there are not too many attractive investment options for stocks and real estate.

How can intelligent investors invest their money and equities in this kind of a situation?

It all comes down to personal preferences, investing strategy, risk-tolerance, life situation etc. Some things that every investor should consider…

Are you investing long-term or do you need the money in a few years ?

  • The sooner you need your money, the more risk you have if you invest in stocks. Stock market in general have always been a good option for long-term holders, but only those with enough time.

What kind of stocks do you have in your portfolio?

  • During tough economic times, investors should look for companies that thrive or at least survive recessions better than other companies. For example, discount retailers such as Wal-Mart or Tokmanni in Finland might be good options if a recession hits.

Should you allocate your investments into other asset classes?

  • To reduce risk in an investment portfolio, one should invest in different asset classes. Investing in precious metals, such as gold, or just having cash, might be a good option if stock prices drop. Gold price and stock prices have no or very weak correlation which is good for asset allocation. Building up a cash buffer might be a good idea during these times, because when the recession hits, equities are on sale!

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

Categories
Companies finland Investing

Our top 5 Finnish Tech Companies

Nowadays, Finland is one of the most advanced countries in the world when it comes to technology innovations. Based on data from sources including the World Bank, IMF and OECD, Finland was the 3rd most innovative country in the whole world in 2019. Only South Korea and Germany were more innovative than Finland.  

Finland would not be so high on the list without its great education system, researchers and skilful people. When high-quality education, innovativeness and advanced technology skills are combined, some great success stories are likely to happen, such as Nokia Cell Phones in the early 2000s, the famous mobile game Angry Birds or the world’s leading startup and tech event Slush

Here is our list of the top 5 Finnish tech companies:

Nokia

Nokia, with a market value of more than 20 billion USD, is a Finnish telecommunications and information technology company that became famous in the early 2000s with its cell phones and Nokia tune. 

Nokia’s history started already in 1800s, but it became a global success story with its cell phones. However, since 2007 Nokia has not been able to compete with Apple’s iphone and suffered badly ever since. Currently, Nokia operates in the fields of multinational telecommunications, IT and consumer electronics.

Rovio

You might not have heard about Rovio, but you have heard about Angry Birds, the famous mobile game (and a movie). 


Rovio Entertainment Oyj is a Finnish game developer company that was founded by 3 engineering students in 2003. Rovio published its famous Angry Birds mobile game in 2009 which was a success: in just 5 months, Angry Birds became the most downloaded app in Apple App Store. Rovio was able to capitalise on Angry Birds with several game extensions, spin-offs, movies, animated series, merchandize and even activity parks.

Another, originally Finnish gaming company, is Supercell. Their most popular mobile game is Clash of Clans. Chinese Tencent bought Supercell in 2015.

Polar

Polar Electro does well in the field of sports technology. They are particularly known for developing the world’s first wireless heart rate monitor. Polar’s gadgets are being sold in 80 different countries across the world.

Their most well known products are currently activity bracelets and sport watches, such as this new “fitness watch”, Polar Ignite which costs around 220 USD. 

Another, very similar Finnish company is Suunto.

Kone 

Kone Oyj is a Finnish company that operates globally in 60 different countries employing 55,000 people. Kone is a global leader in the elevator and escalator business: it builds and services elevators, autowalks, escalators as well as automatic doors & gates. Kone is one of the most valuable corporations in Finland.

Neste  

Neste is one of the biggest and most valuable companies in Finland and the largest producer of renewable Diesel in the whole world. Not necessarily a tech company, but they apply advanced biotech in their business


Neste has been a phenomenal success story: Harvard Business Review selected Neste as the 12th on the list of The Top 20 Business Transformations of the Last Decade. That is something that Finns should be proud of. Luckily, the Finnish State owns 35 % of Neste’s shares.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

Categories
finland

Want to Live in Finland? Tips From a New Arrival

I moved to Finland in January from Vushtrri, Kosovo. As an international student, I also work in Helsinki and have an internship.

Why do I want to live in Finland? Everyone’s goal is to live the highest quality and most stable life possible. Finland surely offer that to you.

[mapsmarker map=”2″]

What would I tell someone considering a move to Finland?

Finland needs international workers. The Director General of the country’s migration department has said: “The basic premise is that, in addition to the domestic workforce, Finland needs employees also from abroad. There is intense competition in the world for international talents.”

Open Spaces

You’ll probably need to be prepared for some cultural and lifestyle changes. For example, looking at Finland for the first time from an airplane, I noticed the lack of colors. At that moment, Finland seemed only black and white – darkness and light. Of course it was wintertime. Other seasons in Finland are very colorful, though that monotone first impression has stuck with me.

Also, outside of a few urban areas, Finland is very low-density in terms of population. You really see that as you descend. There’s huge expanses of open land. While Finland’s population is only about 5.5 million, it’s land mass is 303,815 km2 – that’s a lot of empty space. There’s a huge distances between buildings in some areas, and the land is filled with forests.

View of Finland from the air during winter.
Wintertime view of Finland from an airplane.

Simple architecture

Get on the ground, exit the airport, and notice the architecture. There’s a fantastic simplicity to the architecture in Finland. Finns are all about efficiency: “If it works perfectly, you don’t have to complicate it. Keep its destiny clear and simple!” That seems to be the unspoken motto.

No small talk 

Did I mention unspoken? The distances between houses seems to help people keep at a distance, in order not to disturb others and to work in silence by themselves. At the least, Finns really do appreciate personal space.

One point is unambiguous. Most Finns are not accustomed to small talk. That doesn’t mean that there’s a fear of small talk. It’s just not a common experience for most people. If you come from a more collectivist society, this aspect of Finland may really shock you. If you want company without priorities or purpose, Finland may not be the right place for you.

Helsinki Sunset Pink
Sunset over Helsinki.

Independent culture 

The stoic independence of Finns created a culture of self-service. Many services – such as buying public transport tickets or paying taxes – are done by individuals themselves, rather than a service provider. Having up to date tech tools is important in order to access the apps and other systems you’ll need. You’ll be helping yourself, and also the overall economy, run more smoothly and transparently.

So, how long will it take to get over the culture shock after moving to Finland? I’d say just two or three months and you’ll appreciate every detail of this wonderful country, which has the most beautiful scenery in the world. You’ll find your peaceful moment here, of a type you won’t ever find anywhere else.

Krenare Bunjaku is a marketing intern at sulonorth. Connect with her on LinkedIn or Facebook.

NOTE: The above post was amended on 31 OCT to clarify that Krenare arrived in Helsinki as an international student.

Categories
finland Investing

Europe is the pioneer in global P2P-lending & Finland is dominating the Nordic markets

Peer-to-peer (P2P) lending or crowdlending/-funding is a new way of borrowing and lending money without any middleman. P2P-platforms operating online connect those who need the money with those who are ready to lend money. No bank is needed in this process. 

Borrowers can be either individuals or companies, and there can be tens or even hundreds of individual lenders contributing to one single loan. Crowdfunding is easier to get than traditional bank loans, which makes it an easy option for startups. P2P-lending is also more flexible, less time-consuming and often a cheaper alternative compared to traditional business loans that banks are offering. 

P2P-lending has become very popular in recent years

The first online P2P-lending platform, the UK’s Zopa, was launched in 2004. However, P2P-lending did not become mainstream investment option until few years ago. As we can see from the graph below, crowdlending has grown steadily during the last 5 years in Finland. At a global scale, P2P-lending did not achieve (early) mainstream adoption until in the 2010s. 

P2P-lending in Europe 

Europe is one of the pioneers in the P2P-sector. The first P2P-platform was launched in UK, which has been the market leader in Europe ever since. In 2017, the UK represented 68% of the overall market volume. In Continental Europe, France and Germany were the two biggest players in P2P lending space. As a small country with a population of only 5.5 million, Finland was doing relatively well compared to the bigger European countries.  

Baltic countries, especially Latvia are growing fast in the European P2P-lending scene: their favourable regulation  and entrepreneurial mindset has produced some decent results.  However, most of the investments in Baltic P2P-platforms come from international investors and loans

In general, there are many platforms in European P2P-markets to choose from. Mintos, a Latvian P2P-platform is the largest and most popular P2P-lending platform in Europe and it’s growing fast. 

P2P-lending in Finland growing

In 2019, there are 4 different P2P-platforms that are operating from Finland: Bondora, Fixura, Fellow Finance and Fundedbyme. Fellow finance provides consumer loans also in Germany, Sweden, Denmark and Poland being the leading P2P-platform in Nordic countries

According to P2PMarketData, Finland was the leading Nordic country in P2P-crowdfunding in 2017. Sweden was pretty close, but Denmark and Norway were far away. When it comes to geographical regions, the Nordics beat Benelux countries, Italy, Baltic countries and other big regions in volume. Rankings have probably changed after 2017, but this gives an idea about the P2P-lending scene in Europe. 

In Finland, P2P-lending has become a popular way to borrow and lend money. According to Finlands Bank, in total of 150,1 million Euros was borrowed in P2P consumer loans in 2018. The number was 40 % higher than year before that (2017), so the growth of P2P consumer loans has been quite strong. 

However, borrowing money via P2P consumer loans is not that popular among Finnish families; P2P consumer loans cover only 1% of the total household consumer credit.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.