While real estate investors continue to target prime assets in the Nordic region that provide bond-like returns, Aberdeen Asset Management believes value can be found in taking a little more risk as the competition for buying more risky assets is much less fierce.
While real estate investors continue to target prime assets in the Nordic region that provide bond-like returns, Aberdeen Asset Management believes value can be found in taking a little more risk as the competition for buying more risky assets is much less fierce.
In its latest Nordic Quarterly Property Snapshot, the fund manager points out that the spread between prime property yields and the long-term government bond yield is close to an all time high. Aberdeen expects prime property yields in the region to fall in the second half of 2010.
The Nordic economies have benefitted from the upswing in global demand so far in 2010, with strong GDP growth rates and falling unemployment as a result.
The picture is mixed for occupier markets in the region. Strong demand for prime space has led to stabilisation and even recovery for the best assets in the best locations. In contrast, secondary assets and locations are struggling with increasing vacancy and low demand, Aberdeen says.
Lars Flåøyen, head of Nordic property research and strategy, says: 'Off current valuations, we forecast a five-year average 'all property' total return in the Nordic region of 8.1%, but the differences across the region are likely to be high.'
