Sweden : Stockholm office market2015 Overview
- There is high investor interest in properties in Sweden’s smaller regional towns and cities
Strong investment activity stimulated by attractive financial conditions
In 2015, the Swedish investment market continued to show strong performance, boosted by the residential sector. The total volume at year-end amounted to over SEK 134 billion, with 298 transactions of SEK 100 million or more carried out. This figure was slightly below the record year of 2014 when 297 deals were achieved and more than SEK 149 billion was invested in property all over Sweden.
One factor contributing to the continuing high interest in property is the low interest rate of the central bank (-0.35 %), which is expected to stay negative throughout 2016. Good access to financing and lack of high-yielding alternatives are other factors contributing to a strong interest in proper- ty. These factors are likely to lead to another high transaction volume throughout 2016.
During 2015, regional cities accounted for 45% of the total investment. Stockholm dominated geographically with 44% of the total investment volume, although only four of the ten largest transactions actually took place within the Stockholm area.
The largest deal in 2015, worth SEK 9.5 billion, was Blackstone’s purchase of Swedish properties in various segments and locations. In 2015, office properties were the dominant investment asset class, taking a 32% share.
Limited availability in Stockholm CBD
The average rent level for office premises in Stockholm CBD stood at SEK 5,000/m²/ year. The market rent is expected to rise to SEK 5,300/m²/year by the end of 2016, resulting from the short supply of modern office space in the CBD combined with high demand, and this rise is expected to continue in 2017-2018.
The expected vacancy rate for office space in Stockholm CBD by the end of 2016 should remain low at about 3.5%.