Mind The Gap

"Lemminkäinen Group's Oy Alfred A. Palmberg Ab has made agreements concerning the construction of several new housing sites.

Espoon Kuusama, a 41-unit apartment building completed in May in the Laaksolahti district of Espoo, has been sold to Tapiola KR IV Ky, a real estate investment fund managed by Tapiola Real Estate Ltd."

They can sell to to private people as the demand has collapsed thus the only alternative is to sell between investors -most notably linked to Pension Fund (Tapiola Pension fund investing through its real estate branch?) - Well there is a Gap to fill, I suppose.

The other explanation is of course a "run to cash", the property developer need money and is not able to wait otherwise quite few bankers will lose their sleep with the insolvency shadow in the background. Who said that the market was back to normal and that sales were back to last year level?

"As a follow-up to the deal, Oy Alfred A. Palmberg Ab and Tapiola have agreed on the construction of a new rental housing site in Viertola, Vantaa. The 68-unit apartment building will be built on a site owned by Oy Alfred A. Palmberg. Planning work will start in August-September and the site is expected to be completed in November 2010."

"The construction of an 18-unit apartment building (As Oy Helsingin Lammastarha) has begun in the Fallpakka district of Helsinki for TA-Asumisoikeus Oy. In August-September construction work will start on a 26-unit apartment building (As Oy Helsingin Hevoshaka) in Fallpakka and a 38-unit apartment building (As Oy Espoon Esikko) in the Laaksolahti district of Espoo, also for TA-Asumisoikeus Oy."

So lots of rental supply coming in the year to come added to that to the glut of unsold property - I am wondering if we are going to see the first rent deflation in the Finnish real estate history - probably.

The same will apply to the commercial real estate where the number of offices being build has reach an extraordinary level - expect offices rent to drop as well as their value (which will probably ripple on Banks profits)

"The project is still awaiting confirmation of funding from the Housing Finance and Development Centre of Finland(ARA)."

Quite funny - Tax payer money is still on the line otherwise AAP cannot build since it doesn't meet its profit target (where was the fatty profit made in the past 15 years? (distributed as dividend and large pay to shareholders and executives?)