Download Transaction volume remains at record levels, but fundamentals are

CATELLA MARKET SNAPSHOT FEBRUARY 2017
Transaction volume remains at record levels,
but fundamentals are changing in 2017
The monthly transaction volume
in January amounted to SEK 5.7
billion. This was just above the
SEK 4.0 billion recorded in
January 2016, but significantly
below the SEK 9.5 billion for the
same month in 2015.
The transaction volume of the Swedish
property market remains at record levels
in January, with a rolling 12-month
volume of SEK 182 billion. Institutions
and property companies are the biggest
investors, although institutions and listed
property companies are the only ones
that buy more than they sell over the
long term. There have been relatively few
transactions in January and the volume
is concentrated to Alecta’s acquisition of
a commercial portfolio in Nacka Strand
(Greater Stockholm) from Carlyle, and
M&G’s purchase of the office property
Blekholmen 1 in Stockholm from Niam.
There is, however, a good chance that the
rolling 12-month volumes will fall significantly during the spring, as the volume
from February to April 2016 was boosted
by a number of large deals, including
major investments by Castellum,
Willhem and Partners Group.
In 2017, the fundamental macroeconomic prerequisites of the property
market will be different compared to
past decades. There are many indications
that the market peaked during the last
quarter of 2016. At that point, it became
clear that inflation and long-term interest
rates were no longer decreasing, and that
we will see higher levels of inflation and
interest rates in the coming years. In
addition, the Swedish economy reached
its full capacity utilization in 2016. This
means that GDP growth is moving
towards its highest potential rate, which
is around 1.5–2.0 per cent annually.
TRANSACTION VOLUME PER MONTH, MSEK
Furthermore, we will see a number of
regulatory changes that can have a large
impact on the property market, such as
the use of shares in property-owning
companies in property transactions and
deductions for interest payments. In
addition, amendments to capital requirement regulations for the banks could also
affect the property market in the years to
come. Nevertheless, there are still good
prerequisites for property investments,
although it is unlikely that properties will
still be viewed as the only asset class that
produces stable and attractive returns.
Arvid Lindqvist, Head of Research
[email protected]
TOP 1O INVESTORS 2016 –2017 (YTD), MSEK
40,000
23,000
22,000
35,000
10,000
9,000
30,000
8,000
7,000
25,000
6,000
20,000
5,000
4,000
15,000
3,000
10,000
2,000
1,000
5,000
0
0
2015
2016
2017
TOTAL SWEDISH TRANSACTION VOLUME, MSEK
INVESTOR TYPE AND REGION
70%
200,000
180,000
60%
160,000
100%
90%
80%
50%
140,000
120,000
40%
100,000
70%
60%
50%
30%
80,000
60,000
20%
40,000
10%
20,000
0%
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Swedish investors
International investors
International share
40%
30%
20%
10%
0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Fund
Institution
Listed company
Private investor
Other
Greater Stockholm
Regional cities