The Nordic research team recently held a well-attended and popular client call. Here’s a brief summary of the most important points regarding Sweden.
You can find the article covering all Nordic countries at the end of this article.
Vacancy rates have moved up in all 3 major cities. In Stockholm the overall vacancy rate moved up from 4.1% to 5.1%, in line with the forecast for Europe. The CBD rents were initially moved down with -5%, forecast is that rents will bottom out at -10% by year end and remain at that level throughout 2021. Transactions in the leasing market are gravitating towards tax financed public tenants.
The structural effects of the e-commerce transition have only accelerated through the pandemic. Notably many mid-segment clothing brands without omnichannel strategies have been bankrupted, and the vacancies they leave will weigh on the rent development. Discount stores and big box areas have reversely expanded store networks. Big box areas have been favored during the pandemic as shoppers can travel by car and avoid public transport. Luxury chains are affected by the decrease in tourism, but as the high street area is relatively small in Stockholm, we do not expect an uptick in vacancy levels here. The high street rent is forecasted to be flat.
The big news is that Amazon and Kuehne+Nagel is coming to the market. As Kuehne+Nagel has chosen to establish in Eskilstuna, this might increase the hub’s popularity going forward. Pre-let is by far is the most common in the market, with only 17% being finished on speculation in 2020 and 21% in 2021.
Multifamily is another sector with very strong momentum. In Sweden we see high demand for rental dwellings and both domestic and foreign investors viewing this sector as recession-proof. Multifamily continues to be on the top of many investor wish-lists and the stable demand and attractive risk-adjusted returns support the sector.
The Coronavirus has had an adverse effect on the economies, and for the real estate market the effects are especially felt in retail and hospitality. Office is more mixed but is picking up as uncertainty lifts. We continue to see a strong interest for logistics, multifamily and alternatives.
For more information please contact Amanda Welander, Head of Research, Nordics & Sweden.
Would you like to read the summary covering all the other Nordic countries? You find it here.