Sweden's investment market remains stable according to Savills, with the total 2012 transaction volume expected to reach SEK 90 100 billion (approx. 10.4 billion 11.6 billion), keeping it in line with 2011 volumes and the 10-year average. The international real estate advisor records a total investment volume of SEK 67 bln (approx. 7.88 billion) in the first three quarters of 2012, maintaining the market's European ranking at number four in terms of transaction turnover, after the UK, Germany and France.
The firm notes a clear investor focus on risk-averse product, with the majority of the Q1 to Q3 2012 transaction volume relating to either individual prime assets or larger portfolio transactions of mixed assets. Prime office yields in Stockholm are currently recorded at 4.75% with prime shopping center yields at 5.25%, according to data from Savills. The real estate advisor attributes the low level of secondary stock transactions to the difficulty in securing financing for this property type, thus widening the gap between these assets and prime.
Peter Wiman, Head of Research in Savills Sweden, says: "Demand for prime assets is strong in Sweden and from a European perspective the property market here is still quite liquid. We expect prime yields to remain stable across all sectors into 2013, however yields for secondary assets may soften due to a weaker market for this property type."
Savills research shows that the office sector leads the way in the Swedish investment market, accounting for 49% of turnover in the first three quarters of 2012. The retail and industrial sectors made up 8% and 14% of turnover respectively, in the same period. The firm has seen a sustained interest from international players, particularly in acquiring prime retail warehousing, logistics and shopping centers. However, overall domestic buyers continue to dominate the market, notably Swedish pension funds and institutions.
Johan Bernström, Head of Investment Savills Sweden, says: "Due to the ongoing scarcity of bank lending investors are searching for alternative ways of securing financing. We have seen a particularly sharp increase in the number of bond issuances by domestic listed property companies."