● THE NORWEGIAN PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • SPRING 2020
THE NORWEGIAN PROPERTY MARKET
Photo: Shutterstock
ANOTHER STRONG TRANSACTION YEAR IN NORWAY
The Norwegian economy continues to grow at a steady pace, with a GDP growth rate of around 2 per cent in 2019. Unemployment and employment figures are strong, core inflation is keeping pace, and following interest rate hikes in March, June and September 2019, the prospect of further interest rate increases is limited. Though signs of volatility on the oil market could impact Norwegian growth, all in all, the Norwegian economy is expected to grow at a stronger rate than the other Nordic countries in the coming years. Newsec also believes that the turmoil that has characterized the stock market in recent times will persist and the long stable cash flows offered by the real estate market will tempt more investors. There is a lot of capital, there is a lot of equity, and the banks are willing to lend, which bodes well for the real estate market.
20
2019 was yet another good year for Norwegian commercial property. In total, commercial real estate was sold for NOK 100 billion, spread across 286 transactions. The rental market has and will continue to benefit from a strong economy in 2020. Newsec believes that office vacancies will continue to fall in Oslo and remain stable in the other major cities. Rental levels will continue to rise, especially in Oslo and centrally in Trondheim. However, recently, rental growth projections have fallen somewhat, and Newsec expects a lower growth rate over time, in line with the weaker economic outlook for 2021 and 2022. Nevertheless, strong fundamentals and a strong demand for real estate lead Newsec to believe that the transaction volume will be in line with 2019, with an expected volume of NOK 100 billion in 2020.
In addition to developments in terms of yields and rents, Newsec is seeing a substantial trend shift across all segments. History can no longer be used to predict the future. One must think both innovatively and differently, because user needs are changing across the office, retail, logistics and hotel markets. The changes that occur over the next 10 years will probably be greater than those seen over the past 100 years.
Contact:
Øyvind Johan Dahl, ojd@newsec.no
