New market report: Nordic Real Estate Review, September 2011 has just been published
Denmark, 04 October 2011. Denmark, Finland, Norway and Sweden have, of course, been widely affected by the economic downturn, but the economies are fundamentally quite healthy with a sound financial situation. In 2009 all four countries experienced negative growth, most significantly in Finland. In 2010 the growth had returned to a positive level although for Norway it was only 0.4 percent. Finland and Sweden have both experienced a significant turn-around from 2009 to 2010, while the growth in Denmark in 2010 was more moderate.
Denmark, Finland and Sweden are among the EU countries with the smallest budget deficit. The deficit number for Denmark in 2010 was 2.7 percent and for Finland 2.5 percent while Sweden was in balance. To compare, the EU average was 6.4 percent.
“We see that the number of property transactions has gone down in all markets during the crisis. Now the number of transactions is increasing again, but still the markets are influenced by the funding difficulties” says Torben Nielsen, Sales Director for the Nordics from Colliers International.
Torben Nielsen elaborates, “The stressed bank sector implies that it is very difficult to obtain funding for property investments, unless the properties have very low risks. The bank sector in Norway is less affected than in the other countries, even though LTV is less than it used to be in 2005–2008.”
Traditionally, the foreign investors are most interested in Sweden, which have the largest and most professional property market among the four countries. The Swedish property market is dominated by a number of strong property companies with a high level of funding, meaning that it is also the most liquid market.
The Norwegian property market is more on its own – the surplus of domestic money stemming from the oil wells has entailed that Norway and the Norwegian property market have not been severely affected during the crisis. The property market in Finland is dominated by local investors and has been hit quite a lot – also because the dominant firm Nokia has had a turbulent period, giving challenges to the Finnish economy.
The Danish property market has been hit hard during the crisis. The Danish bank sector has almost stopped giving funding to property investments or projects unless the property has a very low risk.