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New phase in the Swedish property market

Although the trend for alternative assets, such as shares and bonds, has been strong in recent years, the property market will continue to deliver strong returns.

“When optimism is at its highest in the market, it is crucial to keep a cold head and base decisions on market knowledge and thorough analysis. Nonetheless, the mark of a successful investor is the ability to select the right segment and property at each phase of the business cycle,” says Newsec’s Chief Economist Arvid Lindqvist.

Investors still comprise Swedish property companies, funds and institutions, but the type of property has changed. From a position of essentially placing entire focus on office and residential properties in the country’s three largest cities, activity has now shifted to the property segment outside prime locations. The market shift in 2013 resulted in the start of downward pressure on yield requirements for offices in the inner and outer suburbs of large cities, a trend that is expected to spread to growing cities in Sweden during 2014. As of this year, the total return for prime locations and inner-city locations will be driven by good growth in leasing, while returns in more secondary locations will mainly be driven by declining yield requirements. Overall, this means that the differences in total yield between the segments will continue to decrease toward historically low levels.For further information, please contact:Arvid Lindqvist, Chief Economist NewsecTelephone +46 (0)708-43 30 50, e-mail arvid.lindqvist@newsec.se

Niklas Alm, Communication Director Newsec Telephone +46 (0)708-24 40 88, e-mail niklas.alm@newsec.se

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Annika Wahlund Communication Manager