At the moment properties that can be converted to residential properties are steaming hot in Stockholm. Working with real estate is very dynamic. The facade is the same, but a property that one day was industrial, the next day can be luxury apartments. What is happening behind the walls is limited only to the developer’s creativity and their ability to see the property's potential.
During the last year Newsec has been the advisor to several projects. Last week we signed a deal in central Stockholm and we will soon start to advertise a new project. Through our active presence in the market we have reached new investors and created a unique investors list, comprising private persons as well as small and larger developers.
What makes this segment so hot? Several factors have come into play; Stockholm is growing, strong disposable incomes, historically low interest rates, low activity in construction and that more and more wants modern offices. This makes many older office buildings perfect for conversion to residential.
We see that more and more find their way into this segment, but not all will succeed. The key to success in this segment except to see the potential is to estimate the cost of construction and to make the correct assumptions of the market price when selling the apartments in the future.
This means that timing plays a big role, as well as a well-founded macro analysis. Newsec’s Head of Advice, Marie Bucht, was recently quoted in the Swedish financial newspaper, Dagens Industri, about Newsec’s "Five Year Forecast". We believe in a continuing strong residential market in Stockholm and that this segment will continue to be hot for a while in the transactions market.