Revaluation of Nordic real estate equities – from premium to discount

Nordic Nordic property shares have trended downwards since all-time high in September last year. Former valuation premiums have disappeared and many companies are now trading at a discount. In particular, smaller property shares outside the main list have taken a large hit, according to the new report Pangea Nordic Listed Overview from Pangea Property Partners.

2017-05-23

Share via e-mail

Mikael Söderlundh. Image: Pangea Property Partners
Mikael Söderlundh.

“After a strong run lasting for many years, we have now seen a price correction in the Nordic listed property sector,” says Mikael Söderlundh, Partner and Head of Research at Pangea Property Partners.

Since the peak in September last year, property shares have dropped 5 percent in the Nordics, while the overall equity market has increased by 12 percent during the same period. In Sweden, the largest market in the Nordics, property shares have decreased by 6 percent.

“It’s surprising since the underlying property portfolios have continued to increase in value, but the weak stock market performance is probably driven by fear of higher financing costs and new tax regulations,” adds Söderlundh.

The combination of decreasing share prices and increasing net asset values has made the Nordic property shares trade close to par, according to the report. The former large valuation premiums are gone and many property shares, particularly in Norway and Finland, are traded at a significant discount.

“The discount in these markets is partly motivated by lower liquidity, and a smaller listed sector,” says André Lundberg, Director and Partner at Pangea Property Partners.

Looking at different segments, the smaller property shares on the secondary market have underperformed compared to the larger property shares on the main list. Since the beginning of September last year, the small growth companies have decreased by almost 14 percent.

“Many of these property shares are more volatile, and it is quite natural to see a reaction to the in some cases quite extreme price increases in recent years,” adds Lundberg.

Overall, the Nordic property market is still performing well, with solid transaction volumes, strong rental growth in many cities and increasing interest from international core investors.

“We don’t foresee any dramatic changes in the nearby future. The defensive characteristics of Nordic real estate are appreciated by investors in the current market,” says Bård Bjølgerud, CEO and Partner at Pangea Property Partners.

So far in 2017, the transaction volume in the Nordic property market is EUR 12.2bn, down from EUR 15.6bn same period last year. In Norway, the volume is EUR 3.1bn, which is more than 60 percent higher than last year.




Maria Olsson Äärlaht
maria@lokalnytt.se
fastighetssverige.se




Scandinavians in Focus in New Sustainable Marbella-project

Nordic Marbella is back on the international market with Real de La Quinta, a model for new, sustainable luxury homes. And Scandinavians are targeted as buyers.


Nordea Moves HQ from Stockholm to Helsinki

Nordic The Nordea Board of Directors initiates a re-domiciliation of the parent company to Finland – operations in all Nordic home markets remain unchanged.

NREP Sells for EUR 168M

Nordic NREP secures the largest portfolio exit of necessity driven retail assets in Sweden in 2017 by selling a portfolio consisting of 11 assets and a total area of 63,500 square meters to Storebrand/SPP.

East Capital Sells Shopping Center in Vilnius

Nordic East Capital Baltic Property Fund II announces today the signing of an agreement to sell the GO9 shopping centre in Vilnius. The fund acquired the property in 2012 and has since re-developed it. The buyer is Lords LB Baltic Fund IV, managed by Lithuanian real estate and private equity investment management company, Lords LB Asset Management. 

Cross-Boarder Investment in Nordics Surges 23 percent

Nordic Cross-border investment into Europe's Nordic countries rose to EUR 5.5 billion in the first half of 2017, 23 percent up on the same period in H1 2016. This represents a 29 percent share of the total volume invested in the Nordics in the year to date, according to research by international real estate advisor Savills.


Skanska Divests for EUR 225M

Nordic Skanska divests two properties in Stockholm and one in Oslo to Vasakronan, Aberdeen and Entra for a total of EUR 225M.

Nordic Property Transactions Set New Record in First Half of 2017

Nordic Driven by a very strong Norwegian and Finnish market, volumes in the Nordic property markets reached a new record in the first half of 2017. Private investors and property funds were particularly active on the buy side and the share of foreign buyers increased significantly, according to Pangea Property Partners report.

Balder New Majority Owner of Serena Properties

Nordic Balder has agreed to acquire 56 percent of Serena Properties, a company currently owned by Ratos, Varma Mutual Pension Insurance Company och Redito.

EQT Closes Its First Real Estate Fund

Nordic EQT closes the EQT Real Estate I fund with commitments totaling EUR 420 million. Around 35 percent of the total commitments have already been invested in four assets.

Fredrik Jonsson New CEO of Niam

Nordic Johan Bergman has decided to take on the role of Chairman of Niam AB and Chairman in all of Niam’s funds. Fredrik Jonsson, the current CIO of Niam, will assume the role of CEO and take over responsibility for the company’s operations effective July 1, 2017.