US Funds Most Active International Investors in Sweden in 2014

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US investors were the most active international investors in Sweden in 2014, accounting for 29% or $995 million of non-domestic investment, according to international real estate adviser Savills.

In 2014 we saw more portfolios come to the market as well as wider marketing of assets allowing US investors opportunities to invest in far greater volumes than seen previously.

According to international real estate adviser Savills, US investors were the most active international investors in Sweden in 2014, accounting for 29% or $995 million of non-domestic investment and the firm predicts this will continue into 2015.

Peter Wiman, director of research at Savills Sweden, comments: “US investment in Sweden is notable given the domestic nature of the Swedish investment market historically. The off-market selling of assets which characterize the Swedish commercial property market historically, made it very difficult for international parties to compete. However, in 2014 we saw more portfolios come to the market as well as wider marketing of assets allowing US investors opportunities to invest in far greater volumes than seen previously.”

Savills finds that in total, international investment in Sweden reached $3.4 billion, which was more than double the $1.6 billion in 2013. US investors were followed by British investors at 22% or $746 million respectively. Key deals of note include Starwood Capitals acquisition of Sveareal and Grosvenor’s acquisition of Skarholmen C.

The firm reports that there has been solid demand for all types of assets, with offices being the most favored asset class followed by residential property where the turnover amounted to $4.3 billion homes sold in 2014. There has also been an increased investor interest in hotels, with transaction volumes hitting a 10-year high at $1 billion.

Peter continues: “Transaction volumes have been very strong and the competition for assets has led to aggressive pricing, with yields dropping to historic lows in some sub-sectors. For example, prime yields for central Stockholm offices are currently at 4.25% which was last recorded in the 1980s and in the years leading up to the 2008 downturn.”

Fredrik Östberg, head of investment at Savills Sweden, comments: “Despite the strong fourth quarter, there is a noticeable lack of assets advertised openly, with demand far exceeding supply. A significant proportion of last year’s transactions took place off-market. We predict that 2015 should be another good year as the market adapts. Low interest rates, access to equity and borrowed capital are a good foundation for attractive returns.”

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Erin Holin
Savills Studley
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