DTZ: Potential for strong rise in office rents (SE)

The Swedish property market continues to improve, according to DTZ's three recent reports on the latest market trends in Stockholm, Gothenburg and Malmö.

The office rental market in Stockholm is particularly interesting, with clearly improved conditions. Market rents for modern offices in the CBD have risen from SEK 3,800/m² at the beginning of the year to the current level of SEK 4,200/m². The prospect for continued strong rental growth in the coming years is expected to be strong.

"We are seeing continued strong demand for modern offices. This, together with very limited new construction in the next few years may provide rapidly rising rent levels, soon approaching the peak levels from before the financial crisis," comments Jan Rosengren, Head of Consulting & Research at DTZ in Sweden.

The Gothenburg market has fared surprisingly well, given that the city was hit hard by the downturn in manufacturing in 2008 and 2009. Office rents have fallen only marginally, and DTZ's assessment is that the rent levels for the years ahead will be stable.

In the Malmö market there will be a relatively large production of new office space in the coming years, which can hold back the rent increases, despite an expected continued strong demand for offices.

In all three metropolitan markets, we see increased interest from investors while transactions are indicating declining yields.

Source: DTZ

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