REAL ESTATE - The Norwegian property market returned 17.6% last year – its highest return since the index launched in 2000 – but the property market still performed below equities, which returned 32.4%.
But the figures, published last week by IPD, showed that real estate well outperformed bonds, which returned 0.9%.
Offices were the strongest real estate sector, with returns of 18.2%, followed by non-office commercial property, which has benefited from rental recovery over the past two years. Retail suffered in Norway as it has across global markets, showing returns of 16.4%.
Despite a hike in Norwegian interest rates – the ninth since June 2005 – a compression in valuation yields of 50 basis points boosted capital values by more than 10%. The figures also showed rental growth up 8.6% overall and 11.4% in office.
The index is based on a sample of almost 500 properties.
Figures recently published by IPD for Denmark suggest yield compression across Scandinavian markets. In Denmark, real estate return were 17.8%, with a 60 basis point fall in yields, compared with more than 30% for equities.
In Denmark, residential turned in the highest performance for the fourth year, with returns of more than 24%. A nationwide rental recovery also upped office’s performance.
Increased interest from international investors across Scandinavia means that demand is beginning to outstrip supply, notably in Denmark and Sweden.