RCA Insights

Global Flows to Swedish Property Reach Record in ’19

By 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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Tom Leahy

Tom Leahy

Senior Director, EMEA Analytics
tleahy@rcanalytics.com

Tom joined RCA in 2014. In his role as Senior Director for the EMEA region, Tom is responsible for the development and expansion of the market analytics service for RCA’s European clients.

Prior to joining RCA, Tom was an Associate Director and then Head of Research at UK-based property consultancy, Lambert Smith Hampton. He started his career as an analyst at research consultancy Property Market Analysis (PMA).