Sweden has witnessed record levels of industrial real estate investment, with almost €2.5bn allocated in the year to date, which corresponds to approximately 16% of the total investment volume (compared to €1.59bn/10% year-on-year), according to the latest report by Savills. Of this amount, 85% can be attributed to foreign capital.
Peter Wiman, Head of Research, Savills Sweden, said: “Although yields for modern logistics assets are at a record low, from an international investor perspective, Sweden still looks relatively cheap compared to some of the core markets in Europe.”
The Swedish online retail sector grew by 15% during 2018 and most forecasts indicate a continued 10%+ growth over the coming years. The strong development of the online retail sector has had a profound impact on logistics. Savills has found a clear inflection point when online retail reaches 10.7% of total retail sales, triggering a surge in occupier demand for logistics space. Sweden will most likely pass this tipping point in 2019 or 2020.
Savills has recorded that development activity of new logistics assets in Sweden continues at healthy levels with approximately 650,000m² being completed in 2019, which is slightly short of the record volumes produced in 2018. The development pipeline for 2020 is increasingly strong and by November 2019, just over 570,000m² has been scheduled for completion. So far 265,000m² is set to be built in 2021, which will increase as we move into 2020 as production times in most cases are shorter than 12 months. A clear indicator of property developers’ strong future belief in the logistics sector is that speculative construction in 2019 is above 55% in Stockholm and 40% in Gothenburg.
