Transaction volumes in the Nordic property market reached €15.5 bn in the first half of 2020, down 15% on the same period last year, according to new figures from property advisor Pangea Property Partners.
After a strong first quarter, activity dropped more than 40% in the second quarter, which Pangea said was in line with expectations. The Nordics produced a transaction volume of €6.1 bn in the second quarter of 2020, down from €10.2 bn in the same period last year.
'The outburst of Covid-19 changed the picture completely. After a 10% increase in transaction volume in the first quarter compared to the same period last year, the corona effect has hit the Nordic property market in the second quarter. Momentum turned, and now the question is when it will turn again,' said Mikael Söderlundh, head of research and partner at Pangea Property Partners.
Largest fall in Norway and Finland
The transaction volume in Sweden amounted to €6.7 bn in the first half of 2020, a decrease of 14% from last year. The volume in Norway fell 22% to €2.8 bn. In Finland and Denmark, the volumes declined 22% and 2% respectively.
In total, the number of transactions in the Nordic property market was 23% lower in the first half of 2020 than the same period last year. The average deal size increased slightly from €37 mln to €38 mln.
The share of foreign buyers was as low as 16% in the second quarter. Surprisingly, the figure has only decreased from 32% to 29% in the first half of 2020 compared to the same period last year.
Bounce back
'The international buyers are expected to return after further easing of travel restrictions. The Nordic property markets show robustness with an attractive risk versus return profile. In addition, the Nordics are expected to recover faster than the rest of Europe as we have seen in previous crises,' said Bård Bjølgerud, CEO and Partner at Pangea Property Partners.
The largest property segment was residential, accounting for 32% of the volume in the first half of 2020, closely followed by offices, accounting for 31%. The share of residential deals increased significantly from 21% in the same period last year. By contrast, the share of retail deals decreased from 17% to 10%.
'We have a split market right now with very high activity in typical core segments such as residentials, public sector property and logistics, while liquidity has dried up in other segments,' concluded Söderlundh.
