Low new supply short-term indicates that the rental growth in office rents will continue, but the growth pace is slowing down from high levels. Low vacancy rates will be a challenge for the leasing market. Office based employment growth is expected to be slower in the coming years, between 1.5-2% instead of the previous 2-3%. Stockholm will still have one of the highest growth paces in Europe. During 2018, tech-related companies such as IT-, system development and gaming stood for approx. 30% of take up in Stockholm.
Household confidence indicator has weighed on the sector for the past year, likely an effect of the price decline and general turmoil in the residential market. We expect this to improve in 2019-2020 thanks to higher wages, expansionary fiscal policy and stabilized housing prices. The investment market is still marked by an uncertain sentiment, but we have seen interest return in certain types of big box retail.
Industrial & Logistics
The sector has seen a substantial interest in the investment market, and we believe this will continue. The stage is set for 2019 to become a record year in investment volumes for this segment.
For the residential market, we see an increased interest from international investors. The residential construction will likely decrease this year, and housing prices will likely see a stabilization.
Public service properties
We see a large structural growth going forward, that however needs to be financed. In the investment market, schools are the largest segment, followed by elder care. We see a continued interest from institutional investors.
We see excellent expansion opportunities, stable and renewable energy sources and access to a well-educated workforce driving the interest for Sweden and the Nordics. Infrastructure for which the latency is not critical, the Nordics is a cost efficient alternative.