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The past ten years have been ‘hot’ for the real estate market, as European Central Bank's strong stimulus efforts have led to exceptionally low interest rates and easy access to cheap financing. The real estate business has been hot, construction has peaked, and rental apartments have been in high demand.

However, the situation is now changing. Due to the pandemic, migration has been directed more strongly towards growth centres over the past two years, and studios in the Helsinki region can sit empty for months. As remote work increases, larger apartments are attracting more and more interest. In addition, the price of energy is rising, and construction costs will continue to rise due to material availability problems.

There are also changes in the availability of financing. Banking regulation is tightening, interest rates are expected to rise, and EU regulation will bring changes to construction, among other things. The availability of bank financing is no longer self-evident, and the popularity of alternative forms of financing is increasing.

Active communication supported project success

The project was implemented in cooperation with KAS Housing Ltd (KAS asunnot in Finnish). KAS Housing is a public utility provider of rental housing whose mission is to offer comfortable and affordable housing to residents. KAS Housing operates in 38 localities, and the company aims to expand the housing stock even further.

Karoliina Kakarinen and Neea Santama, both Master’s students in the School of Business, took up the project that was part of the Customized Student Business Projects concept. The project was supervised by University Lecturer Joni Kokkonen, DSc. (Econ.), and the aim was to map the current situation and future perspectives of the real estate financing market. In addition, the project aimed to examine the availability of funding and the impacts of the COVID pandemic on the functioning of the real estate financing market.

To comprehensively map the real estate financing market, the students interviewed several experts in the field. The interviewees included bank representatives, alternative financing providers, other rental housing providers and an assistant professor of real estate economics. In addition to the interviews, the students collected information from academic publications, annual reports and financial statements of companies, news articles and webinars.

Jarmo Kuosa and Susanna Vartiainen, CEO and CFO of KAS Housing, respectively, were closely involved in the project and provided valuable additional information and an outlook on the current situation of the company.

Inspiring work in a dynamic project environment

During the project, Karoliina and Neea were able to deepen their competence in qualitative research and utilise their previously acquired know-how from consulting. In addition, they gained concrete experience in project management and working in a dynamic environment.

According to the academic supervisor Joni Kokkonen, Karoliina and Neea worked very efficiently and independently. ‘The students found the interviewees, who fit the customer's wishes very well, on their own, and the interview questions were also carefully constructed with the customer’s needs in mind.’

At the end of the project, Karoliina and Neea wrote a project report in which they analysed the operating environment of KAS Housing and proposed potential future forms of financing for the company.

Jarmo Kuosa, CEO of KAS Housing, says that the project was completed on time and met their expectations. ‘Karoliina and Neea did a good job and produced a report that we can use when looking for new financing solutions on a practical level. The study also coincided with a special time overshadowed by a pandemic and war when many changes are taking place globally. These, together with the tightening of EU regulations, have posed new challenges for the industry. The students interacted well during the project, and this contributed to the realization of the project's goals.’