Norway : Oslo office market2015 Overview
- The investor search for risk-adjusted returns contributed to a rise in investment activity
An all-time high in the investment market
2015 was an extremely good year for the Norwegian investment market, breaking the previous all-time high by a significant mar- gin. Domestic and global investor search for products and yields at perceived risk-adjusted returns resulted in a wave of capital flowing into the Norwegian real estate market. This contributed to an in- crease in investment activity and a pro- longed prime yield compression.
During 2015 the prime yield fell from 4.75% to 4.25% at the end of the year. The office segment represented some 52% of the total transaction volume while retail ac- counted for 33%.
Nearly half of all transactions in Norway occurred in and around the Oslo metropolitan area and foreign investors accounted for approximately 43% of total investment nationwide during 2015.
It is anticipated that the market will see a moderate slowdown in 2016, but it is still expected to be a very good year on an historical basis.
However, some sub markets like Stavanger will probably go in the opposite direction, undermined by higher unemployment and falling property values.
Slow office market activity pushed rents down
Slow processes and a low number of signed contracts summarize the Norwegian office letting market in 2015.
Over the course of several years, only a few large companies have been looking to move, which seems to be the main reason why larger buildings have had the greatest difficulties. Rental values throughout Oslo have gone down by an average of 2.0% compared with the same period last year.