Swedish real estate opportunities attract international investors.

• Sweden hikes key rate to curb housing bubble

Stockholm’s real estate market has emerged as one of the most attractive in Europe, according to a new report from PwC and the Urban Land Institute.

The pan-European study titled 'Emerging Trends in Real Estate Europe', ranks European cities based on the opportunity to buy and develop properties.

As well as having the best market in the Nordic region, Stockholm was ranked the fourth best market in Europe for new acquisitions. In the overall rankings, the Swedish capital climbed to fifth place, up from twelfth last year.

Also a London-based real-estate security fund said that the outlook for properties in Stockholm as an investment asset is more optimistic now than in a long time and could provide one of the best opportunities going forward.

“Our judgement is that property, offering average yields of 6 percent to 6.5 percent across the UK and Europe with the likelihood of further income growth to come, remains attractively priced. We are particularly positive on prime property in Central London, Paris and Stockholm but are more negative on Benelux, Southern Europe and the UK regions", said James Wilkinson, manager of Thames River Real Estate Securities Fund.

The PwC report identified the best sectors for acquisitions in Stockholm as office buildings, followed by retail properties, residential apartments, hotels, and industrial/distribution estates.

Stockholm's relatively high sales volumes and large amount of transactions on the market make it easier to both buy and sell a property, the report concluded.

Still, investors should proceed with caution, especially in the retail sector. Stockholm may experience consolidation because there is “a lot of newly developed retail," the report said. "Time will tell who owns the right assets that will perform and who owns the bad retail assets. The sector will mature in the years to come.”

From a European perspective, many respondents had upbeat attitudes towards the Nordic countries, as the region is believed to have weathered the economic storm better than other parts of Europe.

“In terms of economies, we like the Nordic region the best,” one of the report’s interviewees said. “Those countries have less debt to begin with. Those countries are also managed better, they invest more in industries, they spend more on research and education, so we are very positive to the Nordic region overall.”

A running theme among Stockholmers, though, was that they believe that 2010 was a lot better that expected, but that 2011 will be worse. The report pointed out, however, that initial pessimism was followed by pleasant surprise among the Nordic interviewees last year, too.

Overall, tougher regulations, austerity, sovereign debt crisis and a still sluggish lending market will challenge Europe’s real estate industry in 2011, the report said. While the recovery from the financial crisis may be underway, it has just become significantly more complicated.

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Commissioned advertorial. This article was published in collaboration between Stockholm Business Region and The Swedish Wire.

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