Lower financing costs improve investment calculations and increase market activity

-       “I expect transaction volumes to increase by at least 30 per cent and we may well see lower yields in, for example, good quality logistics in prime locations during the year,” says Thomas Persson, Head of Capital Markets Nordics.

The stock market’s property index has recovered more than 30 per cent since it bottomed out on 25 October. Since February 2022, listed companies have completed new share issues totalling SEK 35 billion, above all in 2023 and primarily through rights issues. We can also see improved conditions for financing in the bond market, which stabilises the property sector by reducing the need for bank financing. Companies are expected to prioritise stability and to manage key metrics, which means we see a continuing need for new share issues, further sales and the conditions for structural transactions.

Interest rate developments will be crucial for the recovery of the sector. Conditions are positive, given the expected soft economic landing by the market and the interest rate cuts of more than 1 per cent by the Riksbank and ECB and more than 0.5 per cent by Norges Bank. Even if growth conditions are weak for 2024, economies will return to growth of about 2 per cent from 2025 for Sweden, Norway and Finland while Denmark is expected to achieve growth of 3 to 4 per cent.

One hot topic in the Nordic region is the reindustrialisation of the business community and major electrification initiatives, where significant investments increase the need for modern industrial properties and residential units. 

“The good growth outlook for industry and the green transition is fuelling demand for industrial properties and is creating the conditions for development projects, and we see a value potential in developing both new and existing properties and opportunities for investors to conduct attractive property transactions in these industries of the future,” says Daniel Anderbring, Head of Capital Markets Sweden.

In the most recent edition of the JLL Nordic Outlook you can read about:

·       Increased polarisation in demand for offices with high demand for modern premises in CBD that meet ESG requirements

·       Expectations for office rentals in major European cities until 2027 and what we can expect in the Nordic market

·       How to use the key value-drivers in ESG – CRREM, EPC and certification

·       Increased polarisation in the financial market with rising activity levels in the bond market but where banks remain selective and prioritise existing customers ahead of new

·       Investments in reindustrialisation – driven by the green transition, automation and near/reshoring – fuel demand for industrial properties. We take a closer look at Västerås

To download the report free of charge, click on the link below

https://www.jllsweden.se/en/trends-and-insights/research/jll-nordic-outlook-spring-2024

About JLL Nordic Outlook

JLL Nordic Outlook, which is published twice per year, analyses the Nordic property market from various perspectives. The analysis includes the office markets in Stockholm, Gothenburg and Malmö, and the other Nordic capitals, as well as retail, logistics and residential property markets in the Nordic region. An analysis is also conducted in a special article of the effects of electrification and reindustrialisation.