The Nordic property markets are continuing to recover with rental levels increasing in most markets and vacancies generally moving lower across most cities and sectors. The recovery is underpinned by strong fundamentals.
The Nordic region is expected to continue outperforming Core Europe in terms of economic growth. Real GDP is predicted to reach 3.4% in 2006, significantly higher than the 2.3% forecast for the Euro Zone as a whole.
Aberdeen estimates that total unleveraged property returns in 2006 will amount to 13.2% in the Nordic region, which would represent a slight increase compared to 2005. For 2006, Aberdeen is predicting that Norway will record the highest total return at 20% followed by Denmark at 14.2%. Sweden and Finland are expected to achieve returns of 11.8% and 9.9%, respectively. Aberdeen’s 2006 forecast for total Nordic property returns of 13.2% compares favourably to the 11.0% predicted for Europe as a whole.
Aberdeen is forecasting that office returns in 2006 will be stronger in all four countries compared to 2005 with the best performance predicted for Norway, at 19.9%. The office sector is expected to do well due to a continued improvement in market fundamentals and somewhat stronger growth in employment in the service industry.
Nevertheless, with the exception of Denmark, Aberdeen expects the retail sector to continue to outperform offices in the region and to generate an overall return of 14.7%, 110 basis points higher than the return from offices.
Aberdeen’s predictions indicate that investment volumes in commercial real estate in the Nordic region are likely to increase by around 25% in 2006 compared to last year to reach a record total volume of approximately €23 billion.
Jon Lekander, Head of Investment Strategy at Aberdeen Property Investors commented;
“From an international perspective, all of the Nordic markets are interesting. From a strategic perspective, however, they have slightly different profiles: Denmark provides stability, Finland higher yields, Norway higher returns and Sweden greater liquidity.”
Alessandro Bronda, Head of Research at Aberdeen Property Investors commented;
“Nordic office and retail yields are higher compared to other European markets and as a consequence we view the region as being undervalued.”
For more information, please contact:
Jon Lekander Head of Investment Strategy, Aberdeen Property Investors Tel: +46 8 412 80 77, +46 70 211 80 77
Jon.Lekander@aberdeenpropertyinvestors.com
Alessandro Bronda, Head of Research, Aberdeen Property Investors Tel: +32 476 349 279
Alessandro.Bronda@aberdeenpropertyinvestors.com
Charlotte Barker / Tom Siveyer, Maitland Tel: +44 207 379 5151
About Aberdeen Property Investors
Aberdeen Property Investors is the specialist division of Aberdeen Asset Management plc, a global investment management group listed on the London Stock Exchange and managing over €100 billion of assets.
Aberdeen Property Investors manages over €9 billion in property investments through property funds and management mandates. The division has some 500 employees at offices in ten European countries. Clients are primarily institutional investors such as life and pension funds.
Aberdeen was named the leading property Investment Manager Globally, in Western Europe and in the Nordic & Baltic regions in the Euromoney Awards 2006 for Excellence in Real Estate.
Issued and approved by Aberdeen Asset Managers Limited, on behalf of Aberdeen Property Investors, authorised and regulated by the Financial Services Authority.