Nordic property markets at all-time high

The Nordic property markets set a new groundbreaking transaction record of EUR 29 billion in the first half of 2021. The volume is 75 percent higher than the same period last year and the highest level ever recorded for the first six months of the year. In Sweden and Norway, the volumes have more than doubled from last year, according to new figures from property advisor Pangea Property Partners.

“The Nordic property markets are more active than ever before, and over the past decade the Nordic transaction volume has only been above EUR 45bn once in 2019. The first half of the year is also normally weaker than the second half, so we are heading towards an impressive volume well above EUR 50bn for 2021”, says Mikael Söderlundh, Head of Research and Partner at Pangea Property Partners.

Sweden and Norway doubles
Country-wise, the transaction volumes in Sweden and Norway increased by 101 percent and 171 percent respectively compared to the first half last year. The volume in Denmark increased by 45 percent, while the volume in Finland dropped 35 percent. However, the number of deals in the Finnish market increased by 31 percent. The total number of transactions in the Nordic property market was 37 percent higher in the first half of 2021, and the average deal size was EUR 46 million.

Based on property transactions above EUR 5m

Capital flows to the Nordics
The Nordic property markets continue to be attractive for international investors who net invested EUR 4.6 billion in the region in the first half of 2021. Foreign buyers accounted for 27 percent of the volume, while foreign sellers accounted for 12 percent.

“In line with our expectations, the international buyers have gradually returned to the Nordic markets, being one of the most robust in Europe. On top of that, we see a strong trend among Nordic property investors to invest in their neighboring countries”, says Bård Bjølgerud, CEO and Partner at Pangea Property Partners.

Office was the largest property segment in the first half of 2021 accounting for 26 percent of the volume, closely followed by residentials accounting for 24 percent. The share of logistics deals was 17 percent, a significant increase from 12 percent last year.

“Residentials and logistics are very popular low risk segments in the current market, both in the Nordics and the rest of Europe. In addition, we see a growing interest for other segments such as office, retail and light industrial”, says Mikael Söderlundh.

The largest property transactions in the Nordic region in the first half of 2021 were:

1. Corem’s acquisition of 89.1% of the shares in Klövern (SEK 58.3bn)¹
2. Balder’s acquisition of Asset Buyout Partners in Norway (NOK 9.0bn)²
3. SBB’s acquisition of Offentliga Hus (SEK 9.3bn)
4. Hemvist’s acquisition of a residential portfolio in Sweden (SEK 5.4bn)
5. Blackstone’s acquisition of a warehouse portfolio in Sweden (SEK 5.0bn)
6. Aurora Eiendom’s acquisition of five shopping centers in Norway (NOK 4.8bn)

¹Enterprise value for the entire company  ²Post deduction of deferred tax

+50 property transactions
During the first half of 2021, Pangea Property Partners has executed more than 50 transactions and advisory mandates across the Nordics with an underlying property value above EUR 4.0bn. For example, the company advised HitecVision on the sale of Asset Buyout Partners to Balder at NOK 9.0bn, post deduction of deferred tax, in the largest property transaction in Norway since 2015. In addition, Pangea acted as financial adviser, debt adviser and joint bookrunner in the creation of Aurora Eiendom, a new shopping centre company with an initial portfolio of NOK 4.8bn. Pangea was also active in the creation of Swedish listed property company Randviken.

“I am very pleased with the solid market conditions and the wide interest from investors, but also increasing investment opportunities across the Nordic region. We are both humble and proud of facilitating several milestone transactions in the first half of 2021. In parallel, our organization has expanded with 30 percent, organically. We have also established Pangea Project Finance who have gotten off to a promising start, and we are very much looking forward to our new initiative Pangea Debt Advisory getting started in August this year,” says Bjølgerud.