The Norwegian transaction market remains very strong. Keen buyers combined with good funding availability and falling margins, results in record high volumes. At the end of June 2015, reports indicate a total investment volume of close to NOK50bn (€5.8bn) including the recent sale of Sector Eiendom to Citycon for NOK 12.3bn (€1.4bn). International buyers represents almost 50% of the record high volumes and we believe this trend will continue for the remainder of this year.

International investors have shown interest in the Norwegian market for past year due to a stable economy, falling exchange rates of the Norwegian krone and low funding costs. Prime yields for office CBD Oslo are at historic low levels of 4.5%, and although property yields have declined, funding costs have declined even further resulting in high yield gaps.

Compared to other Nordic countries, the yield cap is decreasing. In Stockholm prime yield is 25bps lower than in Oslo, in spite of Swedish five year swap being 1% lower. Prices in Oslo are high and in the wake of increased economic uncertainty, investors might be unwilling to pay more for Norwegian property. Average yields have also declined and are at levels of 6.25% – 6.5%. Office is, as always, an attractive property segment accounting for one third of the total investments so far.

^{Source: RCA, Heilo}

Retail is also an attractive segment with an increasing market share and accounting for 30% of total transactions. The latter often involves large portfolio sales such as Sector Eiendom (38 shopping centres). The sale of Sector Eiendom to Citycon (NOK 12.3bn) is the largest transaction so far this year; other large transactions are the sale of 30 properties from Storebrand Eiendomsfond (NOK 3.7bn) to the Swiss company Partner Group. The largest single property transaction so far this year (NOK 2.5bn) was the sale of Statoils head office in Stavanger to the US fund Colony Capital.

^{Source: RCA}

We expect the market to remain strong for the remainder of this year with yield levels as present. Latest predictions indicate at transaction volume at NOK 75bn at year end.