Nordic property shares have recovered strongly after a weak start to the year.
Since the bottom in March, the sector has risen by 52% and the property shares are now on average valued 18% above their net asset values, according to analysis by Pangea Property Partners.
If the sector ends in positive territory for 2020, it would be the ninth year in a row that Nordic property shares deliver positive returns.
The listed property sector is now back at about the same level as the beginning of the year. However, there are large differences between the Nordic countries and different sectors, says the Pangea Listed Overview.
‘The property companies’ financing situation has improved significantly over the past few months, which has contributed to the positive stock market development,’ said Mikael Söderlundh, head of research and partner at the firm.
‘There were also concerns about large rent losses due to the corona crisis, but so far the Nordic property market has shown resilience. In most segments, rental incomes have actually continued to increase, although at a slower pace than before.’
Record number of listed property companies
After the strong recovery, Nordic property shares are now valued at a 18% premium to their net asset values on average. Swedish property shares are valued at a 23%, while the Norwegian property shares are valued at a 14% discount.
‘We see that the strong valuation on the stock market, especially in Sweden, motivates new companies to go public. So far in 2020, six new property companies have been listed in Stockholm, of which two on the main list, and there are more companies in pipeline. The Nordic listed property sector has never been this large before,’ says André Lundberg, project manager and partner.
There are currently 33 property companies listed on the Nordic main list and another 16 property companies are listed on First North, with a total market capitalization of €74 bn. In addition, there are 11 listed property developers with a market cap of €5 bn, according to the report.
Large differences between segments
The best performing property sectors so far in 2020 are public properties and residentials, which have increased by 22% percent and 11% respectively, on average. Property shares with focus on logistics have also risen by 3%. On the other hand, property shares with focus on shopping centres and hotels have fallen by 19% and 32% respectively from the beginning of the year. However, these sectors have also performed better over the past six months.
‘The corona crisis has created clear winners and losers in the property market. The reduced number of visitors has hit both hotels and shopping centres very hard, and with many turnover-based leases, property owners have also been affected,” said Lundberg.
In terms of geography, the Norwegian property shares have performed best and increased by 4% over the year, driven by the bid situation around Entra and a strong upturn in the past few days.
The Pangea Listed Overview is a report covering all Nordic property shares listed on the Nordic main list and First North, and is annual.
