By Tom Leahy on December 10th, 2019
International investors have ramped up their spending in Sweden, already making 2019 a record year for investment flows from non-European sources, Real Capital Analytics data shows. Some SEK 17.9 billion ($1.9 billion) has been spent so far this year, more than double the 10-year average.
While at an absolute level Sweden ranks only eighth in Europe as a destination for non-European capital in 2019, it does mark a substantial shift in comparison with recent patterns.
Sweden has always stood out as the most domestically-oriented of the large markets in Europe and only 6% of all investment since 2007 has involved a non-European buyer. That share has more than doubled to 13% in 2019.
The main driver of the increase has been the flow of capital into Sweden’s industrial sector from U.S.-headquartered investors. Blackstone was the largest buyer, spending SEK 4.5 billion in two separate portfolio transactions. CBRE Global Investors also partnered with Germany’s Allianz on a portfolio deal, the debut in the Swedish industrial market for both parties.
These deals reflect the enduring demand for industrial property throughout Europe. The U.S. dollar is also close to a 10-year high versus the Swedish krona and there does appear to be a link between currency movements and U.S. flows into the Nordic markets. RCA recorded a big increase in U.S. capital flows into Norway in 2015, a period when the dollar appreciated substantially against the Norwegian krone.
The flow of overseas capital into Sweden’s industrial sector is mirrored by the spending of domestic players: total acquisition volume in 2019 is already at a record amount for a calendar year. Portfolio transactions represented 70% of the volume.
The demand has driven up pricing for industrial assets to record levels. The RCA Hedonic Series shows double-digit price growth for the last 11 quarters and the average price per square meter is above SEK 13,000 for the first time.
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