The uncertainty that has impacted the market in recent quarters remains, and although transactions are still taking place, liquidity is now considerably lower. Investors are looking to buy and wish to complete transactions, but many remain hesitant as there is still a great deal of uncertainty in the interest rate market.
Transaction
At the start of the year there were signs of a drop in inflation, and the central banks indicated that interest rates were nearing their peak. However, during February interest rate expectations were rising, and the market saw renewed uncertainty. As of mid-April, we have recorded a transaction volume of NOK 11.6 billion, 54 per cent lower than at the same time last year. The largest transaction recorded this year has been Heitman’s 1.75 billion acquisition of a majority stake in the student housing company Bo Coliving. The company has more than 1,400 rooms split across 52 properties in Norway’s largest cities.
Transaction volume, billion NOK
2 Transaction
0
11.
Transaction volume per segment
Transaksjonsvolum per segment
Transaksjonsvolum per segment
International investors
Bonds worth more than NOK 750 billion have been issued to Nordic property companies, the majority of them Swedish. Many of these bonds will be refinanced in the next few years, and we therefore expect to see less activity from Swedish investors in the Norwegian market this year.
We also expect increased activity amongst euro and dollar-based investors as a result of a more advantageous interest rate differential between Norway/Europe and Norway/USA. European interest rates have risen to XX percent, resulting in more comparable yield gaps. All else being equal, it has therefore become more attractive for international investors to invest in Norwegian property. So far this year, overseas investors have accounted for 20 per cent of the total transaction volume. This is somewhat higher than the average in previous years.
10-year govt. bond vs. Oslo Prime yield, percent
Prime yield
We recently increased our prime yield estimate again, this time from 3.75 per cent to 4.0 per cent, with further upward pressure. Further changes to interest rates will determine future prime yield.
Prime yield
0
%
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Den høye aktivitetsveksten vi har hatt i norsk økonomi inntil nylig har bidratt til et brennhett kontormarked med svært lav arealledighet og uvanlig høy leieprisvekst. Selv om etterspørselen etter kontorareal skulle kjøle seg ned framover, antar vi at arealledigheten vil bli holdt nede av historisk lav tilførsel av nytt areal. Sammen med høy vekst i KPI, venter vi at lav arealledighet vil bidra til å støtte oppunder veksten i kontorleie til neste år.