Union Investment Real Estate Launches €11.5 Million Hotel Conversion of Helsinki's Historic Proffa Office Building

Union Investment Real Estate has secured a building permit to convert the historic "Proffa" office building at Lapinlahdenkatu 3 in downtown Helsinki into an 84-room hotel, the firm announced Sept. 10, 2026. The project carries a total investment of approximately €11.5 million and is expected to be completed by late 2027, with a hotel opening planned for the first quarter of 2028.

The property, a partially heritage-listed building in Helsinki's Kamppi district, has been part of the DIFA-Fonds Nr. 3 open-ended real estate special fund since 2019. Union Investment Real Estate has already signed a 30-year lease agreement with Ruby Group, a hotel operator with experience converting historic buildings in prime urban locations, to operate the new hotel under the Ruby brand.

Office-to-Hotel Conversion Driven by Structural Constraints

The Proffa building was originally designed in 1900 by architect Theodor Höijer as a residential building. It was expanded multiple times over the 20th century, converted to office use in the 1970s, and most recently modernized in 2008. The building's heritage designation, numerous load-bearing walls, and irregularly shaped spaces — inherited from its original residential configuration — have made implementing modern open-plan office concepts significantly more difficult.

Approximately 3,160 square meters of office space will be converted into the 84 hotel rooms, representing a conversion intensity of roughly €137,000 per key and approximately €3,640 per square meter of converted area. Part of the existing ground-floor commercial space will be retained, while another portion will be repositioned to align with the incoming hotel use.

"The transformation in Helsinki is a current example of our active asset management approach. Since implementing modern office concepts is significantly more difficult due to the building's structural layout — resulting from its previous residential use — its partial designation as a historic landmark, as well as its many load-bearing walls and irregularly shaped spaces, we put the property strategy to the test and, among other things, examined the potential for hotel use. The location, market, and profitability analyses, as well as the property's characteristics, are positive. Combined with the Ruby brand's hotel concept, this results in a strategic fit for this property. We are very pleased to have secured the Ruby Group as an experienced operator for this property," said Bastian Stuhke, Senior Asset Manager Hospitality at Union Investment.

Ruby Group Selected for Historic Building Expertise

The selection of Ruby Group followed an in-depth review of multiple hotel operator concepts, with the firm's track record in converting historic buildings at central urban locations cited as a key factor. A general contractor with prior experience in high-quality hotel renovations has also been engaged for the project.

"The complexity of the building's structure requires specialized expertise in the design phase. After an in-depth analysis of various hotel operator concepts, the Ruby Group was selected because the company already has experience with the conversion of historic buildings in prime locations. In addition, a general contractor was recently hired who has already successfully carried out high-quality hotel renovations," said Thomas Stancel, technical project manager at Union Investment.

The Proffa building occupies a prominent corner lot in downtown Helsinki, within walking distance of the Kamppi Center, a major retail and public transportation hub offering connections across the city.

Long-Term Lease Anchors Cash Flow for DIFA-Fonds Nr. 3

The 30-year lease with Ruby Group is structured to provide long-term, stable cash flow to DIFA-Fonds Nr. 3, an open-ended Spezialfonds targeting institutional investors with a focus on European commercial real estate. The change of use is also expected to improve leasing conditions for the remaining ground-floor commercial spaces by enhancing the overall quality and profile of the asset.

Union Investment Real Estate has held the Proffa property in the DIFA-Fonds Nr. 3 portfolio since 2019. The conversion represents a repositioning of a structurally constrained asset, with the long lease term and established operator providing income visibility through the transformation and beyond.

Project Timeline and Outlook

Construction is targeted for completion in late 2027, with Ruby Group planning to open the hotel in the first quarter of 2028.

Sources:
Union Investment Real Estate – German Press Release
Union Investment Real Estate – English Press Release