Sustainable Growth in Real Estate Veritas Optimistic About Future Prospects Despite Losses

Veritas, a Finnish pension insurance company, has shown resilience and optimism about its real estate investment portfolio, even after experiencing losses for the second consecutive year. Despite the difficult performance in real estate over the past two years, the company remains hopeful that the market will recover. This optimism stems from expectations that declining interest rates will play a significant role in stabilizing the real estate market and boosting property values.

In its latest report, Veritas revealed that its total return on assets for the year was 8.4%, with real estate generating a loss of 0.7%. While the company acknowledges these challenges, it believes that the worst is behind them, and recovery is on the horizon, especially if interest rates continue to drop, which could potentially increase demand for real estate investments.

In 2024, Veritas saw a smaller loss in its real estate sector compared to the previous year. The company’s Chief Investment Officer, Laura Wickström, highlighted that the real estate market faced significant geographical variances in returns, with some regions experiencing better performance than others.

While the performance in the equity market showed positive growth, real estate investments underperformed. Wickström indicated that the difficulties faced in the real estate sector were primarily tied to the economic slowdown and rising interest rates, which led to reduced demand for property investments. Despite the challenges, Veritas’ positive outlook is driven by its belief that economic conditions will improve as interest rates stabilize, thereby giving the real estate market a much-needed boost.

The domestic real estate investments of Veritas were notably weaker than expected, which contributed to the overall losses in this sector. However, the company maintains its optimism, expecting that as interest rates decline, the market will begin to recover. With lower interest rates, properties become more affordable, and borrowing costs decrease, which could encourage more investment in real estate.

As a result, Veritas anticipates that the demand for real estate will increase, leading to higher property values. Wickström also mentioned that the early part of 2025 has shown positive signs, especially in European equity markets. This gives the company confidence that with the right economic conditions, real estate can see a strong recovery.

Despite the losses in real estate, Veritas saw impressive growth in other areas of its business, especially in customer acquisition. The company added over 6,800 new customers in 2024, increasing its total number of customers to nearly 71,000 employees and 16,000 entrepreneurs. This increase in customer base helped Veritas achieve record sales, with growth of over 50% compared to the previous year.

This success in expanding its customer base has helped offset some of the financial difficulties in real estate. The strong performance in customer acquisition demonstrates that Veritas remains a competitive player in the pension insurance market, even in the face of challenges in its investment portfolio. In addition to customer growth, Veritas’ diversified investment portfolio helped cushion the losses in real estate.

The company reported solid returns in its equity and fixed-income investments, which provided a balance to the negative performance in real estate. These returns were essential in maintaining overall positive performance for Veritas, ensuring that the company was not solely reliant on the real estate sector for its success.

As the global economy shows signs of recovery, Veritas expects its real estate investments to benefit from better market conditions in the coming years. The company is focusing on sustainable growth by seeking long-term real estate opportunities that align with both environmental and economic goals. Veritas is positioning itself to benefit from a potential market recovery while maintaining a commitment to responsible, sustainable investment strategies.

In the coming years, Veritas aims to continue adapting to market conditions, leveraging its diversified portfolio and optimistic outlook on the real estate sector. The company’s strategy includes focusing on investments that are not only profitable but also sustainable, ensuring that its growth supports long-term goals.

With the hope of an improved economic landscape, Veritas remains confident that the real estate market will recover, and its investments will generate positive returns in the future. By balancing risk and opportunity, the company’s approach to real estate reflects a commitment to sustainability and steady growth, ensuring it remains resilient in an ever-changing market environment.