A combination of stable political climates, strong economic conditions and good positions in the property cycle are currently making the Nordic countries (Sweden, Finland, Denmark and Norway) core targets for both domestic and foreign investors looking to invest in commercial property.
There are a number of opportunities available across different market sectors and geographies. Here are some of Savills top picks:
Offices in secondary locations
Gothenburg and Malmo in Sweden, Bergen and Trondheim in Norway, and the submarkets of Ruoholahti, Keilaniemi and Vallila around Helsinki can offer more attractive yields than office assets in core markets.
Prime shopping centres
Most notably in Stockholm, which is ranked first in Savills European shopping centre investment benchmark report. A note of caution, however: only big destination shopping centres are likely to perform well since the Nordics’ stock of shopping centres per inhabitant is already very high compared with other European countries, and, as elsewhere, the share of ecommerce sales is growing fast.
Public properties in Sweden
Driven by population growth many municipalities need to replace older stock with modern buildings. Schools in Stockholm are particularly in demand as there are currently too few schools to meet the needs of its growing population.
The Nordics are in the top 10 countries in terms of percentage of individuals who buy regularly online, with online sales continuing to grow. Logistics properties with good transport links are therefore desirable.
Care homes in Finland and Denmark
These countries have ageing populations but currently a limited number of long-term care beds in institutions, and are spending an increasingly high proportion of capital on long-term care.
The weather in the Nordics makes it a popular location for data centres as it can be harnessed for natural cooling efficiencies. Demand is increasing, driven by the growth in the use of cloud storage and its offset need for super-sized infrastructure support. Additionally, the four countries benefit from high connectivity, low power costs, abundant resources of green energy and taxation incentives. Facebook has already built centres in northern Sweden and Amazon Web Services have acquired three sites in Sweden.
Population growth, combined with a strong trend towards urbanisation, has resulted in 86 per cent of the Nordics’ population living in urban areas, compared with an average of 73.4 per cent across Europe. Good quality well-managed residential accommodation is therefore in demand.