Understanding the Nordics 2019 Q3
Macro backdrop One region – four stories Strong but tight labour market
5 Years Average
Past 5 yrs
Slowing growth due to external environment
Next 5 yrs
Past 5 yrs
Growth for both mainland and oil economy
Next 5 yrs
Past 5 yrs
Growth has peaked, but outlook remain positive Past 5 yrs
Next 5 yrs
2,5
2,5
2,5
2,5
2,0
2,0
2,0
2,0
1,5
1,5
1,5
1,5
1,0
1,0
1,0
1,0
0,5
0,5
0,5
0,5
0,0
CPI
GDP
Work' pop' Consump'
-0,5
0,0
CPI
GDP
Work' pop' Consump'
-0,5
0,0
CPI
GDP
Work' pop' Consump'
Strong labour market – expect to push up wages
Economy has grown quickly last 3 years, largely closing the output gap
Investment growth in petroleum sector
Low inflation will support spending
Strong employment growth
Monetary policy to support investments
Expectation for slowing export growth
Healthy consumer sentiment
Inflation estimate around target
Possible concerns over capacity constraints
High household debt
Labour market constraints
Cushman & Wakefield – Understanding the Nordics
Decline of key industries – paper & pulp and electronics A strong labour market will be key to ensure domestic demand Ongoing fiscal consolidation
CPI
GDP
Work' pop' Consump'
-0,5
-0,5
0,0
Next 5 yrs
Employment expected to continue to rise and in turn support consumer spending
Weak house price growth weighs on consumption via the wealth effect
Riksbank to keep monetary policy loose
OE’’s view is that house prices are close to equilibrium value Source: Oxford Economics
Macro backdrop Impact scenarios on GDP growth – average annual impact over next 3 years (% points) 0,0
-0,1
-0,2
-0,3
-0,4
No deal-Brexit Cushman & Wakefield – Understanding the Nordics
China slowdown
Trade war escalation
US recession Source: Oxford Economics
Office rental development in Nordic capital cities
Prime rent in â‚Ź/m2 (fixed FX at period end) 700
Copenhagen - City
Copenhagen - Harbour
Helsinki - City Centre
Oslo - CBD 1
Oslo - CBD 2
Stockholm - CBD
600
500
400
300
200
100
Cushman & Wakefield – Understanding the Nordics
Source: Cushman & Wakefield Research & Insight
Persistent strong investor demand NORDIC
9
Q3 2019
DENMARK
FINLAND
NORWAY
3
Q3 2019
SWEDEN
Majority are net buyers – lack of sellers
Cushman & Wakefield – Understanding the Nordics
Q1 2019
Q1 2019
Q3 2019 Q1 2019
Q3 2019 Q1 2019
Q3 2019 Q1 2019
Increase: more acquisition than disposal Stable: as much disposal as acquisition Decrease: more disposal than acquisition
Office occupiers demand flattening out in Sweden, Denmark, Finland and …
…and are retail bottoming out?
NORDIC
OFFICE
NORDIC
RETAIL
NORDIC
LOGISTIC / INDUSTRIAL
Q3 2019
Q3 2019
Q3 2019
Q1 2019
Q1 2019
Q1 2019
Q3 2018
Q3 2018
Q3 2018
Q1 2018
Q1 2018
Q1 2018
SWEDEN Q3 2019 NORWAY Q3 2019 FINLAND Q3 2019 DENMARK Q3 2019
Cushman & Wakefield – Understanding the Nordics
SWEDEN Q3 2019 NORWAY Q3 2019 FINLAND Q3 2019 DENMARK Q3 2019
SWEDEN Q3 2019 NORWAY Q3 2019 FINLAND Q3 2019 DENMARK Q3 2019
Renewed expectation for declining office yields…
… and are retail bottoming out?
NORDIC
OFFICE
NORDIC
Q3 2019
Q3 2019
Q1 2019
Q1 2019
Q3 2018
Q3 2018
Q1 2018
Q1 2018
SWEDEN Q3 2019 NORWAY Q3 2019 FINLAND Q3 2019 DENMARK Q3 2019
Cushman & Wakefield – Understanding the Nordics
SWEDEN Q3 2019 NORWAY Q3 2019 FINLAND Q3 2019 DENMARK Q3 2019
RETAIL
NORDIC
LOGISTIC / INDUSTRIAL
Q3 2019 SWEDEN Q3 2019 NORWAY Q3 2019 Q1 2019 Q3 2018 Q1 2018 FINLAND Q3 2019 Q1 2019 Q3 2018 Q1 2018 DENMARK Q3 2019 Q1 2019 Q3 2018 Q1 2018
Not available Not available
Renewed optimism around financing conditions…
… but not for Finland
FINLAND
DENMARK
Q1 2018
Q3 2018
Q1 2019
Q3 2019
Q1 2018
Q3 2018
Q1 2019
NORWAY
Q3 2019
Improved conditions Cushman & Wakefield – Understanding the Nordics
Q1 2018
Q3 2018
Q1 2019
NORDIC
SWEDEN
Q3 2019
Unchanged conditions
Q1 2018
Q3 2018
Q1 2019
Q3 2019
Worsened conditions
Q1 2018
Q3 2018
Q1 2019
Q3 2019
Optimistic view on own portfolio
Rent growth, vacancy development & yield development all expected to contribute
NORDIC
PORTFOLIO DEVELOPMNET
GROWTH DRIVERS
Q3 2019 Q1 2019 Q3 2018 Q1 2018 SWEDEN Q3 2019 NORWAY Q3 2019 FINLAND Q3 2019 DENMARK Q3 2019
Improving Cushman & Wakefield – Understanding the Nordics
Unchanged
Worsening
Rental growth Vacancy development Yield movement Financing conditions Development of operating and maintenance cost