As a result of a higher risk appetite, better access to financing and a lower risk of vacancies, the gap between the yield requirements for properties in and outside prime locations continues to decline. At the same time, according to the autumn edition of Newsec Property Outlook, favourable trends in rents and low vacancy rates are driving the total yield for properties in prime locations.
However, pricing in the property market has changed over the past 18 months and the investment cycle has now entered a phase in which the prices of properties in both prime and more secondary locations are becoming high. Nevertheless, due the inherent sluggishness in the property market, the difference between the yield requirements of primary and secondary segments has not decreased as significantly as in the corporate bond market.
“The situation is becoming increasingly difficult for general property investors. Instead, property-specific factors are now becoming decisive in investments, where it is necessary to identify the potential of each property in terms of increasing the rent level and reducing the vacancy rate. At the same time, the timing for selling is expected to be good in the second half of 2014 and 2015,” says Newsec’s Chief Economist, Arvid Lindqvist.
Properties will continue to benefit from a combination of low rents and relatively strong economic growth – and will continue to deliver an attractive yield in relation to other types of assets. According to Newsec’s main scenario, the property market will deliver a total yield of nearly 10 per cent annually from 2015 to 2016.
“Well-established investors now have a broad range of financing options – from bank loans to corporate bonds and preference shares. The extremely low rent levels and high risk appetite in the financial market are also key contributing factors to the high level of activity in the market,” says Newsec’s Chief Economist, Arvid Lindqvist.
Swedish property companies will continue to dominate the market. However, international players are showing a clear interest in the Swedish property market – an interest that extends beyond the major cities and could very well result in more investments during the second half of 2014 given the deterioration of foreign exchange trend since spring 2013.
För ytterligare information, vänligen kontakta:
Arvid Lindqvist, Chief Ecomonist Newsec
Phone +46 708-43 30 50, e-mail: firstname.lastname@example.org
Niklas Alm, Kommunikationsdirektör Newsec
Phone +46708-24 40 88, e-mail email@example.com
Newsec – The Full Service Property House in Northern Europe – erbjuder fastighetsägare, investerare och lokalanvändare ett helhetsutbud av tjänster via affärsområdena Capital Markets, Leasing, Asset & Property Management, Valuation & Advisory och Corporate Solutions.
Newsec grundades 1994 och är partnerägt. Idag har bolaget över 600 medarbetare fördelade på ett 20-tal kontor runt om i norra Europa. Newsec genomför årligen tusentals uppdrag och förvaltar över 1 500 fastigheter. Genom den stora volymen, lokal närvaro samt bredden och djupet inom de olika verksamheterna erhålls stor kunskap om fastighetsmarknaden i norra Europa.
Marknadsrapporten Newsec Property Outlook har publicerats sedan 2001. Ladda ner den senaste rapporten på www.newsec.com/npo