There was a sharp rise in investment in Swedish commercial property during Q1 of 2014, according to Savills, with the latest figures showing a 55 per cent increase on the same period last year.
The international real estate advisor has also recorded a large increase in year-on-year transactions completed. Just over 100 deals were carried out in the first quarter of 2014 – a 48 per cent rise over the same period the previous year.
Savills attributes the rise in investment activity to more than one factor. Improved bank lending and low bond yields have led to domestic institutions to seek higher returns. They have also increased their exposure towards property, which has boosted the supply of equity in the market.
The firm has noted that buyers are continuing to favour prime properties in larger centres, such as Stockholm, Malmö and Gothenburg.
The lack of supply of these assets on the market has resulted in aggressive pricing pushing yields down to historically low levels. Prime office yields in Stockholm stand at 4.5 per cent and Savills points out that these yields have only sunk below the 5 per cent level at two previous points – in the late 1980s and shortly before the global financial crisis of 2008.
The Savills data also reveals that the level of cross-border activity in the country has increased as a result of investors selling off Swedish assets while foreign acquisitions remain at low levels.
The firm believes that foreign buyers have been having difficulty bidding against domestic investors for available properties, as opposed to a lack of interest on their part. Domestic buyers continue to dominate the market, accounting for 95 per cent of the volume of transactions in the first quarter of 2014.
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