Negative interest rates create rush for real estate

Nordic institutional investors are planning to be large buyers of real estate over the next 12 months, according to a new survey from Pangea Property Partners. The reason is extremely low interest rates and expectations of increasing real estate prices going forward.
“Our survey shows that investors consider real estate to be the most attractive asset class in the current market, ahead of both equities and corporate bonds. It is a dramatic change compared to previous surveys,” said Bård Bjølgerud, CEO of Pangea Property Partners.
Pangea Property Research conducts an annual investor survey among the 150 largest Nordic institutional investors regarding their views of real estate as an asset class and their investment strategies.
In this year’s survey, as much as 69% of the Nordic institutions want to increase their real estate exposure over the next 12 months. In total, Nordic institutions are planning to acquire real estate for approximately €5 bln in the forthcoming 12 months. As much as 63% of the Nordic institutions anticipate increasing capital values in the coming year and only 11% expect capital values to fall.
The most attractive sector in the current market is residential, closely followed by office and public sector properties. In addition, interest in real estate investments abroad has increased over the past few years. Currently, Europe is ranked as the most attractive foreign market while interest in Asia has declined.
Source: Pangea Property Partners