International buyers push Nordic property volumes to record high of €40b

Real estate investors, with cross-border firms playing a leading role, spent almost €40 bn in the Nordics during 2015 - the highest volume ever recorded for the region, according to Pangea Property Partners.

'The Nordic property market is red hot at the moment. There are buyers in all segments, andwe are seeing record prices in many deals,' said Mikael Söderlundh, head of research at Pangea, a independent Nordic corporate finance and advisory firm.

Pangea's figures show that the Nordic transaction market grew by 36% from 2014 to 2015. Growth was particularly strong in Norway (€12.7 bn) and Denmark (€6 bn), where transaction volumes have doubled from last year.

Finland also recorded a solid volume increase of 30% to finish on €5.2 bn. Sweden recorded a slight decline in 2015, but remains the region’s biggest transaction market, with a volume of €15.9 bn.

For the Nordic region as a whole, the 2015 volumes are even higher than in 2006 and 2007, the previous record years. In terms of national markets, the transaction volumes for Norway and Finland are at all-time highs.

Cross-border buyers
The growth in transaction volumes is driven by international investors. Cross-border transactions accounted for slightly more than 35% of the Nordic volume in 2015, which is the highest figure since the financial crisis. Six out of the ten largest deals had an international buyer.

'International investors find value in the Nordics, and they are attracted by the market size and liquidity. Over the past years the Nordics have accounted for some 13-15 percent of the total European tansaction volume, and that number might be even higher in 2015,' Söderlundh said.

Record low interest rates and strong investor demand has put further downward pressure on yield levels. Prime objects have been sold below 4% in the office, retail and hotel segments.

'The current macroeconomic environment favours property investments, as demonstrated by these record figures. We expect the high transaction activity to continue in 2016, with significant cross-border capital flows,' said Bård Bjølgerud, CEO at Pangea Property Partners.