The Nordic property market at the peak or just on the way to the top?
The Nordic property markets will continue to perform well but faces new challenges, according to the new report Pangea Property Outlook 2017/2018. The winners will be segments with continued rental growth, such as attractive offices in the capital regions, while there is upward yield pressure on interest rate sensitive properties. Transaction activity is expected to be record high in 2017, but slow down slightly in 2018.
“The Nordic transaction volume seems to hit almost EUR 45 billion in 2017, the highest level ever recorded”, says Mikael Söderlundh, Partner and Head of Research at Pangea Property Partners.
The volume is driven by increasing activity in Norway, Denmark and Finland, with the latter two having way over 50 percent foreign buyers. Sweden remains the largest property market in the region, but the volume is down about 30 percent from 2016.
“In 2018 we expect a general slowdown on the Nordic transaction market, but from very high levels. The main reasons are fear of higher interest rates and new tax reforms in Sweden”, adds Mikael Söderlundh.
According to the report, property yields have bottomed out in most segments, and the key value driver going forward will be rental growth. In particular, office rents in Stockholm will continue to increase, and the Oslo market is expected to follow. Logistics and hotel properties also have a favorable outlook, driven by strong occupier demand.
“Most hotel markets are performing well and there is increased investor demand across the line,” says Bård Bjølgerud, CEO and Partner at Pangea Property Partners.
The largest buyers are expected to be institutional investors, major property companies and property funds, according to the report. Private investors, developers and public sector companies are pinpointed as net sellers. In addition, the share of foreign buyers is expected to remain high, driven by stable and well performing Nordic economies.
“We see strong interest from offshore investors, such as global core funds pushing down yields further on high quality assets. There is also strong demand for large corporate deals among value add investors,” adds Bård Bjølgerud.
Pangea Property Outlook is a market report about the Nordic property market produced by Pangea Property Partners. It is produced twice a year and it can be downloaded here.Till nyhetsarkiv