Finland and Norway offer opportunities for value-add office investors, while the office sectors in Sweden and Denmark tend to be restricted more to core returns, according to Anders Palmgren of fund manager Genesta.
Finland and Norway offer opportunities for value-add office investors, while the office sectors in Sweden and Denmark tend to be restricted more to core returns, according to Anders Palmgren of fund manager Genesta.
Core money generally takes the direct investment route into Nordic real estate, Palmgren said, while fund managers in the region take on a slightly higher risk profile.
Nordic funds are currently enjoying high inflows but capital providers need to be aware that different markets and sectors in the region have different return profiles.
'It is also important to take account of liquidity in terms both leasing and investment as a value-add investor will hold a property for a finite period of time and needs to lease it up before selling it on. Therefore they need to be in areas where there is market activity,' Palmgren said.
Palmgren, head of the markets group at Stockholm-based Genesta, was speaking at PropertyEU's recent Europe and Nordics 2016 Outlook briefing, hosted by Catella in Stockholm.
Value-add offices
Speaking about the office sector, Palmgren singled out Finland as a market where Genesta can get a 'margin between core and value add' that is sufficient to meet its return requirement. 'We see the same thing in Oslo and Norway on the back of the fall in oil prices and the depreciation of the Norwegian krona.'
It is much more difficult to get value-add returns from well-located offices in Sweden and Denmark. 'In Sweden, we see that sort of opportunity much more in the retail sector,' Palmgren added.
Click here to watch Anders Palmgren of Genesta take about the risk-return profiles of the four Nordic markets or, watch all the videos from the Europe and Nordics Outlook briefing
