Real estate funds have long been sold as low-risk investments, but that has not turned out to be the case as Finland's housing market started dropping.
Today, ten real estate funds in Finland have restricted investors' ability to withdraw their money.
Two years ago, many small-time investors had a rude awakening when they realised that they could not redeem their holdings in almost a dozen real estate funds.
As the housing market slowed, many investors began wanting to sell their fund shares. But with few buyers for the underlying properties, the funds lacked the cash to honour redemptions.
The lockup began in September 2023, when Ålandsbanken's housing fund — with over 6,000 owners and assets exceeding 700 million euros — became the first to postpone redemptions.
No withdrawals
When OP Bank closed its housing funds to nearly 50,000 investors on New Year's Eve 2024, many became worried. One of those was Gunilla Granroth, who shared her experience with Yle.
She said it all started when Ålandsbanken invited her to their offices in Helsinki. She worked at a ferry company at the time.
Granroth had a modest inheritance from her mother.
"When I asked about the risks, the advisor said, 'what's the risk that people won't need a place to live?' And I thought, well, that makes sense, people will always need homes," she told Yle.
In December 2023, Granroth decided to cash out her fund shares. Their value had begun to decline, and she worried that her investment, meant to buffer her in retirement, might continue to dwindle.
But at that point, the door had already closed.
Her investment of 25,000 euros in 2023 has now dropped by some 4,000 euros.
"They didn't say anything at the bank about me not being able to access my money. I can accept a drop in value, but not that it's impossible to withdraw it," she told Yle.
She has repeatedly tried to get answers from Ålandsbanken about when a redemption might be possible, but the uncertainty continues.
Waiting game
Ålandsbanken told Yle it is protecting the fund's value by not selling properties at a loss.
"We need a housing market with significantly stronger demand for properties before we can return to a normal situation," said Carola Nilsson, who heads Ålandsbanken's asset management.
Ålandsbanken continues to charge full management fees, in contrast to OP, which has halved its fee during the freeze.
Despite the crisis for investors, the real estate fund remains profitable for Ålandsbanken, which continues to charge its management fees of 1.5 to 2.25 percent.
Regulators, meanwhile, are watching the situation unfold, noting that valuing real estate is complex.
"The Financial Supervisory Authority does not have the power to force the company to sell the fund's assets, and the ultimate authority over fund management always rests with the company," Marko Hovi of the financial watchdog told Yle via email.
Granroth said it pains her that half of the inheritance from her mother went into a poor investment. She is far more satisfied with how she used the other half.
With it, she bought a new engine for her father's old boat. Many told her she was throwing money into the sea.
“I've had a lot of joy from that engine,” she said. "It feels a lot more like it was the money I put into the housing fund that I threw in the sea."
Yle News' All Points North podcast asked if it's time to rent or buy after years of falling housing prices in Finland.
