Buying an investment apartment in Sweden

Why should you invest?

Even with the depressing COVID news and the havoc it has had on the travel and accommodation industries, there is one very bright story: short term rental properties. Whilst hotels, airlines, cruise-ship operators and many other parts of the industry have racked up massive debts, the short term rental industry has proven quite resilient and buying an investment apartment in Sweden remains a very good financial choice. Across Europe, demand for non-hotel accommodation is down by just 20 percent year on year, compared to a whopping 60 percent reduction for hotels. And even with a 20 percent reduction, most short term rental properties still return a positive financial return on investment.And of course, many areas in Sweden have seen a significant increase in short term rental bookings this year.

Notwithstanding that, 2020 has been a difficult year for many people in the travel and accommodation sectors. Globally, nearly 200 million people in the travel and accommodation industries have lost their jobs since March 2020. The travel and tourism industry in Europe in 2019 was valued at $ 2018 billion and grew by about three percent compared to 2018. The short term rental industry was consistently growing by at least three to five percent year on year before COVID. According to McKinsey & Company , in March 2020 there was a 247 percent decline in the amount of flight bookings in Europe compared to March 2019. By August 2020 however, that had changed to a 100 percent decline in flight bookings.Even now, as some travel is starting to increase again, most hotels and airlines are still losing a lot of money every week. Average hotel occupancy in Europe dropped to 86 percent of 2019 levels in March 2020, and is still 71 percent year-on-year lower in August. Remarkably, travel accommodation, in particular short term rentals like those seen on Airbnb and VRBO are still performing well. One big part of their success has been the increase in staycations. People unable to travel overseas, or more cautious about spending lots of money on an international holiday, are increasingly choosing a holiday that is driving distance from their home. That has meant a booming trade for self-contained properties throughout Sweden.Properties that are completely self-sufficient, with a car space, clothes washing machine, and fully equipped kitchens are achieving high occupancy and profit. Even though air-passenger numbers may increase slowly, or even decrease if COVID spikes again in Europe, essential business travel has continued. Most travelers have realized that short term rental options avoids other risks found at hotels such as the need to talk to human receptionists,  meet others in shared lobbies and dining areas, and touching dirty lift buttons.

Positive changes in the short term rental industry

COVID has increased the importance of cleanliness and professionalism at accommodation. As we have said in countless other articles, cleanliness has always been the first determinant of success once a guest checks in to your property. During a global pandemic, this is even more important. For this reason, business and holiday travelers are increasingly booking properties managed by experienced Airbnb Super Hosts and professional short term rental property managers . Most experienced property managers will prove their value by the increased income they bring to your property investment.Charging between 15 and 25 percent of the nightly rate as their fee, professional property managers take the hassle out of managing a short term rental property, and offer a significantly higher financial return for the property owner than other investment strategies.

Hotel analysts confidently predict that business travel will return to pre-COVID levels at some point in 2021, but there is less confidence that business travelers will return to the large hotels as they once did. With many short term rental properties now properly equipped with super-fast internet, work spaces and desks, private bathrooms, and fully equipped kitchens, business travelers can get everything they had at a hotel for a better price, and even more flexibility. Buying an investment apartment in Sweden remains an appealing investment for many.

Where should you invest?

Major cities across Sweden will always be appealing to both holiday and business travelers who need an apartment during their visit. The main cities of Sweden including Stockholm Goteborg, Lund, Malmö, Uppsala, Karlstand, and Umeå attract healthy levels of travels throughout the year. If you are thinking of buying an investment apartment in one of these cities, identify who your most attractive guests are going to be and then furnishing and listing your investment property to attract these people. In Uppsala, Lund and Karlstad there are many university students, and some lecturers. In Malmö and Umeå, there are a good selection of industries with international partnerships and personnel traveling back and forth the entire year.If you are considering buying an investment property in Umeå, you have plenty to attract people exploring northern Sweden including beautiful nature, good local shopping, first-class restaurants, a rich cultural life, and a busy calendar of events to attract visitors. If you are considering buying an investment property in Malmö, you are investing in the third largest city in Sweden; with a domestic population of over 300,000 people and many more visitors each year. With thriving biotech and IT industries in Malmö, a well-chosen and advertised property is sure to attract plenty of international business travels. In Goteborg you have a city that is attractive to many European travelers, especially those located in neighboring Norway and Denmark.Buying an investment property in Goteborg is likely to be a good investment; with a domestic population of 570, 000 people and one million if you include outer suburbs, this city is an attractive destination for business and holiday travelers. Film festivals, international sporting events, book fairs, and science festivals all attract millions of travelers to Gothenburg every year. Properly presented and carefully managed short term rental properties in all of these locations are expected to perform well in Q4 of 2020 and beyond.

Mortgage rates are at historically low levels across Europe, and are likely to remain so for the foreseeable future. Similarly, housing prices, which usually rise when interest rates are low, are also at an all time low. The property market has been on the rise for decades in Sweden, but the last couple of years has seen a leveling of this growth, and COVID is only going to add more downward pressure on property values. Now is a great time to buy a property with the intent of listing it on the short term rental market in Sweden. Speak to the team at SwedBNB for an obligation free assessment of your potential property purchase and the property revenue forecast.We can provide you with an estimated earning for your property purchase, as well as the financial considerations you need to assess as part of ensuring your property purchase and the return on investment will meet your financial goals.