Why foreign investors are interested in real estate in Scandinavia
Real estate in Scandinavia has become a tidbit for investors from many countries. The rush on the market has led to the fact that the number of objects for investment is rapidly decreasing. Demand is growing, and supply is not keeping up.
In 2021 the volume of transactions in the Scandinavian real estate market has grown by 10% compared to 2020. Their total amount was $60 billion, which was a record for the segment. These values are almost similar to the UK market, taking into account that the population in the kingdom is 2 times more.
The Nordic countries in Europe, despite their small size, have a stable economy, good capitalization and stable political processes. The population of Scandinavia has a high standard of living, a large percentage of citizens with higher education. All these factors attract investors, who are looking for options for investing funds with high income. Contribute to an increase in interest in the local market low interest rates, which make the purchase of real estate more accessible than ever.
Experts note a record demand for facilities in Scandinavian countries from foreign businessmen. For example, in Sweden, which is the largest economy in the region, in the first quarter of last year, deals were concluded totaling 5.3 billion dollars, which was a record value.
Against the backdrop of rising demand, the cost of real estate is also increasing. Last month, housing in Sweden showed a record price increase of 17% per year. At the same time, finding a suitable offer is becoming a challenge. A major setback for investors was the position of Entra ASA Corporation, which belongs to a fund in Norway. Despite the bidding for the construction of offices for it, the company said it would act independently. Therefore, large Swedish companies, including Castellum AB and Fastighets AB Balder, are forced to look for other options for investing capital.
Among American investment corporations, Blackstone Group is actively expanding its position in the Scandinavian market. It operates mainly in the segment of warehouse and logistics objects, which have become extremely popular over the past 2 years. However, even such a giant is difficult to find decent options for investment, the reason for which is a sharp decline in supply.
A number of state-owned companies working in the real estate market offer their portfolios with good discounts, and they are quickly sold out. The shortage of properties is also due to the fact that many local pension funds prefer to have a large number of properties in their portfolios. They have a number of buying priorities, leaving few options for other investors.