US-based investment giant Starwood Capital has signed on as financial partner for a significant residential development being undertaken in Stockholm by Sweden's Oscar Properties.
The pair have formed a joint venture for the Primus 1 property at Lilla Essingen, an island next to central Stockholm.
Starwood Capital holds a 70% stake in the joint venture and Oscar owns the remainder.
Pangea Property Partners facilitated and advised on the transaction.
Market watchers see the international alliance as an important vote of confidence for Sweden's housing market, which is battling the perception that it is a bubble about to burst. While production of apartments is at a nine-year high, sales are not keeping pace. An analysis published on newswire Bloomberg in October 2017 suggested there were a number of signs the market 'could be going from red-hot to icy cool'.
Oscar Properties was formed in 2004 and its portfolio comprises of 3,951 homes, of which 1 116 residential units are currently under construction.
Primus 1
The company acquired Primus 1 in 2014 for SEK 920 mln (then €97 mln) from Vasakronan, a property company owned by four of Sweden's national pension funds. Oscar said at the time that the strategy was to collaborate with a financial partner.
The Primus 1 project will consist of architect-designed housing in a park environment with sea views along the seafront in the district of Lilla Essingen. Construction start is calculated in the second quarter of 2019.
The original overall plan for Primus, involving public and private parties, featured 600 new homes, of which 210 housing would be on land owned by the city in the city's land and 390 residential areas on private land.
Following several transactions last Autumn, Oscar Properties said that it was stable in a housing market in transition. This position, the firm said, created freedom of action to enter into new business opportunities, 'which are naturally opened in this type of market'.
'Starwood Capital shares our strong focus on design and architecture and is an excellent partner for the project. The work with Primus creates good conditions for further cooperation between us,' said Oscar Engelbert, CEO of Oscar Properties.
Starwood Capital described Oscar Properties as one of the most experienced residential developers with a high level of design in Stockholm. 'Primus has an attractive location on the water near central Stockholm and we are convinced that we will create a unique product together,' added Starwood Capital's vice president Caleb Mercer.
