We currently experience a sluggish global economy and a credit market that is cooler than the winter weather outside. Banks are hesitant to take risks and demand high interest rate margins and even tougher covenants.
However, the property market of the four Nordic countries is still interesting; we have stable government finances, well-functioning labour markets and competitive industrial production, which generate good fundamentals for stable long-term development. In the short term we have always the ongoing trend of decreasing interest rates to be pleased over. Rents are also quite stable in the region with limited speculative construction and healthy rental increases during recent years, indicating a market in balance; the exception from this is the central area of Oslo, where the rental increases have been exceptional recent years due to a shortage of supply. All in all, the Nordic economies and property markets are in better condition than many other European markets, both in the long and short run.
There are still low-leveraged players awaiting the right prices before entering the market; many international players are still showing interest in the markets, just awaiting yields to shift. It can be noted that processes are taking longer and that there are fewer bidders, but the market is not dead. The total volume of transactions in the Nordic countries for 2008 ended up at approximately EUR 23.5 billion, which is approximately one third down compared to 2007. Viewed historically, however, the transaction volumes have only been higher during the years 2005-2007. To sum up, we are facing an interesting time on the Nordic real estate market.