Varma - Annual Report 2012

Stable return on prime real estate

In 2012, the economic uncertainty was apparent in all areas of the real estate market. Apart from a few major transactions during the year, the market remained rather quiet. The total volume of real estate transactions in Finland was approximately EUR 2.1 billion. Varma's new real estate investments stood at EUR 125 million.

The total return on real estate investments was 4.5 (6.4) per cent.


Investors' interest was focussed on low-risk properties with steady rental cash flow and good selling potential also during the slow market cycle. Funding was only available for investments with the smallest risks. The gap between good and poorer areas was further accentuated, and the value of properties located in Helsinki's city centre continued to increase.

Varma had a total of 450 new rental flats under construction in the Helsinki area in 2012. In terms of business premises, Varma shifted its focus from new construction to developing office premises and to maintenance construction and renovations.

In 2012, Varma divested 14 real estate properties, most of which are located outside the Helsinki area.

In 2012, the impact of fair valuation of real estate under Varma's direct ownership totalled EUR -33 million. At year-end, the market value of the real estate owned directly by Varma stood at EUR 4.0 billion. The return on capital employed in direct real estate investments was 4.6 (5.9) per cent. The value of and total return on the portfolio were influenced by fair valuations and the divestment of properties.

Varma made new investment commitments in three Finnish real-estate funds at a total value of EUR 100 million. At year-end, the value of real estate fund investments amounted to EUR 503 million and the return was 3.1 (11.2) per cent.