Alternative assets are the big real estate winner across the Nordics with €6.6bn invested during the first three quarters of the year, which is an increase of 69% compared to last year and represents the same amount invested into multifamily and logistics, respectively, according to Savills.
The international real estate advisor notes that among these alternative assets, care home investment increased by 24% compared to Q1-Q3 last year. In Finland, other public use properties such as educational properties, health care buildings and police stations are also sought after investment targets.
Savills latest research shows that the average prime CBD-office yield in the Nordics moved in by 21bps annually in Q3 and currently stands at 3.36%, compared to 3.30% on average in core countries such as Germany and France and 3.6% across Europe. Industrial prime yields hardened by an average of 24bps over the past year to 4.74%. This compares to 4.66% for the average prime core industrial yields. Care home yields continue to harden and now stand at 3.85% in Sweden (-30bps yoy) and 4.70% in Finland (-10bps yoy).
According to Savills, the average prime Nordic residential yield remained stable over the past year, now ranging between 3.3% and 3.75% across the region. In Q3 2020 the average prime shopping centre yield moved out by 49bps yoy to 4.74%.
Lydia Brissy, Savills European research director, says: “While alternative assets in the Nordics have done well, the region as a whole has proved popular. In the current low interest rate environment investors’ appetite remains strong but the investment activity in 2021 will heavily depend on the availability of product, notably large portfolios. All in all, we anticipate the 2021 Nordic investment volume to range between €36bn and €42bn, compared to this year’s expected total of approximately €35.5bn.”
Oli Fraser Looen, Joint Head of Savills Regional Investment Advisory EMEA, says: “If anything, the Covid-19 pandemic has made the Nordics a greater focus with some investors shifting their attention from ‘riskier markets’ such as southern Europe to a more stable and secure economy. Key drivers include a low interest rate environment, the growing amount of capital available worldwide and the hunt for stable long term returns.
“Excluding cross border investors from the Nordic region itself, interest is increasingly coming from Germany and the UK, while activity from US investors has been slowing down over the past two years.”