Ilkka Tomperi, Varma’s investment director responsible for real estate, told IPE: “Our portfolio includes very few assets in Helsinki’s [central business district]. That has been the main beneficiary from the rental growth and yield compression, while the demand for secondary locations has been limited. We saw values declining in many of our commercial properties, while the residential portfolio performed well.”In its report on 2016 results, Varma said its real estate investments ended the year at €3.6bn on the balance sheet, down from €3.9bn. Direct real estate investments made a loss of 2.6% in 2016, down from a 2.3% profit the year before, but real estate investment funds returned 6.8%, down from 9.9% in 2015.Varma continued with its strategy of increasing international diversification in its property investments during 2016, the report said.The company said its weighting of domestic, directly-owned real estate investments was reduced last year, with the company raising €301m through sales of direct real estate investments in 2016.Commenting on overall results for the year, Varma’s president and chief executive Risto Murto said: “A challenging year turned out to be a good one.”“Solvency, which is strategically important, strengthened and investment assets increased,” he said, adding that the company was in strong shape. Varma, the largest of Finland’s pensions insurance companies, reported an investment return of 4.7% in 2016 after taking a hit from its property portfolio.Writedowns in the values of some of its real estate assets knocked more than 10% off its annual investment profit, the insurer said.Varma reported its property asets made a 0.9% loss in 2016 as a result of €218m fall in value. Indirect real estate investments generated a positive 6.8% return, however.Despite this, total assets under management rose to a record high of €42.9bn last year, from €41.3bn in 2015. In absolute terms, Varma’s overall investment return for 2016 was €2bn.