According to research from Savills, the transaction volume so far in 2010 for the Swedish investment market currently stands at approx SEK 14 billion (1.4 billion), which is already in excess of 55% higher than that recorded for Q109. In addition, the international real estate advisor expects this trend to continue throughout the year with increased investor appetite in particular emerging from Swedish institutions, national property funds, German property funds and national and international pension funds.
Peter Wiman, head of research in Sweden, comments: "The ability to secure debt has become easier in Sweden, which has been a driving force behind this significant increase in transactional volumes. Furthermore, the property allocation element of many pension funds is low due to the recovery of the stock market, which has therefore created an opportunity for these investors to increase their property portfolios."
Looking at the supply/demand equation, Savills research notes that there is a definite shortage of prime assets in the Swedish market as most of these properties are held by core investors that have very few reasons to sell. Many of the prime assets that have been sold so far in 2010 are development projects that have recently been completed or are close to completion and have been sold by developers such as Skanska, NCC and Peab.
Peter Wiman continues: "As with most other areas of Europe a definite supply/demand imbalance has emerged over recent months in Sweden. We have seen little opportunity for funds to take advantage of distressed stock coming to the market as a result of loan defaults. However, looking forward in 2010 we expect to see transaction volumes increase as a result of a rise in bankruptcies and forced sales."
In terms of sector specific demand, Savills notes that the residential sector dominated the transactional market in 2009 and entered 2010 with an increased market share. However, the company confirms that there is evidence of growing renewed interest in the other property segments. Recently completed transactions of retail warehouse properties indicate a hardening on prime yields.
When assessing yields overall, Savills research states that while prime office yields in Stockholm remained relatively stable throughout 2009 at 5.5 to 5.75%, the gap between prime and secondary is widening significantly reflecting the risk averse nature of current market players. This trend is expected to continue throughout 2010 with prime yields predicted to be at 5.50% by the end of the year.