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Nordic Update

2019: Another strong year in the Nordics

Publicerad: 8 februari 2019, 20:04

While there do exist threats to the stability of the Nordic property markets, the outlook for 2019 remains solid. Growth is competitive, labour markets strong and the local currencies weak which indicates that 2019 will be yet another strong year in the Nordic markets, according to a new report from Pangea Property Partners.

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Pangea Property Partners

In Pangea Property Outlook 2019, the advisory company cites higher interest rates and lower rental growth in some markets as some of the main threats.

As a total, the European transaction volume fell by 15 per cent in 2018, whereas the Nordic property market grew to EUR 43 billion making 2018 the second best year on record. Pangea predicts another strong year in 2019, with transaction volumes amounting to EUR 40 billion; partly driven by portfolio and corporate deals and large inflows of foreign capital.

In 2018, the Nordics accounted for roughly 16 per cent of the total European volume, despite being home to only 5 per cent of Europe’s population.

“Despite global headwinds in the form of declining global growth and rising interest rates, we expect another strong year for the Nordic property market, not least because the Nordic countries are experiencing solid growth, robust public finances and strong labour markets on the one hand and weak currencies on the other”, said Bård Bjølgerud, CEO and Partner at Pangea Property Partners in a press release.

The net capital inflow to the Nordics in 2018 was €5.7 billion, and foreign buyers represented 39 percent of the volume, according to Pangea’s data.

“Depreciation of the Nordic currencies makes the markets attractive. Over the past years the currencies of Sweden and Norway have depreciated about 40 percent against the dollar and almost 20 percent against the euro,” added Mr. Bjølgerud.

While the markets in total are performing well, there are significant variations between sectors.

“The office segment is strong overall, but we see prime rents in Stockholm deaccelerating and the residential construction companies in Sweden are struggling. As in 2018, we foresee a very clear divide between logistics, which is hotter than ever, and retail, which is not, reflecting expectations of more and more shopping moving online,” said Mikael Söderlundh, Head of Research and Partner at Pangea Property Partners.

“In total, the listed property sector is valued close to net asset value, but there are large variations between countries and segments. This creates opportunities and may trigger further M&A activity,” said Mr. Bjølgerud.

Click here to download report

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