Transaction volumes in the Nordic property market will exceed EUR 43 billion in 2016, according to new figures from Pangea Property Partners. This is an increase of eight percent from 2015 and the highest level ever recorded for the Nordic market.

“The Nordic property market is now growing towards 20 percent of the total European market. With more than 6 percent of the entire stock turned over, it is probably the most liquid region in Europe,” said Bård Bjølgerud, CEO and Partner at Pangea Property Partners.

Growth is mainly driven by the Swedish market, which is expected to reach a transaction volume of EUR 22.2 billion in 2016. This is an increase of 42 percent from last year and the first time the Swedish market surpasses the previous record volume from 2007. The Finnish and Danish markets also record solid growth, with Finland setting a new record. Norwegian volumes are markedly down from a very strong 2015, but it is still the second largest market in the Nordics. 

The largest sector in 2016 is residential, accounting for 29 percent of the Nordic transaction volume, followed by office, accounting for 27 percent, and retail, accounting for 18 percent. The average deal size increased from around EUR 43 million to around EUR 46 million.

“The hot sector this year is definitely residential, and this reflects the situation in the underlying market, characterized by housing shortage and increasing prices. The segment has broadened, with buyers also for secondary assets, development projects and conversions,” said Mikael Söderlundh, Head of Research and Partner at Pangea Property Partners.

In terms of investor categories, listed property companies and institutions are the main net buyers, continuing a trend seen in previous years, while property funds are substantial net sellers. Private companies and the public sector, including municipalities, are also net sellers in 2016. The share of foreign buyers has decreased to 23 percent, from 36 percent in 2015.

“We still see strong interest from offshore investors, but competition is hard, with decreasing property yields across all sectors and many active Nordic investors,” added Mr. Söderlundh.

The largest capital inflows to the Nordic property market in 2016 comes from the US, Germany, Switzerland and the UK. Among the Nordic countries, Finland is the most popular destination with more than 50 percent foreign buyers in 2016.