2018 was another active year in the Nordic property market, as average transaction size increased, and inflow of foreign capital continued to be strong.
According to new figures from Pangea Property Partners, transaction volumes in the Nordic property market reached €42 billion in 2018, virtually unchanged from 2017. 2018 is the fourth year in a row with a transaction volume above €40 billion.
“2018 nearly reached the record level from 2016, illustrating that the Nordic property market is very active. This year we saw fewer, but larger, deals than last year, which also means that there are more complex deals involving portfolios and companies,” said Mikael Söderlundh, Head of Research and Partner at Pangea Property Partners.
Country-wise, volumes have increased in Norway (+13 per cent) and Denmark (+13 per cent) from last year, while the volume in Finland has decreased (-21 per cent) from its highest level. Sweden remains the largest property market in the region. The volume in Sweden increased in local currency but declined slightly in euro terms.
|Transaction volume (€ billion)||15.1||9.6||7.8||9.4||41.9|
|- change from 2017||-2%||13%||-21%||13%||-1%|
|Number of transactions (#)||380||260||170||155||965|
|- change from 2017||-15%||-14%||-13%||0%||-12%|
|Average transaction size (€ million)||40||37||46||61||43|
|Foreign buyers (%)||32%||18%||72%||48%||40%|
Estimated figures for full-year 2018 based on property transactions above EUR 5m.
The Nordic property market remains attractive for international investors, with foreign buyers accounting for 40 per cent of the volume in 2018. In Finland and Denmark, the share of foreign buyers was 72 per cent and 48 per cent, respectively. International investors were net buyers of properties worth more than €5 billion in 2018.
The largest sector in 2018 was office, accounting for 31 per cent of the volume, overtaking residential, which was the largest sector in 2017, but which now accounts for 27 per cent, followed by retail, accounting for 16 per cent. The average transaction size amounted to above €43 million, up from €39 million last year.
“All the five largest transactions in 2018 were cross-border, showing that the Nordic property market is still very liquid and attractive to international investors, who, on average, are looking for larger investments than national investors. This contributes to larger and more complex deals, a trend that suits Pangea Property Partners perfectly. We are a Nordic company with a substantial international network, and we have worked on many of the largest and most complex transactions in the region,” said Bård Bjølgerud, CEO and Partner at Pangea Property Partners.
The largest property transactions in the Nordic region in 2018 were:
- 1.Vonovia’s acquisition of Victoria Park in Sweden (SEK 17.1bn)1
- 2.Kildare Partners’ acquisition of Technopolis in Finland (EUR 1.6bn)2
- 3.Danica’s acquisition of SEB Pension in Denmark (DKK 6.2bn)3
- 4.Heimstaden Bostad’s acquisition of several residential portfolios (SEK 8.4bn)4
- 5.Cibus’ acquisition of 123 grocery stores in Finland (EUR 0.8bn)
1Property value Q2-report for entire company. 2Property value Q3-report for entire company. 3Real estate included in company takeover. 4Adjusted for ownership change before and after.
During 2018, Pangea Property Partners has executed about 50 transactions and advisory mandates across the Nordics with an underlying property value close to €3.0 billion. For example, the company advised Starwood on the acquisitions of Victoria Park (32 per cent of the votes) and residential project Primus 1 in central Stockholm (together with Oscar Properties), and Aspelin Ramm on the sale of ALNA senter in Oslo for NOK 2 billion, the largest Nordic retail single asset transaction in 2018. We have also advised on many hotel transactions.
“While increasing interest rates are on the agenda, and despite sector-specific challenges in retail and residential development in Sweden, we are working on a string of exciting deals for 2019. We certainly expect transaction activity to remain high into the new year,” added Mr. Bjølgerud.
- Chart: Nordic transaction volumes, 2008-2018
- Chart: Nordic transaction volume split by geography and sectors, 2018
- Chart: Share of foreign buyers in the Nordic countries, 2018
Pangea Property Partners is an independent Nordic corporate finance and advisory firm focusing on the real estate sector. The company has offices in Stockholm, Oslo and London with more than 30 employees. We also have a strategic cooperation with Mrec in Finland. Since 2010, Pangea Property Partners has advised on more than 350 transactions with an underlying property value above €29 billion. The mandates include property divestments and acquisitions as well as large corporate transactions, capital raisings and debt financing.