Copenhagen,
17
Januar
2019
|
19:32
Europe/Amsterdam

The Nordic investment market slowed down in 2018

The picture is quite unanimous across the region, with investment volumes contracting in all four Nordic countries. On a regional level, the 2018 investment volume ended 16% below the level recorded in 2017.

According to preliminary figures, it is now evident that the Nordic market has most probably reached its full capacity in 2017 in terms of investment volume, with 2018 country volumes contracting on a yearly basis from just 2% in Norway to over 20% in Denmark.

 

Q1-Q4 2018

(local currency, billion)

Q1-Q4 2018

(EUR,

billion)

Q1-Q4 2017

(local currency,

billion)

Q1-Q4 2017

(EUR,

billion)

y-o-y (%)

(local currency)

Denmark

71,9

9,5

92,9

12,5

-25%

Finland

8,9

8,9

10,3

10,3

-14%

Norway

83,7

8,7

85,0

9,2

-2%

Sweden

116,2

11,3

132,1

13,7

-12%

Total

 

38,4

 

45,7

-16%

Source: CBRE Research

 

The cooling down of the market did not come as a surprise but is certainly putting some weight on the prospects for 2019. What is especially interesting are the movements within different market segments, particularly residential and office.

While Denmark with DKK 33bn invested into residential properties accounted for the largest part of the total Nordic residential investment volume (42%), Denmark was also the only Nordic country to experience a contraction in this market segment compared to 2017.

 

Residential
(2018,
EUR billion)

Residential 
(2017, 
EUR billion)

y-o-y (%)

(local currency)

Denmark

4,4

6,0

-26%

Finland

1,8

0,9

99%

Norway

0,7

0,4

56%

Sweden

3,8

3,1

21%

Total

10,7

10,4

2%

Source: CBRE Research

 

‘The volume invested into Danish residential letting properties grew to its historical heights during 2017. A large number of residential portfolio sales, composed of properties located mostly in the Greater Copenhagen area, as well as massive investor appetite for residential development projects in the largest Danish cities pushed the 2017 residential investment volume to a total of DKK 45bn (EUR 6.0bn), compared to DKK 24bn (EUR 3.2bn) recorded in 2016.

Although the trend has remained strong in 2018, the prospects of possible downward revision of residential letting levels as well as strong development pipeline have put a cap on investment levels’, says Mikael Glud, Head of Capital Markets, CBRE.

On the other hand, while investment into offices contracted across the Nordic region, with DKK 15 bn worth office properties changing hands during 2018, Denmark was the only country to see an increase in this market segment y-o-y.

 

Office
(2018, EUR billion)

Office
(2017, EUR billion)

y-o-y
(%)

Denmark

2,1

2,0

4%

Finland

3,4

4,2

-18%

Norway

3,5

4,2

-17%

Sweden

2,7

3,1

-13%

Total

11,7

13,5

-13%

Source: CBRE Research

 

‘Strong occupier fundamentals are certainly adding to the attractiveness of the office properties as investment product. The momentum in the Danish office leasing market is expected to persist in 2019, supported by a strengthening economic outlook. Furthermore, companies’ positioning in terms of location is gaining importance and is increasingly being regarded as strategically important for further brand development and access to talent. This can motivate companies to reconsider their current positioning’, says Dragana Marina, Head of Research, CBRE.

For investors, the main challenge for 2019 will continue to be sourcing core deals at this stage of the cycle. CBRE expects 2019 to be another year with high investment activity, supported with abundant capital to be deployed. Considering the increased investors’ perception of risks related to potential higher than expected interest rate increase, we expect a more cautious attitude from investors going into 2019. The market is expected to remain strong in historical context but with a possible moderate decline in turnover levels.

_______

For more information contact:

Dragana Marina, Head of Research, CBRE: dragana.marina@cbre.com

About CBRE Group, Inc.:

CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2017 revenue). The company has more than 80,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.