After a groundbreaking record 2021 with a transaction volume of more than €71 bn, transactional activity in the Nordics fell by 31% in 2022 to €49 bn, which is still the second best in history, according to Nordic property advisor Colliers.
‘Compared to the incredibly strong 2021, we’re now facing a more restrained market,’ said Mikael Söderlundh, head of Research Colliers Nordics & Partner:
While the number of deals has decreased by 13% to approximately 1250, the average deal size has reduced even more from €53 mln to €39 mln. Volume decreases in all Nordic countries except Finland All Nordic countries, except Finland, are facing a downturn in transaction volume. Sweden, being the largest market in the region, is down 42%, Norway is down 35% and Denmark is down 18%. In Finland, being the only country not facing a negative development, the volume is up 4% compared to 2021.
Mikael Söderlundh: ‘2022 started strongly with a record volume of €30 bn during the first half of the year, but then volumes declined 34% during the second half. The cooldown is partly fueled by higher interest rates and a gloomier overall economy. In total, the listed property sector is down 45 percent YTD 2022.’
From net buyers to net sellers
A big change from 2021 is that the listed property companies have gone from net buyers to net sellers. Last year the listed companies accounted for 49% of all acquisitions in Sweden and 27% in the Nordics. This year, the equivalent figures are 16 and 8% respectively.
Bård Bjølgerud, CEO Colliers Nordics & Partner said: ‘The listed sector is currently valued at an almost 40% discount to book NAV, making it difficult for the companies to be active on the buy-side. Instead, we have seen property sales and equity issues to handle a tougher financing climate and credit rating requirements.’
Continued Nordic interest for foreign investors
Foreign investors continue to be net buyers, accounting for 39% of all acquisitions and 21% of all sales in the Nordics. This means net purchases of €8.6 bn in 2022, which is the seventh consecutive year of positive capital inflow to the Nordics. In Denmark and Finland, the share of foreign buyers is 64% and 49% respectively.
Bård Bjølgerud: ‘Looking ahead, we expect a challenging first half of 2023, but gradually improving and stabilizing property markets by end 2023. When entering a higher interest rate environment, the market will naturally transform and we expect to see new investors and interesting deal opportunities, including both asset and corporate transactions.’
