27.11.2025 16:30
The stagnating housing market in Finland has brought real estate funds, which have been presented as low-risk for years, to the brink of crisis. At least 10 funds are restricting investor withdrawals, while a total of 56,000 people's money is effectively trapped in the funds of two major banks.
The Finnish economy entered a technical recession in 2023 and showed weak growth in 2024. This fragile picture in the economy had its most severe impact on the housing market, revealing the vulnerability of real estate funds that have been marketed as "low risk" for many years.
The financial media in the country reported that at least 10 different real estate funds decided to restrict investor withdrawals; thousands of small investors were unable to withdraw their savings.
THE FIRST BLOW CAME FROM A 106-YEAR-OLD BANK
The crisis began in the funds most exposed to high interest rates and the collapse of housing prices. The first step came from Alandsbanken, a 106-year-old bank, in September 2023, when its housing investment fund suspended payments after being unable to generate enough cash to meet withdrawal requests.
The fund, which has approximately 6,000 investors and manages assets exceeding 700 million euros, was forced to halt withdrawals due to the overwhelming number of requests.
56,000 VICTIMS IN TWO BANKS
Following Alandsbanken, OP Bank, one of Finland's major financial institutions, also made a similar decision at the end of 2024. The restrictions in the bank's housing fund affected approximately 50,000 investors. Thus, the number of people experiencing hardship through just two funds reached 56,000.
BANKS: WE DO NOT WANT TO SELL AT A LOSS
While the restrictions on investors' withdrawals from the funds continue, Alandsbanken's management claims they are waiting to avoid selling properties below their value. The bank states that it is difficult for the funds to return to normal without a recovery in demand in the markets, yet it continues to charge full management fees.