Urbanisation is one of the largest megatrends in the world, and it is also the trend which ICON Real Estate Funds has chosen to jump on. The company builds and develops energy efficient real estate in growth centres, and simultaneously it contributes to solving the housing shortage that emerges when people are moving into cities. The fund has one of the best returns in its line of business in Finland.
“In contrast to other real estate funds, we build and develop our real estate ourselves, and can therefore make smart decisions which bring added value to the investors,” says Markus Havulehto, CEO.
In practice the process works in the following way: first, the best objects on the market are chosen, i.e. the ones with the highest potential returns. It can be newly constructed property or old office buildings, which are converted into private homes. After that the private and institutional investors willing to invest in the project are brought together. ICON’s own team also invests its own capital in all projects.
“When we later on start to realise the projects, we are always working to increase the value, for instance by making the buildings more energy efficient,” says Jari Koskinen, Chairman of the Board of ICON.
Jari Koskinen is one of the founders of Vacon Oyj and has earlier worked in the management of the company. He has brought several good industry management models to the real estate business. ICON has, for instance, developed a concept with roundtable discussions for all parties involved in a project. Thanks to them the building stage runs smoothly and effectively.
When the object is ready it will be sold, and the return is divided between the investors. The estimated rate of return will be over 10 per cent a year.
“We offer a significantly better return on investment than traditional real estate investing. This is possible thanks to our expertise, which enables us to select the best objects and finish them in a cost effective way,” says Havulehto.
ICON is working on approximately five projects at the same time, at a total value of around 100 million euros. The objects are located in growth centres such as Helsinki with surrounding areas, other larger cities in Finland, and Tallinn. In order for ICON to start investing in a particular area, the population growth rate must be positive – this keeps the housing prices at a stable level, despite the recession.
ICON REAL ESTATE FUNDS
Business sector: Real estate development and real estate investment
Total value of the projects: €100 million
Average return on investment: over 10%