Event: ‘Rental growth in all Nordic capitals’

Yields are levelling out in the Nordics but the four capital cities are experiencing rental growth in the main real estate sectors, Fredrik Dackheden, Head of Transactions, Croisette Real Estate Partner, Sweden, told Real Asset Media’s European Outlook H2 Investment Briefing, which was held in Stockholm in June.

Fredrik Dackheden, Head of Transactions, Croisette Real Estate Partner

Filmed at the Investment Briefings Nordic Outlook Event by Real Asset Media.

‘It could be a scary scenario with yields not dropping, but we see increased rents in all capitals and in most sectors,’ he said. ‘Offices, logistics and residential are all seeing rental growth due to high demand. Logistics in particular is expected to outperform’. 

There is still significant rental growth to come in the prime office market in Stockholm, Helsinki and Oslo, but it will be muted in Copenhagen because there has been too much new development and now supply exceeds demand, Dackheden said.

Stockholm is the best-placed, he said: ‘Office rents have been increasing for the last two years but they will continue to rise because demand is still higher than supply’.

The exception is the retail sector, which is the worst-hit sector with rents falling in some cases, particularly in Denmark.

Overall the outlook for the real estate market in the Nordics is ‘neutral’, Dackheden said: ‘It could be better but it could be a lot worse’. His prediction for 2019 is that total transaction volume will settle at around €40 bln, a 10% decline on last year’s figure of €44 bln but ‘still a very healthy number’. Sweden will again be first in line with a third of the total, followed by Denmark, Finland and Norway at or just above the 20% mark.

‘You can see the entire spectrum of investors in the Nordics region,’ he said. Domestic investors only represent 30-35% of total transaction volume in Finland, which is attracting a lot of international capital. In Sweden and Norway domestic capital still dominates the market with a 70% and 90% share respectively. That could change, however, as the fall in the value of both the Swedish and Norwegian currency, the krona, means that for foreign investors ‘property is comparatively cheap compared to euro-denominated assets’.

Another positive of the real estate market in the Nordics is the easy access to capital. ‘A few years ago ordinary bank loans were the only option for financing real estate,’ Dackheden said. ‘Now there are many more options. A lot more bonds and preference shares are being issued and debt portfolios are being diversified within the real estate segment’. 


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