Cross-border investment into Europe's Nordic countries (Denmark, Finland, Norway and Sweden) rose to €5.5 bn in the first half of 2017, up 23% on the same period in 2016, according to new data from Savills.
Foreign inflows represented 29% of all deals, the advisor said, with Sweden and Norway accounting for 66% of the total cross-border volume.
'The highly urbanised nature of the Nordics, combined with population growth, is driving a need for professionally managed residential accommodation of different tenures and sizes in major cities such as Copenhagen and Helsinki, and this has caught investors’ interest sending volumes up,' commented Lydia Brissy, European research director at Savills.
The total investment volume in the Nordics reached €19 bn in H1 2017, slightly lower than the record high reached in the same period last year, although Savills said it expected full-year volumes to reach €33 bn, an increase of 4% on 2016’s total.
'Overall the property fundamentals of the Nordics are solid, with the region offering an alternative option to core European destinations, given its very competitive pricing,' noted Peter Wiman, Savills acting head of Swedish investment.
Danish and Norwegian deals rise
H1 investment in Denmark reached a new record this year at €4.2 bn, up 19% on the same period in 2016, while in Norway H1 volumes almost doubled to €4.4 bn as a result of an investment surge in the hotels sector.
First-half investment in Sweden reached €7.8 bn, down on 2016 levels, but still 19% higher than the five-year H1 average, while activity in Finland decreased 32% during H1 due to a lack of available prime opportunities.
'As in any other European markets, alternative assets such as multi-family will continue to capture a growing share of total investment, but we forecast that senior housing in Finland, Sweden and Norway, student housing in Denmark, and the hospitality sector in Norway will also grow in popularity, albeit offices will probably continue to prevail in the face of strong rental growth,' added Wiman.
Offices still first choice
According to Savills research, offices remain the preferred investment sector, accounting for 34% of all H1 investments in the Nordics, down slightly from 39% in H1 2016. The ‘multi-family’ sector saw a 3% rise in investment on the same period last year, accounting for 28% of the market and receiving €5.4 bn, ahead of retail (22% market share, up from 17%) and logistics (10%).
'Strong investor appetite for offices last year saw the average Nordics prime office yield move in to 3.75%. This is still more attractive than prime office yields in core European countries such as France and Germany, so the sector continues to attract strong investment, but it did lead to some buyers exploring what other opportunities there were in the marketplace, hence the rise of multi-family,' concluded Brissy.
