Supply of rental units in Finland spiked in the first half of 2020 as students returned home due to university closures caused by the COVID-19 pandemic and "Airbnb apartments" converted to long-term rentals, the CEO of the country's largest listed residential landlord said.
Speaking during a first-half earnings call, Kojamo Oyj's Jani Nieminen said newly constructed apartments coming onto the market during the period also pushed up supply. The company has been "operating in a more challenging period of time" as a result, he added.
"Most of the so-called Airbnb apartments were converted to long-term rental use," said Nieminen. "And at the same time, because of the circumstances [related to the pandemic], students went back to their homes, either to their parents here in Finland or back to their home country. So that created temporarily a bit of an unusual situation."
Like other major listed European residential landords, the impact of the pandemic on Kojamo's first-half earnings was negligible. In the second quarter of 2020, when the impact of the pandemic was strongest, the company's revenues increased by 1.9% to €94.8 million. Net rental income increased by 3.1% to €68.9 million.
Bumpy residential market
Residential property has remained largely unscathed by the COVID-19 pandemic compared to other real estate segments such as retail, leisure and hospitality. Still, purpose-built student accommodation providers such as Unite Group PLC have been forced to provide refunds to students who vacated premises due to universities closing in response to the crisis.
The residential market has also experienced some turbulence from the pandemic's impact on properties previously let through platforms such as Airbnb Inc. As global traveler numbers sank due to travel restrictions and consumer fears about exposure to the virus, demand for short-term lets through Airbnb and similar platforms also plummeted. Many landlords have been forced to put their properties on the long-term rental market, having previously preferred short-term models.
A recent uptick in global traveler numbers has helped increase demand for short-term lets, encouraging Airbnb to go ahead with its planned initial public offering.
Kojamo's Nieminen said the impact of the pandemic is expected to be temporary for his business, which aims to capitalize on the intensifying urbanization trend happening in Finland. The country will need 700,000 new homes by 2040 as people increasingly move from rural areas and small towns into cities, according to research cited by Nieminen.
"And of course, the Helsinki region will be growing most, and there is the biggest need for new apartments," he added.
About 58% of Kojamo's residential portfolio is in the Helsinki region, according to a calculation based on figures in the company's first-half presentation. This percentage rises to 77.7% when the regions of Tampere and Turku, Finland's second and third largest cities, are included.
Kojamo has a total residential rental portfolio of about 35,000 units valued at about €5.99 billion as of June 30.