MIPIM: Foreign investment in Sweden soars by 135%

Sweden is firmly back on the agenda for cross-border investors with a 135% rise in foreign investment. International real estate advisor Savills reports an increase of foreign investment from SEK 5.8 bn (EUR 654 mln) in 2009 to SEK 13.6 bn in 2010 and ranks Sweden fourth on the list of European countries by commercial investment volume, after the UK, Germany and France.

Savills research further reveals that total investment volumes in the Swedish market reached SEK 113 bn in 2010, amounting to a 95% increase compared with 2009.

Alongside China, Sweden currently has the strongest GDP statistics globally and preliminary GDP figures for 2010, released by Statistics Sweden, indicate a growth of 5.5% in 2010 compared with 2009, which represents the highest annual increase in Sweden since 1970. Consequently, the international real estate advisor predicts that in 2011-2012 international players, who have in recent months been sellers in Sweden, will develop an increased appetite for investment in the Scandinavian market.

In Stockholm prime rental growth was at 20% in Q4 2010, one of the highest levels recorded in Europe and far above the European average growth of approximately 4.5%.

Some distressed situations are being actively targeted and Savills predicts that some opportunistic funds that bought several years ago and have been asset managing, refurbishing or developing out projects they acquired, will now be looking for their institutional exit at the appropriate time.

'Given the really good GDP growth prospect of the country Sweden is now attracting international players once again across the risk/return spectrum and this will continue to increase in 2011-2012,' said Giles Wilcox, from Savills European and cross border investment team. 'Its occupational market has been less volatile than many of the core countries, especially in the office sector and there are now good prospects for rental growth going forwards. The key issues remain lack of quality product and the intense competition from the local domestic pension funds.'

Overall, according to Savills data more than half of the total turnover on Sweden's investment market in 2010 was invested in Stockholm, with an emphasis on residential transactions, at 42%, and the office sector representing more than one third of all investments.