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Sommarhälsning 2023 (eng)

The summer weather has already arrived, and before we take a few days of well-earned restI would like to share my reflections on the past six months.

Repricing and refinancing are the key themes for 2023

During the first half of 2023, the Nordic investment market experienced a slowdown as rising interest rates and a shift in the pricing environment limited the number of closed transactions. The investment market reached only €3.4 billion in total investment in the first quarter, down -73% y-o-y. At the same time, investors remained cautious in allocating new capital under the current market conditions - yield expansion and repricing of real estate continued.

Prime yields have continued to decompress across all sectors in Continental Europe due to increased financing costs and rising real estate values decreasing. Nordic prime yields are seeing a similar direction of travel. So far, Nordic real estate sectors have seen a peak-to-trough movement of ca. 100 to 125 basis points. Let’s look at each country in the Nordics.


Investment activity during the first half year 2023 was significantly behind the same period last year. Capital availability continues to be challenging, with lenders expected to become more active as the macroeconomic environment improves and interest rates stabilise. Increasing borrowing costs will be highly relevant for re-financing existing loans, considering the decline of collateral values and lower LTVs. As financing costs increase, yield widening started in Q2 2022 across all sectors.  
Repricing of assets is a key issue in the current investment market, presenting both a challenge and an opportunity for investors. Since bottoming out in late 2021 and early 2022, prime yields are up by 50-110 bps across all property types, translating to a decline in values through 2022 and the first half year, 2023. 

The current period of adjustments in the office sector indicates the start of a new cycle. This, coupled with a general weakening sentiment in the office market, will be reflected in subdued investment activity in the short term. In the Industrial & Logistics sector, it is anticipated that the movement of prime yields will slow down in the remainder of the year. Although moving up, vacancy rates across Industrial & Logistics assets remain relatively low. This is expected to mitigate the effect of potential further repricing as it provides support for capital values and income growth. The multifamily market has slowed down strikingly, in line with the situation across the region. Increased construction costs and financing expenses continue to create less favourable conditions for new construction projects. As a result, construction activity has decreased, impacting thus the supply of residential units.


In Finland, we are witnessing high activity in deal preparation and robust pipelines of work but limited market evidence amidst the repricing of real estate.

The Finnish investment market experienced a slowdown in the first half of 2023 as rising interest rates and a shift in the pricing environment limited the number of closed transactions. Investors remained cautious in allocating new capital under current market conditions. Investment volumes decreased over 80% year-over-year to €455 million in the first quarter, and total investment in the first quarter was 75% below the five-year average quarterly volumes. The first half of 2023 has reached the €1 billion mark, while the first half of 2022 was the strongest first half in history with a total of €4.6 billion. 

Residential is the largest sector, with (34%) of total YTD investment, followed by I&L (28%) and social infrastructure (17%). Office investment has been slow to pick up with only 14%, and the retail sector has seen the lowest volumes of 9% so far. The largest transaction in the first half of 2023 was KKR’s entry into the Finnish market, with the acquisition of over 1,200 apartments from Kruunuasunnot in May. This significant residential transaction was also KKR’s market entry into the Nordic real estate market. Other notable transactions in the first half have been the CBRE-advised logistics transactions - the ABRDN sale of the 31,200 sqm Postnord warehouse in Vantaa in April and NREP Logicenters’ purchase of Alfaroc's 38,000 sqm logistics warehouse development in Tuusula in March. These transactions have provided the broader market much needed evidence of investor appetite for logistics assets.


Norwegian CRE investment activity saw an exceptionally slow start to the year, with a total volume of NOK 12.9 billion in Q1, down 67% YoY. The highest activity was in the Residential (34%), Office (28%), and I&L (17%) sectors. 

Interest rates have continued to rise in the first half of the year, and the key policy rate (KPR) was lifted to 3.75% in June. The Norwegian Central Bank currently signals a high probability of a peak KRP of 4.25% in the coming Autumn, to battle the high inflation. The macroeconomic uncertainty has left investors cautious, and the price expectation variance between buyers and sellers remains high. Yield levels are still softening with prime office yield now at 4.20%. Financing costs are now reaching relative parity with Continental Europe and the steep depreciation of the NOK means that Norway is looking as an attractive buying option for International investors.

The Oslo office leasing market has maintained strong momentum from an exceptional 2022. Take-up in Q1 increased by 35% and average rent is up by more than 10% YoY. Office demand is expected to grow at a slower pace in the coming quarters as economic activity cools off, while the low development of new stock will retain vacancy at low levels.


Sweden has had a hesitant start in 2023, with the transaction market currently at a modest SEK 34 billion, down over 60% on the same period y-o-y investment volume. The number does not include structural deals such as SBB and Brookfield or between pension funds AMF and AP7. Macroeconomic uncertainties, increasing financing costs, and repricing challenges between buyer and seller expectations have limited activity. Cash flow has become a much higher priority, with the cost of capital increasing. Sectors with the highest investment activity are currently Residential (21%), Retail (19%) and I&L (18%). Listed real estate companies continue to divest parts of their portfolios to property funds open to acquisition. Cross-border deals have increased to 30% in the first half of 2023.

Office leasing volumes in Stockholm rolling 12 months have come down from a record 700,000 sqm to 500,000 sqm with 500-2,000 sqm spaces being the most popular in 2023. Active occupiers this year are mainly public & non-profit together with co-working operators. In many cases, office tenants are downsizing space, which in attractive locations continues to push rents upwards. The logistics vacancy rate has increased from 0.8% on a national level in 2022 to 2.25% this year due to speculative development - which is still too low. The retail leasing markets might see increasing headwinds as households consume less. However, discounts, luxury goods and groceries will likely continue to perform well and the vacancy in central Stockholm high street locations is currently down to 0%.  

Notable transactions

In 2023, there have been some notable transactions in the Region, such as NREP’s acquisition of Akersgata 51 and Tordenskioldsgate 6 in Oslo from Entra. The NOK 1.8 billion student housing portfolio, acquired by Heitman from DNB. In addition, CBRE advised Deka’s sale of the BREEAM-NOR Excellent certified ‘Clarkson’ office property to KLP for NOK 684 million. 

In Sweden, listed property company K2A divested a SEK 1.1  billion residential portfolio to Savills IM. Retail, where less repricing has been needed, has seen high activity, especially groceries and hard discounts. CBRE advised StenhusFastigheter in their SEK 725 million portfolio divestment to Nyfosa. In Denmark, PensionDenmark has acquired a mixed development portfolio consisting, among other things, 378 apartments from Coop for DKK 1 billion. 

In Finland, NREP Logicenters’ purchase of Alfaroc’s 38,000 sqm logistics warehouse development project in Tuusula and the ABRDN sale of the Postnord 31,200 sqm warehouse in Vantaa have provided the broader market much needed evidence of the continued investor appetite for logistics assets. 
Buyers and sellers have begun to edge closer to each other, and the active deal pipeline and some of the realized transactions indicate that the investment market could pick up a little more speed in the second half of 2023 and early 2024. There is still a high amount of equity on the sidelines needing to be deployed despite the current cyclical headwinds. We expect the Nordic real estate markets to see a recovery phase over the second half of 2023 as investors are under increasing pressure to commit. 

We wish you a great summer!

Now, I hope and wish that you all, our clients, employees, and partners, can enjoy a beautiful Nordic Summer filled with great weather and even better memories. Take the opportunity to meet your loved ones and recover. See you soon!

Colin Waddell
Mobile +47 404 49 088 / +358 50 464 0458

Colin Waddell

Colin Waddell

Colin Waddell är Managing Director, CBRE Nordics och Norge.
Kontaktuppgifter: +358 50 464 0458

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