Despite the turbulence in the investment market, property investment is still profitable. The best return comes from properties that are healthy, safe, and sustainably built to last from generation to generation – like log houses.
For investors, 2022 has been a downward spiral caused by a change in the central bank policy, increased interest rates, and high inflation, among others.
“Investors are looking for something with which to protect their investments against inflation, i.e. a piece of property that will maintain its value or even increase in value when compared to the inflation. The increase in interest rates and inflation has changed the way profit is made,” says Jukka Oksaharju, equity strategist and property investor at Nordnet.
Oksaharju, who has been working as a stockbroker and equity strategist for 15 years and as a versatile investor for 20 years, knows what he is talking about.
Why, then, is property investment profitable?
“Properties are tangible assets whose value the fluctuating market conditions cannot reduce to nothing. The investment market is swarming with things to invest in, ranging from listed companies to cryptocurrencies and meme stocks. When investing in those, the risk is greater, as many of them may just disappear into thin air,” describes Oksaharju.
When investing in property, it is advisable to invest in sustainably built high-quality premises to get the best return on the investment. For this reason, Oksaharju is in the process of having premium log villa built in Finnish Lapland, with Honkarakenne as a partner.
In the future, log villas will be built in Levi, Lapland, providing an easy way to rent a peaceful place for the weekend or a week.
Jukka Oksaharju is building Honka Ailo Log Villa to Levi, Finnish Lapland.
Log construction remains popular
Over the past decades, the market share of log houses has doubled. More and more people are interested in the ease of log construction and the healthiness of log (See also Pull quote 1).
“Those keeping an eye on the property market know that log houses are selling like hotcakes,” says Honka’s CEO Marko Saarelainen.
Honka’s long experience in log construction and a strong brand are also assets in the world of investment.
“Honka is a reputable listed company with established practices. When a person seeking to build a house applies for a loan, it helps to have a reliable operator as a partner,” says Oksaharju.
Honka also builds sustainably.
“House builders are more aware of sustainable options and the sustainability of construction. Log homes and Honka as a sustainable operator meet that need particularly well,” says Saarelainen.
Sustainability is a future requirement
In construction, the gaze is now directed to the future. The approach is increasingly life cycle-oriented, meaning that houses are built to last.
“Log is very wise material. It is healthy, sustainable, and lasts from generation to generation which makes it a particularly safe investment asset (See also Pull quote 2). Log is also a very durable building material and requires, in general, less maintenance than people think,” says Saarelainen.
Jukka Oksaharju says that property investors should invest in sustainable operators and already turn their gaze to the secondary market of the 2030s.
“Construction must be sustainable, or otherwise there’s no point. I believe that in a few years, energy efficiency and eco-friendliness will become ‘musts’ for any company wanting to operate in the sector,” says Oksaharju.
Green finance has a strong influence on the loan market. It will be a requirement for obtaining a loan more often than now, which means that the right type of property will also be more likely to receive funding.
There is, of course, more to sustainability than just green finance. The whole value chain needs to meet the requirements of sustainability (See also Pull quote 3).
“The construction industry is nowadays much more sustainable than it was a few decades ago. Production, waste, logistics, site operations, recyclability, occupational safety, tidiness – there’s been improvement in all these areas. We here at Honka have prioritised a good customer and employee experience in our strategy since we care a lot about the well-being of people,” says Saarelainen.
For example, in June 2022, all Honka locations switched to electricity that is produced solely with renewable energy.
What is a good way to start a property investment?
Location and plot are essential in the beginning. Choosing a good partner is also crucial.
“I recommend utilising the expertise of construction professionals for fine-tuning your idea. Having a good partner for the design and implementation helps in obtaining funding and guarantees a good result,” says Oksaharju.
When considering property investment, it is also advisable to take into account the change resulting from the current economic situation. The focus of investment has shifted from passive to active.
“When the interest rates were at zero, investments were often managed passively by letting, for example, but now the profits are related more and more to the construction phase, a time before the property’s life cycle. In the current market situation, passive investment is not profitable at the current level of inflation,” points out Oksaharju.
Oksaharju chose Honka because he knows that the value of a well-built piece of property clearly exceeds its construction cost.
Nothing is less profitable in terms of overall cost than a cheaply and poorly built piece of property.”
Jukka Oksaharju, Nordnet
Did you know that…
The antibacterial natural compounds of wood eliminate bacteria and mould spores from the air and structures. This results in healthy indoor air and damp-proof, durable structures.
When standard solutions are used, the thickness of a wall structure is 25 cm, whereas a log structure is only 20 cm. Thus, logs make the living area larger and consequently provide better profit.
The buildings Honka delivered in 2021 have sequestered 30,560,000 kg of carbon dioxide, which is equivalent to an avg. of 14,220 passenger cars’ annual CO2 emissions. (* (**
*) Based on the Natural Resources Institute Finland’s estimate on the annual growth of conifers.
**) Standards EN 15804:201 + A1 and EN 15804:201 + A2:2019
***) Traficom: average CO2 emissions of an average passenger car in Finland: 153.5 g/km, Statistics Finland: average annual mileage of passenger cars in Finland: 14,000 km
Honka’s sustainability programme: We are building the future
Sustainability is more than just a word for us. It is a choice, one that we at Honka make every day. Our choices are guided by human and natural vitality. We are continuously looking for new ways to further improve our work, and we report openly on our progress. At Honka, we focus on building the future.
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