JLL Nordic Outlook Autumn 2023

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Nordic Outlook Focus: Improving liquidity is around the corner September 2023
JLL Nordic Outlook Autumn 2023 Contents Introduction 4 Macroeconomic conditions and the listed property market 6 Interest and Credit markets 8 Investment market Investment market Sweden 10 Investment market Finland 12 Focus: Improving liquidity is around the corner 14 Offices Office rents in Europe 2023–2027 18 Office Nordic 20 Stockholm 22 Gothenburg 23 Malmö/Lund 24 Helsinki 25 Oslo 26 Copenhagen 27 Retail ...................................................................................................................................... 28 Sweden 30 Finland 30 Norway 31 Denmark ....................................................................................................................... 31 Logistics 32 Sweden 34 Finland .......................................................................................................................... 34 Norway 35 Denmark 35 Residential............................................................................................................................ 36 Sweden 38 Finland 38 Norway 39 Denmark ....................................................................................................................... 39 JLL services 40 Definitions 43


This year has continued on a cautious note, in line with the trends seen towards the end of last year, with continued upward revisions on short-term interest rates driven by the slow decline in inflation. Long-term interest rates have been volatile and are also trading on a higher level, in part due to resilient data linked to underlying economy and anticipation of soft landing in both the US and in Europe. Central banks are expected to further tighten their monetary policy during the second half of 2023, although expectations remain high that signals will include the likelihood of lower interest rates going into 2024. The Swedish Riksbank are however held back by weak SEK which boost headline CPI. Funding costs continue to rise more than the underlying swap rates, owing to the lack of liquidity in capital markets and limited appetite from the Nordic Banks. Nordic banks reported strong profitability in the first half of 2023, increasing their exposure to the corporate real estate (CRE) segment by SEK 125bn in Sweden over the last 18 months, up by 11 percent. Signals from the financing market so far in the third quarter of 2023 are; however, mixed and could imply less growth in the second half of 2023 from banks mitigated by short term improvement in the bond market. The higher funding costs, in combination with liquidity constraints, lead to further pressure on loan to value (LTV) ratios and a need for more equity in pending transactions and refinancing, which could delay the recovery somewhat.

The listed real estate sector has continued to be under pressure in the Nordics, and today trades at around 40 percent discount to Net Asset Value (NAV) for a median listed real estate company1—which has increased slightly, compared with 30 percent discount to NAV seen in our Spring 2023 report. This stands in contrast to the 15 percent premiums to NAV we recorded in the Spring 2022 edition of this report, a year and half ago.

Prolonged higher inflation will create further upside from rent index adjustment going into 2024, although it’s clear that the continued higher funding costs, seen in the market demand, will lead to further increases in yield requirement across all segments. The sharp decline in the transactions market clearly signals the combination of a tougher financing market (availability to capital) and continued price discovery, in part held back by a lack of evidence in the transactions market. Higher yielding asset classes, in combination with strong tenants, continue to be in favour among investors supporting ‘last mile’ logistics in particular. Core logistics transactions continue to be liquid, although capital values has been under pressure, owing to higher funding costs and a lack of core investors within the segment. Hotel properties show solid recovery in operating income, improving the interest among investors, although they still face limited access to funding. The retail sector remains out of favour, owing to economic concerns and a weak outlook on consumer spending, although the current earnings trend continues to improve.

In this edition of the JLL Nordic Outlook, we cover the Nordic office, logistics, retail and residential markets and review developments in

investment and capital markets. The theme for this report is devoted to assessing when the real estate cycle will bottom out and turn. We conclude that in previous cycles, the transactions market bottomed out four to five quarters into the ‘crisis’, from a transactions market standpoint. As of the third quarter of 2023, we are four quarters into this rebalancing cycle and, hence, we expect the market to stabilise during the second half of 2023 and gradually add liquidity in 2024.

Short term interest rates are expected to fall by 140 basis points in Europe and 100 basis points in the US, during 2024, while interest rates are expected to fall by 75 basis points in Sweden and only 40 basis points in the UK . Stabilisation of long-term rates, strong Nordic banks and a stabilisation of the bond market should create fundamentals for stabilisation in the second half of 2023 and gradually improve further in 2024. Real estate assets have historically stood firm in an inflation-induced market, as can be expected of real assets, and, assuming the economy recovers as expected and the current interest rate tightening cycle is close to peak, we see no reason why this should change.

The focus on cash-on-cash returns limits transactions today but, with the peak of the interest cycle around the corner, total returns should be boosted by rental growth for the long term investor.
Niclas Höglund Head of Research, JLL Sweden
1 As of September 4, 2023 2 Source: Oxford Economics, August 2023

Gothenburg, Barcelona

Stockholm, Malmö, Copenhagen, Madrid, Lyon, Budapest

Brussels, Milan, London City, London West End, Luxembourg, Bucharest, Prague, Rome

Helsinki, Oslo, Berlin, Frankfurt, Lisbon, Paris CBD, Zyrich

Amsterdam, Cologne, Geneva, Hamburg, Manchester, Stuttgart, Warsaw

Edinburgh, Munich


Dublin Rental

JLL Nordic Outlook Autumn 2023 5 Nordic Investment Volumes (€bn) 0 10 20 30 40 50 60 70 80 Denmark Norway Finland Sweden H1 2023 H1 2022 R12m 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Bottoming Out
Growth Accelerating
Source: Akershus Eiendom, EDC and JLL
Clock Q2 2023 Rents
Growth Slowing
Rents Falling Dusseldorf

Macroeconomic conditions and the listed property market

Sticky inflation creates volatility in interest rates on a higher level which continues to act negatively for market sentiment.

Macroeconomic conditions

The general economic environment has come under further pressure across the Nordics and Europe, owing to rising cost inflation and rising interest rates. The outlook for GDP growth in 2023 is expected to decline in Sweden, while all other regions should be back in positive territory in 2024 albeit on lower levels than were expected in our Spring 2023 report.

Inflation tendencies have fallen year-over-year, although on levels well above the 2 percent target by US Federal Reserve (FED), the European Central Bank (ECB) and the Swedish Riksbank. To contain the situation, central banks have started tightening their monetary policy more than previously guided and are determined to do what it takes to stop inflation getting out of hand. Inflation rose by 7.3 percent to 8.4 percent across the Nordics and the Eurozone in 2022, but it is expected to come down in 2023 to a forecasted 6.0 (4.3) percent in the Nordics and 5.3 (4.9) percent across the Eurozone. Foreign Exchange Market (FX) changes are balancing on the negative and the weak SEK and NOK is further elevating imported inflationary pressure, which risks elevating the central bank response in the short term.

The sharp increase in interest rates will partly be compensated by inflation, over time, through index-linked changes to rents. Growth in indexed rents balance on the positive for 2023. However, the combination of weak outlook for real GDP growth and high interest rates could prove negative, since they increase the risks for higher vacancies and might limit market rental growth across cyclical sectors in the second half of 2023 and in 2024.

total property value of €153 billion and a market capitalisation of €49 billion. The sector is currently valued at 40 (30) percent discount to NAV* (median) which implies an 18 (13) percent discount to total asset value. The sector performance is down 40 percent* since the end of 2021, despite higher asset values, and today’s valuations stand in sharp contrast to our Spring 2022 report which recorded a 15 percent premium to ‘net asset value’ (NAV) and an 8 percent premium to total asset value. When we compare companies with different types of property assets, industry/logistics-related companies are trading at premium to assets while all of the other segments are trading at historically high discount to assets and NAV. Performance so far in 2023 has been volatile and the sector is down by 8 percent*.

In the 2022 Spring edition of our JLL Nordic Outlook report, we argued that the lower multiples would imply less room for consolidation, held back by higher funding costs and a soft bond market. The trend in 2023 has continued on a more cautious note, due to the same factors. Currently the potential rebound in the sector has been postponed owing to higher interest rates with high volatility. However, if visibility for a stronger refinancing market and declining interest rates improve, preference for mergers and acquisitions should turn more favourable, although this is not likely until 2024. Preference in the listed market relates to industry/logistics, while all the other segments are being incentivised to reduce exposure, due to the discount levels. Short-term pressure to reduce exposure is limited by low liquidity in the transactions market, an awaited stabilisation in funding costs and owing to elevated bid ask spread in the market. We see potential for companies that raise equity to reduce debt and capture lower prices (higher yields) in the market, while reducing refinancing risks. This creates potential for further growth in 2024. Access to attractive growth plattforms, operational synergies and project revaluation potential (low implied value of building rights) could also act as fundamentals for consolidation across segments as ‘company-specific’ factors to improve cash flow will be rewarded.

Listed property sector in the Nordics

The listed property sector in the Nordics consists of more than 40 companies listed on Nasdaq OMX and Nasdaq First North, with a

The sharp increase in interest rates accelerates the need for more equity and higher yield requirements in new transactions.
GDP Growth (%) Source: Oxford Economics and JLL -8 -6 -4 -2 0 2 4 6 Denmark Norway Finland Sweden Eurozone F 2025 F 2024 F 2023 2022 2021 2020 Source: Oxford Economics and JLL CPI Inflation (%) 0 2 4 6 8 10 Denmark Norway Finland Sweden Eurozone F 2025 F 2024 F 2023 2022 2021 2020 * As of September 4, 2023
JLL Nordic Outlook Autumn 2023 7 Premium (+) / discount (-) to assets (%) -30 -20 -10 0 10 20 30 40 50 60 Office (LST=-21.9%, AVG=-5.6%) Retail (LST=-16.4%, AVG=-10.4%) Industrial/Logistics (LST=10.5%, AVG=14.2%) Residential (LST=-21.4%, AVG=2.1%) Sector (LST=-16.7%, AVG=-2.3%) 2023 2022 2021 2020 2019 2018 2017 2016 2015 Source: Sedis AB, Nasdaq and JLL as of September 4, 2023 Source: Sedis AB, Nasdaq and JLL as of September 4, 2023 Premium/Discount to Assets (%) -60 -40 -20 0 20 40 60 Sagax Swedish Logistic Property NP3 Catena Emilshus Wihlborgs Cibus K2A Stendörren K-fastigheter Nyfosa Diös Atrium Ljungberg Castellum Genova Eastnine Wallenstam Citycon Balder Brinova Pandox Stenhus Fastigheter SBB Logistea Platzer Entra Trianon Heba Corem Fabege Studentbostäder i Norden John Mattson Oscar Properties Hufvudstaden FastPartner Fortinova Klarabo Nivika Fastigheter Kojamo Olav Thon. Annehem fastigheter Neobo Arlandastad group 70 100 130 160 190 220 250 Nordic all OMX (LST=167) 2023 2022 2021 2020 2019 2018 Stockholm Sector index (LST=112) Performance Listed Market

Interest and Credit markets

Interest market

Central bank rates are at their highest levels since 2001, and although we should be close to the peak of the interest rate mountain, it seems we might reach a plateau we have to cross before starting the descent on the other side. Inflation has lingered throughout 2023 and central banks have been forced to tighten their paths more than expected, causing higher interest rate peaks and also a longer descent. Some early signs of slowing headline inflation have not yet been enough to change the course of the central banks.

Credit market

The capital market is still extremely cautious about real estate companies. In principle, it is only the government— or institutionally owned companies that can issue bonds on reasonable terms. This situation has emerged as investors have sought more secure placements towards other industries with less exposure to interest rates.

The liquidity shortage in both commercial paper and bond markets has pushed spreads upwards significantly. This is clearly a game changer, especially for investment-grade rated companies, as bank financing has become the more attractive alternative. This situation will, eventually, cause headaches for some of the rated companies as increased amounts of bank financing will decrease the level of unencumbered assets, which is one of the criteria for an investment-grade rating.

The Nordic banks are showing less appetite for lending and are primarily focusing on existing relationships. They are more cautious about offering higher levels of leverage, particularly for low yielding segments. At the same time, the margins on loans from the banks have widened significantly. Moreover, the Nordic banks are showing indications of reserving capital to cover future bond maturities. The lending to the real estate sector in Sweden has increased, with approximately SEK 6 billion loaned during the second quarter of 2023. This marks a noticeable

shift from the previous quarters, where lending grew by around SEK 20–30 billion each quarter. Consequently, there has been a change in the market.

This shift in the bond and banking market has significantly improved the competitiveness of the alternative lenders in relative terms. The margins have remained largely at the same levels from debt fund lenders, while higher leverages are now available as the covenant structures are tailored to reflect the current market of higher rates.


The real estate sector in the Nordics continues to go through adaptation to a higher interest rate environment and to less reliance on bond market financing. New investors need to increasingly source financing outside the Nordic banking market, while the Nordic banks continue to focus on their existing clients and exposures. The alternative financing sources, debt or equity, are expected to further develop to fill the gap left by the bond market and the Nordic banks. Most importantly, a large number of Swedish listed companies have made new issues, and more are about to do the same in order to strengthen their balance sheets.

Increasing yields in the market will gradually start to help the credit metrics in new financing cases. However, for some time still, it is expected that deleveraging will be required in cases of refinancing and also covenant breaches. As a result, we also expect to see more motivated sellers in the market over the winter, driven by the financing requirements. Moreover, because covenant breaches and restructurings in the market impact the whole sector, banks need to maintain higher capital buffers by regulation, which is continuing the trend of bank margins moving higher from the current levels.

5-year swap and forward rates in SEK, USD and € (%) Source: Bloomberg and JLL -1 0 1 2 3 4 5 6 NOK - 3M Nibor USD - 3M SOFR EUR - 3M Euribor SEK - 3M Stibor 2025 2024 2023 2022 2021
JLL Nordic Outlook Autumn 2023 9
Eemeli Lehto Head of Debt & Financial Advisory Helsinki , Finland Joakim Nirup Head of Debt & Financial Advisory Stockholm, Sweden

Investment market Sweden

Investment volumes for the first half of 2023 were down by 62 percent, compared to the first half of 2022, and the volume ended at SEK 43.7 billion. Mergers and acquisitions among listed companies contributed with SEK 7.8 billion in the first half of 2023, which is down from 21 billion in the first half of 2022. Pricing has continued to be poor since the second half of 2022, with gradually lower prices recorded for transactions and lower transparency in both ongoing and finalised transactions. Sentiment continues to be under pressure, owing to the sharp increase in interest rates, increased difficulties around financing new acquisitions and the need for more equity on most transactions.

Many transactions continue to be on hold and await clarity around current trends in the capital markets and rate increases from central banks. All sectors are impacted, although segments with high visibility to rental growth linked to consumer price index (CPI) adjustments can partly compensate for increasing funding costs and mitigating the negative value impact. Some positives can be seen by value-add capital funds starting to invest across asset classes. The residential market continues to be under pressure, although focus has changed from new build to older assets, owing to pressure from higher interest rates and a lack of short-term compensation from rent negotiations. Industrial / ‘last mile’ high yielding properties are doing better, since investors can capture higher rental growth and have margin to manage financial costs, which support cash-on-cash returns. Office properties show a resilient and still strong rental market, although international investor sentiment remains under pressure. This is due to uncertainty regarding future demand, linked to work away from the office, and capital expenditure needs for future proofing B/C location properties.

Interest costs have risen sharply in Sweden, linked to inflation-induced policy changes among the central banks, with higher short-term rates than were expected over the last six months. Funding costs are also up due to deteriorated liquidity in the capital markets for real estate companies. Nordic banks are still showing appetite for lending but are primarily focusing on existing relationships.

Rising funding costs have continued to put pressure on the yield requirement to compensate for the higher costs and lower availability of funding. Our prime yield estimates are up for all segments from the second quarter of 2022, related to sentiment-based evidence linked to ongoing transactions and discussions. We expect yield requirements to stabilise during the second half of 2023, assuming that short-term and long-term interest rates stabilise. The strong rental market in 2022 will continue to be tested in 2023, and the 10.9 percent index in 2023 will likely be followed by a 6–8 percent increase in 2024. This will mitigate higher funding costs but will further increase the risk on vacancies and renegotiations, due to a softer economic outlook and affordability concerns across commercial real estate tenants.

Weaker demand from both international and domestic investors, in combination with a sharp shift in sentiment in the listed sector has limited transaction volumes, with a decrease of 64 percent in the first half of 2023 compared to the same period in 2022. This is partly due to tough comparable quarters in 2022 and, if the current low transaction volumes of SEK 43.7 billion for the first half of 2023 continue in the second half of 2023, we will be at a yearly volume that hasn’t been recorded since 2013. The weak start to the year, compared to the strong start to 2022, will be tough to compensate in 2023, although we do expect investment activity in 2024 to stabilise at around SEK 150 billion, which is the same level we saw in 2015.

Financial highlights Daniel Anderbring Head
Investment Volumes Sweden (SEKbn) 0 50 100 150 200 250 300 350 400 Other (land & development incl.) Hotel Residential Mixed-use Industrial/logistics Retail Office H12023 H12022 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 Source: JLL Transaction volumes of SEK 44bn in H1 2023 -64% Discount-to-Asset values in the listed sector
Markets, Sweden
JLL Nordic Outlook Autumn 2023 11
Stabilising interest rates and economic rebound bodes well for activity to recover in the second half of 2023.
Daniel Anderbring
Head of Capital Markets Sweden

Investment market Finland

Real estate investment activity started out extremely slow in 2023, with very few transactions observed in the market in the first quarter and a record-low transaction volume of €440 million. Transaction activity picked up slightly during the second quarter and the total investment volume in the first half of 2023 amounted to €1.3 billion, which is still down considerably from €4.1 billion in the first half of 2022. Residential was again the largest sector in terms of transaction volume, accounting for 30 percent of the transaction volume, with a total of €400 million in the first half of 2023. Logistics and office were the second and third largest sectors, with 20 and 19 percent of the total transaction volume in the first half of 2023, respectively.

The current economic and geopolitical climate has implications across all sectors, which can be directly observed in transaction activity. Higher interest rates, lower LTV available and more difficulty in obtaining financing are all putting pressure on transaction activity. Investors are currently calculating higher risk premiums across all segments due to the uncertain market sentiment, which, in combination with the higher financing costs, is putting significant upwards pressure on yield requirements. Prime yield estimates are trending upwards in all

segments, especially in the tightest priced sectors. The gap between seller and buyer price expectations remains high, leading to several transactions currently being put on hold or abandoned altogether. However, there is still activity in the market and transaction volumes in the second half of 2023 are expected to surpass first half volumes.

Regardless of sector, sustainability and Environmental, Social and Governance (ESG) considerations are part of virtually all due diligence processes. This includes Net Zero roadmaps following carbon risk real estate monitor (CRREM) targets, setting requirements for energy performance certifications and other EU taxonomy requirements, environmental certifications, as well as other ESG checks. There are still high variations and even misconceptions among investors’ definitions regarding what is ‘sustainable’.


Total transaction volume was significantly lower in H1 2023, compared to the same period last year.


Financial highlights Tero Uusitalo Head of Capital Markets, Finland Investment Volumes Finland (€m) 0 2,000 4,000 6,000 8,000 10,000 12,000 Residential** Other* Industrial Retail Office H12023 H12022 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
In 2023 Q2, the transaction volume nearly doubled from Q1 2023 figures. Source: JLL *Includes JLL categories: Mixed-use, Hotel, Alternatives, Healthcare and Student Housing **Source of residential transactions: KTI 2008-2019

“The transaction volume was historically low in H1 2023.

JLL Nordic Outlook Autumn 2023 13
Tero Uusitalo

Focus: Improving liquidity is around the corner

Inflation-induced interest rates, in combination with limited financing availability, have created a standstill in the transactions market, following the trend seen in the great financial crisis of 2008–2009 (GFC). Financial stability and outlook for the economy add strength and should limit downside risks compared with GFC, but the sharp increase in both short and long-term interest rates have put pressure on prices across asset classes. Inflation compensation on rents should mitigate the fall in values, although it will take time, and for the leveraged investors this implies the need for more equity or to sell assets to meet debt covenants and interest payments. Cash-on-cash returns have declined and act as the basis for higher yield requirement in transactions which act negatively for total returns across segments. Since yield requirements have increased substantially the unleveraged return outlook for commercial real estate (CRE) has sharply increased, which creates the basis for strong rebound in total returns when yields stabilise and visibility for rental growth improves again.

Cycles Transactions market

Cycles GDP Nordic - Quarters from peak (zero) 90 92 94 96 98 100 102 104 106 COVID-19 recessions Global financial crisis Eurozone debt crisis Current crisis 10 9 8 7 6 5 4 3 2 1 0 -1 Cycles GDP Sweden – Quarters from peak (zero) 90 92 94 96 98 100 102 104 106 108 COVID-19 recessions Global financial crisis Eurozone debt crisis Current crisis 10 9 8 7 6 5 4 3 2 1 0 -1
US transactions 0 50 100 150 200 COVID-19 recessions Global financial crisis Eurozone debt crisis Current crisis 10 9 8 7 6 5 4 3 2 1 0 -1 Europe transactions 0 20 40 60 80 100 120 140 160 180 COVID-19 recessions Global financial crisis Eurozone debt crisis Current crisis 10 9 8 7 6 5 4 3 2 1 0 -1 Nordic transactions 0 20 40 60 80 100 120 140 COVID-19 recessions Global financial crisis Eurozone debt crisis Current crisis 10 9 8 7 6 5 4 3 2 1 0 -1 Sweden transactions 0 20 40 60 80 100 120 140 COVID-19 recessions Global financial crisis Eurozone debt crisis Current crisis 10 9 8 7 6 5 4 3 2 1 0 -1 Source: Oxford Economics and JLL Source: Oxford Economics and JLL Source: Oxford Economics and JLL Info 0= Starting quarter Current crisis = 2022 Q3 Global financial crisis = 2008 Q3 Eurozone debt crisis = 2011 Q2 COVID-19 2019 Q4

On average, transaction volumes are down by close to 50 percent across the US, Europe and the Nordics, based on annualised transaction volumes from the third quarter of 2022 (current crisis starting point), three quarters into the crisis. In comparison, volumes were down on average by 64 percent during the peak of the great financial crisis, bottoming out after four to five quarters in 2010. The recovery back to levels pre great financial crisis took five years on average, despite support from substantially lower interest rates. Sweden however recovered back to 80 percent pre crisis transactions already within about two years. Current crisis also impacted Sweden already in Q2 2022 owing to increase in long-term interest rates, earlier than rest of Europe. The US Federal Reserve (FED) lowered rates by more than 500 basis points from the second quarter of 2007 until the second quarter of 2009. The European Central Bank (ECB) and the Swedish Riksbank reacted later to the crisis, although from a lower level, lowering rates by more than 300 basis points in less than a year (from the third quarter of 2008).

Three fundamental factors which support a normalisation and turn of the market:

Higher yield requirements — Logistics and Residential yield requirements are up the most and the Office market is catching up.

Stabilisation of longer-term interest rates — from very volatile and ‘fragile’ development over the last three to six months.

Lower short term interest rates—the yield curve points to lower rates across the US, Europe and the Nordics during 2024, although from a higher level than was estimated previously.

The sharp increase in interest rates implies pressure on the cash-on-cash return outlook for most investors in the market. Cash-on-cash returns include financial leverage but exclude the revaluation potential of rents, projects and lower yields. The instant increase in financial costs, compared to the more gradual index/ inflation driven growth in cash flows, is currently adding pressure on yield requirements in new transactions today, particularly those related to leveraged structures. Alternative returns from low-risk bonds are also adding upside pressure on yields from institutions. A lack of interest for core and core+ capital can also be seen by the very low fundraisings related to core capital, as it is difficult to attract interest when rents / return requirements are rising.

JLL Nordic Outlook Autumn 2023 15
Interest rate (short term) - US, Sweden, Europe (%) Real GDP - US, Sweden, Europe (%) -1 0 1 2 3 4 5 6 7 EU Sweden US 20222023E2024E2025E2026E 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 -15 -10 -5 0 5 10 15 EU Sweden US 20222023E2024E2025E2026E 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Source: Oxford Economics and JLL Source: Oxford Economics and JLL

This real estate cycle acts contrary to what has been seen in the past, in part due to the extremely low starting point in interest rates, despite positive economic activity. Globalisation and technical pressure on low-cost production induced deflation, in combination with COVID-19 uncertainty made most investors expect a 'lower for longer' scenario for interest rates. However, the sharp economic rebound post COVID-19, in combination with war in Ukraine, has added structural upside in inflation and triggered tighter monetary policy across the globe.

As mentioned earlier, the sharp decrease in cash-on-cash returns across segments calls for higher yield requirements, which act as negative drivers to capital values and create uncertainty for rating agencies and lenders. This exaggerates the perceived risks among lenders, despite a robust financial market and better headroom to valuations, with lower LTV than what was evident during the great financial crisis in 2008–2009. (see our Nordic Outlook Spring 2023 report). From a Nordic perspective—particularly related to Sweden—the large, listed sector with high outstanding debt in the bond market increases the need for more equity, stabilisation and lower interest rates in order for a clear positive turn in the market. This uncertainty can be seen in the poor performance of listed shares relative to the overall equity market index. Valuations have also sharply deteriorated from premium to discount pricing of the underlying assets.

Based on company-reported valuation yield requirements (which include index adjustments), the valuation yield requirement for the listed sector in the Nordic market went up by 45 basis points to 5.1 percent in the second quarter of 2023 (compared with the fourth quarter of 2021), while the funding costs increased to an average 3.45 percent (including hedges), which is up by approximately 175 basis points. The current pricing of equity; however, implies that the market expects implied yield requirement of a touch above 6 percent, which is more than 100 basis points higher than the current valuation yields and implies an 18 percent lower value, all else equal.

The high discount to values seen in the listed market are likely to also take other financial factors into account, including dilutive rights issues, fire sale risks in asset divestments and project downside risks to asset values.

When yield requirements stabilise and current price discovery for buyers and sellers normalise, the total return outlook should improve, adding outlook for rental growth (index and market rents) to the equation. Visibility for value changes should also create opportunities for refinancing, reducing the need for equity and support the rebound in internal rate of return (IRR) in value-add leveraged structures.


Over the next six months, do you think market conditions will: Improve Stay the same Worsen

Performance Nordic market vs sector (last five years) 0 50 100 150 200 250 Stockholm Sector index (LST=112) Nordic all OMX (LST=167) 2023 2022 2021 2020 2019 2018 Valuation yield, implied yield (%) -1 0 1 2 3 4 5 6 7 8 9
10y Swap (LST=3%, AVG=1%)
Swap (LST=4%, AVG=1%)
Sector implied (LST=6%, AVG=6%)
unleveraged values (%) -25 -20 -15 -10 -5 0 5 10 15
AVG=-2%) 200920102011201220132014201520162017201820192020202120222023
Sector reported (LST=5%, AVG=5%)
Discount to
Sector (LST=-18%,
2019 2020 2021 2022 2023 -20 -18 -38 -35 -41 -51 -37 -21 -11 -5 -8 -5 -16 -28 -42 -49 -30 -32 -31 53 63 44 51 41 22 34 35 43 24 37 32 24 25 24 23 28 29 29 Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug 27 18 18 14 19 27 29 44 45 70 54 63 59 47 34 28 42 39 40 -60 -40 -20 0 20 40 60 80 100
JLL Global real estate sentiment survey
Nasdaq and JLL Source: SEDIS, Bloomberg and JLL Source: SEDIS, Bloomberg and JLL Source: JLL Global Perspective

The JLL global real estate sentiment survey, which measures % of respondents that expect market to improve, stay the same or worsen, showed a less supportive market from the third quarter of 2021, which turned negative (negative outweigh the positive) from the third quarter of 2022. The sentiment survey show signs to have bottomed out, with less participants that expect the market to worsen. The survey is based on a large sample (7000 global respondents) but readings remain fragile as current indications are clearly better than the underlying transactions market.

Other bright spots in the transactions market can be seen by capital, raised via value-add funds, starting to deploy capital in transactions across segments. Capital raised via the equity market, despite discount to NAV, also limits the pressure on asset values, albeit coming with a dilution to NAV (on average), which might have delayed the rebound of the equity market somewhat. Nordic banks have supported the market, adding SEK 125bn to the market during 2022 and in the first quarter of 2023, which is mitigating the lack of refinancing for investment grade real estate corporates.

JLL has; however, seen a tighter refinancing market among the banks during the third quarter of 2023, compared with the first half of 2023. Bond market however show first signs of activity for investment grade companies with bond issues in both Castellum and Fabege at very attractive yields (spreads 200-215bp) although its still very fragile market and early to draw any major conclusion for the overall market. JLL do not rule out that a more cautious view from the banks might limit transactions in the market in the short term, although it could fuel opportunities for alternative sources of capital.

Secured bank funding costs have gone from 0.5–1 percent in 2021 to 5.0–7 percent today. Return requirement from equity investors in the general stock market has increased to 8.4 percent according to PWC (2023), which is the highest level since 2009 and is up by 1.3 percent from 2021.

The higher cost of capital implies that the gap on costs for alternative sources of capital (mezzanine debt or preferred equity) has narrowed. In the short term, a funding cost of 12–15 percent might also be seen as favourable over the next three to five years if this enables companies to reduce refinancing risks and ‘grow’ into today’s market’s higher return requirement, which can be potentially lost in a ‘fire sale’ scenario when current transaction market liquidity is below average.

The turn of the market should be around the corner, although normalisation of the transaction volumes will be gradual and slow. The return outlook for CRE will increase when visibility improves for rental growth and stable yield requirement, the effects from nominal rental growth should prove supportive to total return.

JLL Nordic Outlook Autumn 2023 17 0 50 100 150 200 250 300 350 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014
Nordic banks growing exposure to CRE (as per Q2 2023)
Includes Tenant owners association
Interpolation between Q1 2021 until Q1 2022 owing to limited reporting
1 2
Source: Company reports and JLL

Office rents in Europe 2023–2027

Preliminary data for the second quarter of 2023 points to a continued weakness in office demand. At 1.9 million square metres, it was down by 28 percent on the second quarter of 2023 and was the lowest quarter since the third quarter of 2020. In the first half of 2023, take-up fell by 25 percent on the corresponding period last year. Despite the healthy pipeline of new requirements, corporates continue to be hesitant to make decisions, resulting in lengthy transaction lead times. The focus remains either on downsizing for best-in-class, sustainable and centrally located accommodation or renegotiating current leases to reduce costs. In some instances, the scarcity of top-quality office space in the CBD is forcing tenants to seek space in nontraditional submarkets.

Following a slowdown in rental growth in the first quarter of 2023, the European Office Rental Index gathered pace during the second quarter of 2023 (up 1.5 percent quarter-on-quarter). This quarterly movement is above the 10-year average of 0.9 percent.

Occupancy and pricing fundamentals among premium offices continue to fare better than in lower quality accommodation. Core locations in Europe will likely see further positive rental growth, albeit in lower single digits. However, the best-in-class space, especially Net Zero Carbon schemes, will see strong double-digit growth as corporate requirements have limited options. Older product in non-central locations will continue to face the greatest headwinds as the obsolescence risk remains ever present.

European office vacancy held steady at 7.6 percent during the second quarter of 2023 and remained in line with long term averages. Supply dynamics continue to be tight. This has been perpetuated by market wide planning postponements and construction delays, underpinned by the challenging financing environment. Strong increases in vacancy were recorded in the Hague, Utrecht and Rotterdam. Index markets that have recorded a decrease in available supply include Milan, Luxembourg, Amsterdam and Budapest.

Completions totalled 1.1 million square metres in the second quarter of 2023, according to preliminary data, with London (210,000 square metres), Berlin (165,000 square metres) and Munich (162,000 square metres), accounting for half of the office space being delivered.

Faced with rising construction and finance costs, labour shortages and low investor confidence, many developers are delaying decisions to start new office schemes, especially speculative new-build projects. The current economic headwinds are also slowing development delivery times, which is widening the supply shortfall for best-in-class offices.

Occupancy and pricing fundamentals amongst premium offices continue to fare better than in lower quality accommodation.
Bo Glowacz Head of EMEA Office Research JLL
European office vacancy Q2 2023
European prime office rental growth year-over-year
Copenhagen Amsterdam Antwerp Barcelona Berlin Birmingham Bristol Cardiff Brussels Bucharest Budapest Cologne Dublin Dusseldorf Edinburgh Frankfurt Geneva Glasgow Hamburg Helsinki Leeds Lisbon London London City East London LondonWest End Luxembourg Lyon Madrid Manchester Milan Munich Oslo Paris Paris - CBD Paris - La Défense Prague Rome Rotterdam Stockholm Stuttgart Utrecht Vienna Warsaw Zurich The Hague 2.0% 2.7% 3.8% 1.4% 2.6% 2.6% 1.8% 7.2% 2.6% 2.1% 2.0% 4.3% 0.1% 0.8% 3.7% 2.1% 0.9% 5.1% 2.3% 3.6% 3.6% 1.6% 4.6% 3.8% 4.6% 1.1% 1.0% 2.0% 1.3% 3.7% 2.8% 3.9% 1.1% 1.5% 1.5% -1.4% 1.0% 1.3% 2.9% 0.9% 3.1% 2.7% 0.7% 2.2% 0.5% 1.7% JLL Nordic Outlook Autumn 2023 19 -6 -3 0 3 6 9 12 15 5 y average 2023–2027 2023 2022 2021 2020 2019 10 y average 2010–2022 Stockholm Oslo Helsinki Copenhagen Europe 3.3 4.1 1.3 6.7 3.9 2.3 0.8 2.5 2.4 2.2 0.0 2.0 2.0 4.0 4.4 0.0 5.6 1.3 3.4 3.6 5.5 6.5 5.3 14.0 5.3 7.5 4.0 1.2 1.1 7.2 -0.8 -3.1 -3.8 1.1 0.9
Growth (% pa)
Offices > 2.75% 2.0 %–2.75% 1.25 %–2.0% 0.5 %–1.25% < 0.5% Yearly Percentage Rental Growth on the Office Market (%) Source: JLL EMEA Research, September 2023 Source: JLL © 2023 Jones Lang LaSalle IP, Inc. All rights reserved.

Office Nordic

The investment volume for the office segment in the Nordic market has significantly declined, compared to historical levels. A noticeable trend in the tenant market is the polarisation between tenants showing high interest in new, centrally located office spaces with high ESG standards, while older spaces risk becoming obsolete without capital investment from landlords. As tenants adopt cost-saving measures and hybrid work models, downsizing office spaces during renegotiations has become a prevalent trend.

The investment market for office properties in the Nordic countries has experienced cautious behaviour among investors over the past 12 months. This caution has led to a significant decline in investment volume, with a staggering 58 percent decrease witnessed in the first half of 2023.

Furthermore, prime yields in all Nordic markets have continued their upward trend. This increase in prime yields reflects the subdued investor sentiment and the cautious approach taken by market participants.

Downsizing office spaces reflects cost-saving measures and adaptability to hybrid work models. Tenants now seek smaller, efficient spaces that meet their revised needs. Landlords must optimise space utilisation and align with evolving tenant demands to remain competitive.

In conclusion, the Nordic office market faces reduced investment volumes. Investors are now prioritising prime assets due to their perceived stability and higher quality. They are more cautious toward future vacancies, particularly in secondary assets, as uncertain market conditions persist. Prime assets, characterised by desirable locations, modern facilities, and strong tenant profiles, offer greater reassurance in terms of long-term occupancy and income stability.

Financial highlights

Investment volumes for the office segment in the Nordics in H1 2023 vs H1 2022


-58% Investment volumes for the office segment in the Nordics over the last 12 months (EURbn)


Average Nordic prime office yield, up 60 bps y/y

This increase in prime yields reflects the subdued investor sentiment and the cautious approach taken by market participants.
JLL Nordic Outlook Autumn 2023 21 Investment Volumes for Office Segment (€bn) Office Prime Yield Nordic Capitals (%) 0 5 10 15 20 25 Denmark Norway Finland Sweden H1 2023 H1 2022 R12m 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 Denmark Norway Finland Sweden 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 Source: Akershus Eiendom, EDC and JLL

Office Stockholm

The rental market subdued in take-up volume during the first half of 2023, compared to 2022 when there was a clear recovery after the COVID-19 pandemic. Submarkets in the peripheral of the city saw the biggest decrease when it comes to take-up volume, while more centrally located submarkets continue to be the most sought after by tenants looking for new office spaces. On a yearly basis, the vacancies decreased in these central submarkets as well, while the submarkets in the peripheral saw an increase. A continued strong employment market, together with stable vacancy levels, made JLL keep the prime rent estimates flat during the first half of 2023.

Investment market

The office market continues to face challenges in 2023, with investment volumes down 22 percent on a yearly basis for the entire Swedish market and down 12 percent for the Stockholm market during the same period. The biggest transaction in 2023 this far was in this segment when the Seventh AP Fund bought 33 percent of the city block Urban Escape from AMF Fastigheter, with an option to increase further. Prime yields continued to increase during the first half of 2023, with interest rates and total funding costs still not stabilising on lower levels. Prime yield for Stockholm prime central business district (CBD) reached 3.75 percent in the second quarter of 2023.

Tenant market

Premium offices continue to perform better than lower quality offices in submarkets located further out from the city centre. JLL is still waiting to see evidence for continued rental growth and new prime rent estimates, with our most recent analysis showing that Net Zero Carbon schemes will pave the way, going forward, for prime rent estimates. Co-working and hybrid strategies are gaining market share and these normally come with higher demand and quality focus from tenants. The focus for corporates remains either on downsizing for best-in-class, sustainable and centrally located accommodation or renegotiating current leases to reduce costs.

Funding status

Real estate companies are facing increased difficulties in obtaining new financing from domestic banks. Many of these banks have made it clear that their current focus is on prioritising existing relationships and financing upcoming bond maturities for these companies, rather than financing new investments. This shift in lending practices has created challenges for real estate firms seeking funding for new acquisitions. This could limit the transaction market for the rest of 2023 as more equity is needed with less access to funding in general.


Sustainability and ESG continue to be an increasingly important aspect, both for tenants and investors. The scarcity of top-quality office space in the CBD might force tenants to seek space in non-traditional submarkets as demand continues to grow.

Outlook for 2023

Leasing activity is likely to remain subdued as economic growth slows through the second half of 2023. Accelerating return-to-office mandates, upcoming lease expiries and lower renewal rates will provide additional impetus to demand for new, high-quality space, while risks for higher vacancy will be in focus for the rest of the year.

The interest for prime office assets remains high, reflecting the market's attractiveness and potential for long-term returns.
Financial highlights Erik
Transaction volumes office Stockholm H1 2023 vs H1 2022 -12% Vacancy CBD Q2 2023 +5.5%
Skalin Head of Markets, Sweden Linda Sandstedt Senior Director Capital Markets, Sweden
Vacancy rate 5.5% 8.4% 12.5% 11.2% 23.9% 12.3% Prime rent (SEK/m2/y) 8,900 5,600 5,100 3,500 2,400 3,400 Prime yield 3.75% 4.60% 4.40% 5.25% 6.75% 5.50% Office Properties H1 2023 Short-term forecast
CBD Rest of Inner City Hagastaden Adjacent Suburbs Kista Solna / Sundbyberg Source: Citymark (vacancy) and JLL

Vacancies continued to rise during the first half of 2023, mainly due to the large amount of newly produced office space added to the market in 2022 and the corporate trend to downsize when renegotiating leases. The volume of newly produced office space is further increasing the polarisation between A and B/C-class properties, which will increase the incentive for landlords with older stock to ensure their assets don’t turn obsolete.

Investment market

The investment market has continued to face challenges in 2023. Gothenburg stood for 8 percent of the total investment volume in Sweden during the first half of 2023. The low activity is creating uncertainty, prolonging the time needed to preserve sufficient evidence of stabilised yield levels. The prime yield for Gothenburg CBD was estimated at 4.25 percent at the end of the second quarter of 2023.

Tenant market

The take-up volume in Gothenburg during the first half of 2023 reached the lowest levels seen in the past 10 years. This strengthens JLL’s earlier predictions that tenants are now more hesitant to sign new leases. The few deals that have been signed in 2023 thus far have been on high rental levels, indicating that tenants now prioritise new built space with high standards and ESG certifications.

Funding status

Real estate companies are facing increased difficulty in obtaining new financing from domestic banks. Many of these banks have made it clear that their current focus is on prioritising existing relationships and financing upcoming bond maturities for these companies, rather than financing new investments. This shift in lending practices has created challenges for real estate firms seeking funding for new acquisitions. This could limit the transaction market for the rest of 2023, owing to increased need for equity in transactions.


In recent years, there has been a significant increase in the importance placed on sustainability as a prerequisite for investors. It is now one of the most crucial factors for them, as both investors and tenants actively strive to mitigate their carbon emission and adopt more environmentally friendly practices. Consequently, investments aimed at enhancing sustainability should future proof buildings and are expected to yield favourable returns, moving forward.

Outlook for 2023

JLL anticipates a stable rental environment for the rest of 2023, primarily due to the completion of newly built office spaces that entice tenants to sign new leases. This phenomenon will accentuate the divergence between grade A properties and B/C properties, with the latter facing challenges associated with escalating vacancies and difficulty attracting tenants without significant investment volume to stay attractive.

JLL Nordic Outlook Autumn 2023 23
Investment aimed at enhancing sustainability should future proof buildings and are expected to yield favourable returns.
Financial highlights Per sq.m. Prime rent Gothenburg CBD is up 1.2% y/y 4,200SEK Vacancy level Gothenburg Q2 2023, up 1.0% y/y 11.6% Sara Vesterlund
1.Rest of Hisingen, 2. Eastern Gothenburg, 3. Western Gothenburg Source: Citymark (vacancy) and JLL CBD Rest of Inner City Norra Älvstranden Mölndal R. of Hisingen1 E.Gothenburg2 W.Gothenburg3 Vacancy rate 12.2% 10.2% 6.2% 11.3% 8.7% 19.1% 19.1% Prime rent (SEK/m2/y) 4,200 3,500 2,800 2,500 2,000 2,500 1,300 Prime yield 4.25% 4.90% 5.50% 6.25% 6.25% 6.25% 6.75% Office Properties H1 2023 Short-term forecast
Senior Director Capital Markets, Sweden
Office Gothenburg

Office Malmö/Lund

Investment volumes fell sharply in the first half of 2023 for the Malmö/Lund region. Compared with last year, the investment volume for offices fell by 91 percent. However, there is a risk that the investment volume is underestimated, due to portfolio transactions that may include properties in the region, but where the majority of the portfolio is located in another market and, thus, not accounted for. Vacancies and rental levels have remained stable, showing that the market is still attractive for corporates. The weak performance of the Swedish krona can also potentially strengthen the rental market as it may attract more companies from neighbouring foreign markets such as Denmark and Germany, with investment of infrastructure reducing commuting and transport times in the region.

Investment market

The investor market for properties in Malmö has experienced subdued activity throughout 2023. However, higher yield requirements have acted as a stabilising factor, potentially making the market more appealing to investors in the second half of the year. This suggests a possibility of increased attractiveness and activity in the market in the latter part of 2023. JLL's estimates for Malmö/Lund have not increased as significantly for the first half of 2023, primarily due to the already higher initial yield estimated, compared to Stockholm and Gothenburg. This resulted in a 4.60 percent yield requirement for the Malmö CBD in the second quarter, indicating a relatively stable market in terms of investor expectations.

Tenant market

The tenant market continued to show strong numbers during the first half of 2023, compared to the five-year average. The market is still struggling with low visibility and transparency, compared to Stockholm, which is partly due to strong local actors, but a shift has started to be seen. Hyllie continues to be the strongest submarket, with the biggest take-up volume in 2023 thus far, further indicating that new built is what attracts corporates, rather than centrally located spaces.

Funding status

Real estate companies are facing increased difficulty in obtaining new financing from domestic banks. Many of these banks have made it clear that their current focus is on prioritising existing relationships and financing upcoming bond maturities for these companies, rather than financing new investments. This shift in lending practices has created challenges for real estate firms seeking funding for new acquisitions. This could limit the transaction market for the rest of 2023, owing to increased need for equity in transactions.


Investors are placing significant emphasis on property certification and making investments aimed at reducing carbon footprint. This focus stems from the recognition that such initiatives not only contribute to sustainability but also yield favourable returns by reducing operational costs. Additionally, certifications add a quality aspect to properties, which can enhance their attractiveness and potentially support increased rental levels.

Outlook for 2023

A significant volume of newly built office space is projected to be completed in 2023-2024, potentially creating market pressure and limiting rental growth in the coming quarters. However, the positive aspect is that a big portion of that volume is pre-let. This high pre-let volume is indicative of the ongoing strong demand for high-quality office spaces. In the second half of 2023, JLL anticipates rental levels to remain stable or slightly positive, with particular attention to new developments in attractive locations.

Malmö's office market has showcased resilience, maintaining stability.
Daniel Anderbring
Head of Capital Markets, Sweden
Source: Citymark (vacancy) and JLL
Vacancy rate 8.4% 8.8% 6.3% 14.7% 12.6% 8.3% Prime rent (SEK/m2/y) 3,200 2,500 2,500 2,800 2,800 2,300 Prime yield 4.60% 5.60% 5.35% 5.25% 5.10% 5.60%
CBD Rest of Inner City Västra Hamnen Adjacent Suburbs Hyllie Lund
Short-term forecast Financial highlights Per sq.m. Prime rent Malmo CBD is up 3.2% y/y 3,200SEK Vacancy level Malmo/Lund Q2 2023 9.6%
Office Properties H1 2023 Daniel Anderbring Head of Capital Markets, Sweden

Office Helsinki

The office occupier market does not seem to have been significantly impacted by the economic and political uncertainties of the previous 12 months. Although we were optimistic about an increase in tenant market activity in 2023, the market continued performing at par with the previous year without considerable improvements overall. The best performing submarkets continued to benefit from desirable locations, transport links, services and amenities. The expected impacts of remote work-driven downsizing of premises have gradually been reflected in vacancies, especially in secondary sub-markets, but this has remained moderate.

Investment Market

The first half of 2023 has also been quiet for office investments, due to rising interest rates and uncertain market sentiment. Office became the third most traded segment after residential and logistics, with total investment volume reaching €250 million in the first half of 2023. The volatile market conditions have caused an increase in yields across all office submarkets in Helsinki, with prime yield in Helsinki CBD currently at 4.20 percent, up by 95 basis points year-on-year.

Tenant market

The tenant market remained relatively active for the first half of 2023 and demand for office premises was stable, even though the previously expected improvement did not occur in a meaningful way. There was no mentionable increase in the number of transactions or overall activity; however, positive signs could be observed as the need for downsizing was no longer the main driver for future office requirements. The post-pandemic remote work driven ‘new normal’ appears to be gradually reverting more towards normal.

Funding status

Financing is available from bank lenders for assets in core locations with a quality anchor tenant or a diversified tenant mix. Usually, the all-in higher financing rates are driving LTVs lower to below 50 percent levels as bank lenders want to see enough cash flow buffer for loan servicing and amortisations. Lenders have also started to focus on potential recession impacts on new leasing. Hence, pure single tenant assets, even with a high-quality tenant, are not favoured at the moment if there are perceived risks on the tenant’s business. Non-core locations, short weighted average unexpired lease terms (WAULT) and some vacancies / value-add cases require sourcing financing from alternative sources with higher margins.


The office market is perhaps the most advanced in terms of sustainable thinking. Virtually all new developments are Energy Class A, as well as highly certified. In old stock, there is massive need for improvement in energy performance to meet ambitious CRREM energy efficiency targets, though this is typical across Europe. There are often limited opportunities for best-in-class energy performance in old stock, and carbon emissions are dependent on purchased district heating. This has been off-putting to some but is expected to be a strength for

Finland in international comparison, due to ambitious Net Zero targets for utilities. Smart money also realises that the bulk of the market will not be best-in-class, yet will still remain safe from dramatic ESG risks. Avoiding unfixable worst-performers and red flags is usually enough.

Outlook for 2023

Our expectation towards the year end is optimistic for both the occupier and investment markets, although we are unlikely to see an exciting steep upwards trend. The challenging and uncertain economic environment may, in some cases, still postpone the occupiers’ decisions to expand or relocate in all but the most critical circumstances.

JLL Nordic Outlook Autumn 2023 25
The office market is perhaps the most advanced in terms of sustainable thinking.
Vacancy rate 12.2% 12.9% 9.2% 16.5% Prime rent (€/m2/y) 456 315 324 234 Prime yield 4.20% 5.50% 5.25% 6.25% Source:
Klaus Koponen Head of Markets, Finland
CBD Ruoholahti, Helsinki Keilaniemi, Espoo Aviapolis, Vantaa
Financial highlights The office transaction volume in H1 2023 250€m Office prime yield, up +95 bps year-on-year 4.20%
Office Properties H1 2023
Klaus Koponen Head of Markets, Finland

The transaction market is going through a period of considerable uncertainty and low liquidity, due to higher financing costs and sustained uncertainty surrounding future interest rates. The slow ending to 2022 with few transactions has continued into the first half of 2023. Transaction volume in the first half of 2023 was 55 percent lower than the same period last year. The high momentum in the leasing market has continued into 2023, with good deal flow and rental growth in central areas of Oslo.

Investment Market

Activity in the transaction market for office properties is affected by uncertain interest rate prospects, and many investors are biding their time. We saw a slow first half of the year, and we expect the transaction volume of 2023 to decrease, compared to last year. However, through the course of the year, we expect more clarity around interest rates and corporate earnings and for liquidity in the transaction market to pick up as a result. Office assets was the second most traded asset in the first half of 2023, accounting for 30 percent of the market.

Tenant market

The high demand for office space in the office rental market during 2022 continued into the first half of 2023. Supply of new office space in 2023 and planned supply for the next two years in the Oslo office market is significantly below the historical average. Constrained supply, combined with a high demand for new office space, means the vacancy rate is expected to remain low. The overall vacancy rate in Oslo was 5.57 percent in the second quarter of 2023. The strong activity in the office rental market, along with low vacancy rates, resulted in a rental growth of 5.2 percent in Oslo's CBD during the first half of 2023, while most other areas followed behind.

Funding status

Financial markets have been turbulent over recent quarters, with considerable volatility in share prices, market interest rates and credit spreads. The policy rate will likely be raised further and be kept high until the weakness in the real economy and inflation becomes more evident. The central banks have consequently forecast that policy rates will increase further and remain relatively high throughout next year. Market players have also lifted their interest rate expectations, and forward rate agreement (FRA) rates, as of early August, indicate a policy rate of 4.70 percent before the end of the year. The bond market is still tough for property companies. High volatility has characterised SWAP rates in 2023, thus bank financing is unpredictable for the market players.


For investors and property owners, sustainability is progressively emerging as a distinguishing element. Future compliance with taxonomy requirements and the capacity to adapt to tenants' environmental expectations are pivotal factors for attracting and ensuring compliance in the future.

Outlook for 2023

The difficult economic environment is likely to continue to characterise the investment market during the second half of 2023. High financing costs and higher yields have contributed to few transactions in the office market, but there is a lot of capital seeking good property investments. Akershus Eiendom forecast a year-end transaction volume of NOK 65 billion. In the leasing market for office assets, we still expect good activity, despite a weaker outlook for the Norwegian labour market.

Financial highlights


Prime rent is up 5% since Q4 2022. Estimated to NOK 6,000 per sq.m. in Q2 2023


Prime yields have risen 70 bps since Q2 2022, and is now estimated to 4.00% Q2 2023


26 Office
CBD Rest of inner city Outer city west Outer city east/ north/south Vacancy rate 4.76% 5.00% 6.62% 7.80% Prime rent (NOK/m2/y) 6,000 3,850 3,900 2,800 Prime yield* 4.25% 4.50–4.75% 5.25–5.50% 5.25–5.50%
Kari Due-Andresen Head of Research, Department: Research, Akershus Eiendom
* Based on Q3 numbers Source: Akershus Eiendom
Short-term forecast
Office Properties H1 2023
Significant interest rate hikes have pushed yields upwards during 2023; however, the strong rental growth has eased the value drop for centrally located office assets.
Kari Due-Andresen Head of
Department: Research, Akershus Eiendom

Office Copenhagen

A strong Danish labour market signifies that the office segment is anticipated to remain more attractive than in other countries. The market for sustainable and flexible office solutions is growing as a large proportion of both investors and tenants are willing to pay a premium for this.

Investment Market

The office segment has been a prime target for real estate investors, due to a strong Danish labour market. Investors, both domestic and international, are still keen on acquiring well-located office properties with modern amenities and sustainable features. Nevertheless, there is currently a large gap between the investors’ and vendors’ yield expectations, which is the main reason for the transaction volume being significantly lower than last year. Office spaces in the CBD and areas with excellent transport connectivity are particularly sought after. The trend towards flexible working arrangements and the rise of co-working spaces have also influenced investment decisions, with investors showing interest in properties that can cater to evolving tenant demands.

Tenant Market

Unlike some other European economies, the Danish economy avoided a recession in the first half of 2023, with the labour force continuing to grow, providing a strong foundation for office demand. The tenant market for office spaces in Copenhagen has experienced shifts in recent times, where the adoption of remote work and flexible office solutions has been accelerated. While some companies have downsized their office spaces and embraced remote work, others are now exploring hybrid work models that combine in-office and remote work options. Tenants are seeking offices that prioritise employee wellbeing, collaboration and sustainable design to create attractive and productive work environments.

Funding Status

Sharp increases in interest rates in the first two quarters of 2023 resulted in limited access to capital through the banks, which led to a lower volume of secondary properties being traded. In addition to rising interest rates, mortgage lenders have become more reluctant to lend, adding additional barriers to financing. As interest rates are expected to stabilise in the short to medium term, the hope is that financing will become more readily available.


Sustainability has become a significant consideration in the Danish office segment. Developers and companies are prioritising green building certifications, energy-efficient technologies and eco-friendly design to reduce their environmental impact, and a high proportion of both investors and tenants say that they are willing to pay a premium for office properties/spaces that have incorporated sustainability practices.

Outlook for 2023

The outlook for the rest of 2023 remains optimistic, mainly driven by the continued solid demand for office properties. This especially applies to prime office assets, whereas properties in secondary locations might experience turmoil until economic development is certain. Furthermore, the effect of potentially increasing unemployment on the market for office properties remains to be seen.

Financial highlights


DKK/sqm/year prime rent for core office properties in Copenhagen CBD


Vacancy rate for office properties in CBD, Q2 2023

JLL Nordic Outlook Autumn 2023
The labour force continues to grow, providing a strong foundation for office demand.
Thomas Riis
Licensed Real Estate Agent, MRICS, Chartered Surveyor, EDC Poul Erik Bech
Old CBD New CBD Waterfront Rest of Copenhagen Ørestad Greater Copenhagen Vacancy rate 3.67% 11.35% 5.48% 4.95% 4.86% Prime rent (DKK/m2/y) 2,150 2,200 1,700 1,650 1,625 Prime yield 3.50% 3.50% 4.25% 4.25% 4.75% Source: EDC Office Properties H1 2023 Short-term forecast
Thomas Riis Licensed Real Estate Agent, MRICS, Chartered surveyor, EDC Poul Erik Bech

Retail Nordic

The retail sector remains plagued by uncertainties, putting significant emphasis on tenants' ability to meet rental obligations. Poor consumer sentiment, resulting from reduced purchasing power, combined with rising rents linked to CPI indexation, poses challenges for companies with retail assets. Striking the right balance between rental growth and providing suitable discounts becomes crucial in navigating this complex landscape.

While there have been some upward revisions in the economic outlook for certain countries in recent months, it is important to note that overall economic conditions remain uncertain. There are still challenges and risks that could impact the retail segment. Additionally, weak developments in local currencies pose a potential barrier, making it more difficult for businesses to navigate international markets, which could affect the retail market. However, there has been a slight improvement in consumer confidence, which could provide some relief and support for the retail sector in the near future.

The retail segment in the Nordic countries has witnessed varying investor views and market sentiment. While the retail sector continues to face challenges, there are still opportunities that attract investor interest.

Investor interest remains strong in well-located, high-quality retail assets with strong tenant covenants and a focus on experiential retail. These assets are seen as more resilient to the ongoing shifts in consumer behaviour, offering a unique customer experience and a blend of retail, entertainment and dining options. Investors are also exploring opportunities in well-performing sub-sectors, such as grocery-anchored centres, convenience retail, and e-commerce fulfillment centres.

Financial highlights

Average prime Retail yield requirement across the Nordics


4.15% Investment volume retail properties in the Nordics in the past 12 months

JLL Nordic Outlook Autumn 2023 29 Investment Volume Nordic Retail Properties (€bn) 0 1 2 3 4 5 6 7 8 Denmark Norway Finland Sweden H1 2023 H1 2022 R12m 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Retail Prime Yield Nordic Capital Cities (%) 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 Denmark Norway Finland Sweden 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
Source: Akershus Eiendom, EDC and JLL

Sweden Retail

The polarisation trend observed in the Swedish retail market persisted throughout 2022 and continued into 2023. Retail warehouses specialising in grocery offerings and out-of-town locations continue to demonstrate resilience and strength.

Investment market

As anticipated, the retail investment market encountered persistent challenges during the initial half of 2023, exhibiting a combination of factors influencing transaction activities. Notably, the market is demonstrating significant discrepancies, with grocery-anchored retail segments experiencing robust demand and relatively stable yields. In contrast, external shopping centres continue to face hardships.

Tenant market

Retailers have continued to face challenges, first seen in the first half of 2022, as a weakened economic outlook and lowered growth projections for e-commerce put pressure on them. Considering this backdrop, tenants are placing greater emphasis on micro-location strategies during lease renegotiations to secure more flexible terms. The remainder of 2023 is expected to be challenging, as reduced consumer confidence and a gloomier economic outlook continue to put pressure on the sector.

Funding status

Banks and capital markets are maintaining stringent criteria regarding the availability and pricing of capital for the retail sector. Persistent low consumer confidence is amplifying the pressure on the retail sector in 2023.


JLL anticipates a growth in efforts by both landlords and tenants to diminish their carbon footprints. These stakeholders are diligently striving to enhance the efficiency of good transportation and integrating circular economic principles into their operations.

Outlook for 2023

Uncertainties will persist in the retail sector throughout 2023, fuelled by ongoing supply chain challenges, a less favourable economic forecast, continued high inflation rates and funding costs. It will be important for real estate companies holding retail assets to strike a careful equilibrium between rental growth to compensate for higher costs while providing suitable discounts to limit vacancy risks.

Financial highlights


Transaction volume for retail assets in H1 2023

Finland Retail

Shopping centre yields at 5.50% in Q2 2023

Retail transaction activity was at a record low level in the first half of 2023. However, with a recovering economy, decreasing inflation and stabilising conditions, household spending is expected to turn to a growth path during the second half of the year, and the short-term outlook is looking more positive.

Investment market

The retail investment market remained very quiet during the first half of 2023, with total transaction volume amounting to only €99 million. Investors are factoring in tenant risks in retail to an increasing degree and are still favouring grocery-anchored assets with solid tenants.

Tenant market

Polarisation can be seen in the occupier markets, where tenant demand has remained stable and occupancies strong in retail warehouse parks and shopping centres, while demand for high street retail is weaker in many major cities. Shopping centres recorded strong growth in sales and footfall during the first half of 2023.

Funding status

Grocery-anchored portfolios and local malls still have good access to bank financing. Generally, higher yields in the sector are also helping the credit metrics. Fashion-driven assets and shopping centres are struggling to find attractive financing terms.


Consumer awareness of sustainability continues to grow and ESG plays an ever-increasing role for investors as well as tenants. Landlords are grappling with complex energy management, and retail chains’ sustainability checklists are getting more detailed. Still, their efforts towards sustainability in retail units are often dwarfed by sustainability issues in their global supply chains.

Outlook for 2023

Conditions in retail markets are stabilising after several years of varying headwinds and the future outlook is looking more positive. Still, with the continuing price discovery and lack of active buyers in the sector, transaction activity is likely to remain low.

Financial highlights


Shopping centre prime yield moved out 50 bps in H1 2023


H1 2023 transaction activity decreased by 72% compared to H2 2022

“The appeal of grocery-anchored tenants remains strong, showcasing their resilience and continued attractiveness to investors.”
+35bp y/y
“Market conditions are stabilising, but the number of active investors in the market remains limited.”

Norway Retail

Norwegians are, once again, prioritising services over goods, which is in line with the long-term trend seen before the pandemic. However, significant market turbulence and concerned consumers, combined with the continued strength of the online shopping trend, create uncertainty for consumers, investors and retail tenants.

Investment market

The current market uncertainty has led to a lukewarm transaction market in 2023. Retail property is no exception. We have recorded retail transactions of NOK 2,750 million up to the end of August 2023, making up approximately 10 percent of the total transaction volume.

Tenant market

Retail leasing activity picked up in 2022, especially in Oslo’s luxury area. Luxury and automotive retailers appear to be the drivers behind the positive trend. At the same time as demand has increased, there is limited available space in the most attractive streets, leading to upward pressure on prime high street rents. Consequently, we have chosen to adjust our estimate for market rent for high-quality retail spaces with prime locations to NOK 30,000 per square metre (up 50 percent over the last 12 months).

Financial highlights


Retail accounts for 10% of the total transaction volume

Denmark Retail

Funding status

The transaction market has been impacted by higher financing costs and higher yields, resulting in a slow first half of 2023. Duration, tenant quality and reletting risk dictate financing possibilities in the retail segment.


The consumer continues to demand sustainable options and retailers need to increase their ESG focus to gain competitive advantage. Our ESG survey shows that Norwegian banks are increasingly likely to offer advantageous terms and are keen to lend more to green investments. In addition, building owners and property developers have high ambitions for their green investments.

Outlook for 2023

Looking ahead, we expect the demand for prime retail spaces to remain strong, and rental prices within this segment will stay at high levels. Strong price growth and increased interest rates are likely to impact the broader rental market in the short term.

30,000 NOK/ sq. m.

High-street prime rent. Up from NOK 20,000 / sq. m. 12 months ago

Rising consumer confidence and high purchasing power have led to increased demand for innovative retail solutions focused on excellent consumer experiences.

Investment market

Consumer purchasing power remains relatively high which, in combination with rising consumer confidence, means that demand for retail is expected to remain stable. As consumers are focusing on the segment for experiences, investors are particularly interested in retail spaces that cater to the growing trend of innovative retail concepts.

Tenant market

Rent increases due to CPI adjustments have put pressure on tenants. Despite this, the market is not at a standstill but rather experiencing a rotation where tenants are looking for smaller and cheaper premises, offering higher flexibility in uncertain times. At the same time, more retailers are looking towards a consolidation strategy, where several small stores are gathered into fewer larger stores.

Funding status

Spikes in interest rates have led to limited funding opportunities for retail properties in secondary locations, whereas financing remains more readily available for prime assets with reliable tenants.


The Danish retail market is focused on sustainability. Investors, owners and tenants have a strong emphasis on environmental responsibility and many retailers have adopted sustainable initiatives in their businesses. This is due to the competitive advantage that sustainable retail concepts give, not only in terms of attracting customers but also enhancing the reputation and appeal of brands in the market.

Outlook for 2023

The retail market in Denmark is expected to rebound. Sustainable and innovative retail concepts will remain a focal point, attracting both tenants and investors. Proptech integration will further optimise retail operations, enhancing customer experiences. Overall, Denmark’s retail market is poised for continued development.

Financial highlights


Prime yield for high-street Copenhagen locations


Vacancy rate for retail in Copenhagen Q2 2023

“Increased demand for prime locations has lead to strong rental price growth.”
Remi N. Olsen
Head of Retail, Akershus Eiendom
“Investors are interested in retail spaces that cater to customer experiences.”
Frank Heskjær Head of International Retail, EDC Poul Erik Bech

Logistics Nordic

In 2023, the logistics market in the Nordics witnessed a decrease in investment volume. However, prime assets with high standards and in favourable locations continued to be attractive for investors. The cautious approach of tenants in the market resulted in lower take-up volumes compared to the previous three years.

Despite the challenges posed by the decrease in investment volume and cautious tenant behaviour, the demand for well-located, high-quality logistic assets remains strong. Investors recognise the long-term potential of the logistics market and are seeking opportunities to capitalise on this demand.

Looking at the short-term outlook, there are signs of positivity in the market. Investors are gradually returning and demonstrating a turnaround in their risk appetite. This shift suggests a growing confidence in the logistics sector.

As the market navigates uncertainties and adapts to changing dynamics, it is crucial for stakeholders to remain abreast of market trends and align their strategies with the evolving needs of tenants and investors.

Financial highlights

-43% y/y

Investment market for logistics segment in Nordics in H1 2023, compared to H1 2022

+46bp y/y

Average yield up to 4.85% in Q2 2023

JLL Nordic Outlook Autumn 2023 33 Investment Market Nordic Logistics Segment (€bn) 0 1 2 3 4 5 6 7 8 Denmark Norway Finland Sweden H1 2023 H1 2022 R12m 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Logistics Prime Yield Across Nordic (%) 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 Denmark Norway Finland Sweden 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010
Source: Akershus Eiendom, EDC and JLL

Logistics Sweden

The demand for modern logistics and industrial assets located in strategic areas remains, particularly for ‘last mile’ assets.

Investment market

Investment activity for logistic properties witnessed a significant 72 percent decline on a year-on-year basis during the first half of 2023. However, when compared to the sharp decrease experienced in the second half of 2022, the decline in investment volume has not been as substantial. This suggests that the volume may have reached its lowest point and is now beginning to stabilise. Since the summer of 2022, the transaction market is evidencing a pricing shift of +150 bps.

Tenant market

When compared to the average volume over the previous 12 months, the current take-up level remains relatively strong. There is a substantial number of projects currently under development in the logistics sector, which have the potential to impact rental growth in the coming year. Additionally, it is worth noting that a significant portion of the development stock is being constructed without a pre-signed tenant.

Funding status

Funding costs are at high levels compared to previous years, leading to lower refinancing loan-to-value (LTV) ratios. Nordic banks are primarily

Financial highlights


Up 125 bps y/y. Yield requirement prime logistics

Logistics Finland


prioritising existing clients, which has had a detrimental effect on the availability of funds and restricted the entry of new investors.


ESG considerations have evolved into an essential factor for a growing portion of investors who are at the forefront of this trend. However, it is crucial for all investors to adapt and incorporate ESG considerations to ensure their continued liquidity in the future.

Outlook for 2023

The increase in interest rates has resulted in a wider yield spread, causing the transaction market to lose momentum as buyers and sellers struggle to align their price expectations. Ongoing economic headwinds are further contributing to the challenging environment, leading to an anticipated decline in transaction volumes compared to past years. In the near term, the leasing market is expected to continue cooling down. However, despite these short-term challenges, the long-term outlook for the logistics segment remains positive, offering promising prospects for sustained growth.

Transaction volume for L&I in the past 12 months

The turmoil in investment markets is easing and market conditions are stabilising. Demand for prime logistics has prevailed, although high financing costs continue to add pressure on yield levels. The changed market environment has weakened the liquidity in secondary assets and the light industrial sector.

Investment market

As for the rest of the market, higher interest rates and market uncertainty have continued to cause upwards pressure in logistics yields, with prime yield currently at 4.95 percent. Even though the transaction volume in the first half of 2023 was below the level of the second half of 2022, the demand for modern logistics properties has remained high.

Tenant market

Occupier demand has remained healthy and the overall vacancy rate low. Landlords have been able to carry out CPI-linked rent indexations in full.

Funding status

The sector is relatively favoured by bank lenders, but financing conditions have become more challenging in tandem with the general market.


Logistics prime yield moved out further by 30 bps in H1 2023


Tenant quality mix, WAULT, alternative use and reletting possibilities dictate the financing possibilities. The international bank market and alternative lenders are actively looking at opportunities in the sector for larger portfolios and assets. Consequently, there are good opportunities for higher LTVs relative to other sectors.


Most of the large logistics carriers have ambitious Net Zero goals between 2030 and 2040, which introduces new energy efficiency and carbon requirements for both old and new stock. Landlord-tenant collaboration is crucial for planning for upgrades but can sometimes be a hindrance for building Net Zero roadmaps.

Outlook for 2023

With interest rates stabilising and predictability increasing, the gap between buyers’ and sellers’ opinions on value is decreasing. While demand for prime logistics has remained strong, the number of active investors for secondary logistics and light industrial assets has decreased.

“Higher yields create a solid entry point backed by solid demand fundamentals.”
Senior Director Capital Markets, Sweden
volume for L&I in H1 2023 amounted to ca. 20% of total volume
“Liquidity of light industrial and secondary logistics assets has weakened considerably.”
Financial highlights Transaction

Logistics Norway

The logistics segment has been greatly impacted by shifting market sentiment, marked by rising interest rates, economic uncertainty and yield fluctuations after years of compression. This has affected both transaction and leasing markets. The cost of capital has continued to rise throughout the year and we anticipate further upward pressure on yield in the near term.

Investment market

Investor sentiment is slow and cautious, and transaction activity has slowed down considerably, illustrated by a transaction volume which is currently down 65 percent on the year to date. Properties representing a value-add potential remain favourable among investors.

Tenant market

Occupier demand is holding up well, although there are signs that smaller organisations are taking on a more cautious approach and readjusting their expansion plans in line with the uncertain economic outlook. Residential conversions have decreased the supply of strategically located ‘last mile’ premises significantly in the last decade, causing rents to increase rapidly as efficient value chains and short delivery times remain a key competitive advantage for these firms.

Financial highlights

Prime yield Q3 2023 5.25% Logistics Denmark

Funding status

Funding costs are substantially up, and refinancing LTV is somewhat lower as banks prioritise their existing client relationships. Duration, tenant quality and reletting risk dictate financing possibilities in the logistics segment.


Volatile energy costs have incentivised landlords and tenants alike to invest in energy saving solutions. Several occupiers have signed Letters of Intent, securing large-scale roof-top installations of solar power in recent months.

Outlook for 2023

Rising interest rates have led to yield expansion and the transaction market has slowed down due to a gap between buyers’ and sellers’ price expectations. Economic headwinds persist, and we expect transaction volumes to fall compared to previous years.


Modern and sustainable logistics assets remain popular among investors as well as tenants, yet the conversion of urban industrial areas, in combination with limited access to new development opportunities, is putting pressure on supply.

Investment market

The logistics segment has been gaining traction among investors seeking stable and long-term opportunities. Investment opportunities in proximity to infrastructure, major ports and cities are especially in great demand. Yet, recent high demand for such properties has resulted in scarce investment opportunities and the logistics market remains popular, despite the macroeconomic developments.

Tenant market

The tenant market for logistics properties in Denmark has been robust and demand for efficient and well-connected logistics spaces remains high. Tenants seek facilities with proximity to major transportation routes, ports and urban centres to streamline their supply chains and meet fast delivery expectations. However, the demand for industrial properties has been receding and vacancy in this segment is expected to increase.



Funding status

Funding for logistics has seen dramatic long-term growth but has fallen significantly in the past year and a half. Despite this, we believe that the long-term, upward trend in logistics funding won’t be reversed by the recent short-term decline.


Sustainability is becoming an essential aspect of Denmark’s logistics segment. Stakeholders in the sector are increasingly focused on reducing the environmental impact of logistics operations. Sustainable warehouses and industrial facilities with energy-efficient lighting, solar panels and smart building management systems are gaining traction.

Outlook for 2023

The logistics segment is expected to continue its positive trajectory. Focus on ‘last mile’ delivery solutions will drive interest in properties closer to urban centres and both investors and tenants are expected to prioritise properties that offer sustainable and energy-efficient features. Overall, the outlook for the segment is positive and demand is expected to remain high.

JLL Nordic Outlook Autumn 2023 35
“Investor caution shapes the logistics scene, as funding hurdles continue to rise, and strategic value-add properties take center stage.”
Erik Mikael Johnsen Associate, Transactions, Akershus Eiendom
Financial highlights Vacancy level Q2 2023
“Demand remains high, but vacancy is beginning to increase.”
Prime yield Q2
Investment volume in 2023 YTD
Thomas Møller Rudlang Partner, Head of Department, EDC Poul Erik Bech

Residential Nordic

In the Nordics, the residential market has observed a decline in investment volume compared to the first half of 2022. However, it remains one of the most robust segments for investors.

The strong investor appetite persists, as the residential market is perceived as a relatively low-risk investment option. After experiencing a significant yield shift over the past 12 months, buyers and sellers are starting to find each other once again.

Furthermore, the market's stability is expected to be supported by a market imbalance caused by a reduction in new construction volumes. As the supply of new residential properties decreases, the segment is anticipated to withstand the ongoing economic downturn more effectively.

While challenges persist, the residential market in the Nordics continues to demonstrate resilience and allure for investors. The perceived low-risk nature of the segment, coupled with the improving alignment between buyers and sellers, contributes to its ongoing attractiveness. As the market adjusts to the evolving economic conditions, stakeholders should remain attentive to market dynamics and leverage opportunities for long-term success in the residential sector.

Financial highlights


Investment volume for the Residential segment in the Nordics last 12 months


Investment volume for the Residential segment in the Nordics H1 2023 vs H1 2022

JLL Nordic Outlook Autumn 2023 37 Investment Volume Nordic Residential Properties (€bn) 0 5 10 15 20 25 Denmark Norway Finland Sweden H1 2023 H1 2022 R12m 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
Akershus Eiendom, EDC and JLL

Residential Sweden

The residential market remains under pressure, even though investment activity has increased slightly from the weakest point. At the same time, new supply has and will continue to see a significant decline, further emphasising on the attractive demand-supply imbalance.

Investment market

The investment market remains weak with some disparity between buyers and sellers. However, more transactions have been recorded in the second quarter compared to previous quarters, and it is still possible to secure good deals for the right type of objects. The older part of the stock is struggling with low yields relative to financing costs. Newly-produced properties represent the majority of the traded assets, although there is limited investor appetite for the most aggressive yields.

Tenant market

High inflation figures continue to exert pressure on property owners operating within the residential segment, given the delayed compensation against inflation compared with other commercial segments.

Funding status

Banks have adopted a more cautious approach when it comes to

Financial highlights


Investment volume for the residential sector H1 2023 compared to H1 2022

Residential Finland

financing residential investments, displaying increased restrictions compared to previous practices. Notably, they are prioritising existing clients and enforcing more stringent LTV requirements held back by interest coverage ratio covenants that normally need to exceed 1.5x.


ESG remains of great importance but has declined in significance due to the impact of increased financing costs on investment feasibilities. However, it is still considered a basic requirement with pricing implications in cases where fundamental criteria are not met.

Outlook for 2023

The next two quarters are expected to continue showcasing a somewhat cautious market, with relatively low transaction activity. A slowdown in the construction cycle and a more stable interest rate environment, along with more dependable conditions for rent setting in new production, will create better opportunities for developers and also have a positive impact on the transaction market.


Prime yield for new build multifamily buildings in Stockholm

Residential volume in general was historically low when compared to earlier years; however, the activity picked up during the second quarter of 2023. In terms of supply and demand, the amount of new construction starts has been historically low during 2023.

Investment market

Residential yields have been the lowest of all segments, thus the impact of increased financing costs has been strongest. The prime yield was 4.20 percent in the second quarter of 2023.

Tenant market

Short-term demand for rental apartments is growing, while demand for owning an apartment has decreased due to high financing costs. Long-term demand for rental apartments in the growth centres is supported by their growing populations. Despite the presence of common 100 percent CPI indexation clauses and higher inflation, it seems challenging to transfer the whole inflation figure to rents.

Funding status

Bank lenders have increased their margins and decreased their maximum LTV levels as the valuation yields are still tight, compared to

Financial highlights

4.20 %

Prime yield, a 10 bps increase Q/Q and a 110 bps increase Y/Y



Senior Director Capital Markets, Sweden

financing costs. Financing for secondary locations and new speculative developments is hard to find from the bank market at the moment.


The significance of sustainable solutions, especially relating to energy efficiency, is increasing continuously, and is driven by investors, shareholders and occupiers. New developments are driven by sustainable aspects, especially by energy efficiency solutions.

Outlook for 2023

Activity is expected to remain similar to the first half of 2023, or to invigorate moderately. Pricing adjustment is still ongoing; however, the gap is narrowing down. Certain investors have significant dry powder ready to be deployed to new acquisitions.

Transaction volumes in H1 2023, with activity increasing significantly from Q1 to Q2

The second quarter of the year had more activity than the first quarter, and the activity is expected to remain or to invigorate moderately for the remaining year.”
“There are still good opportunities to be found for diligent investors taking a more holistic view on the sector.”

Residential Norway

With the rise in housing costs, it is expected that housing prices will fall during the second half of 2023. However, challenges in the residential market are set to be temporary. Imbalance in the rental market has led to higher rental prices in the first half of 2023.

Investment market

We have experienced a healthy appetite for the residential market, with the transaction volume rising to about NOK 8.3 billion in 2023 from NOK 5.4 billion in the same period in 2022. Historically, residential property and projects have accounted for 11 percent of the total volume. In the first half of 2023, the residential sector was the most traded asset. We still expect good interest in the residential investment market, especially for development projects, due to positive prospects in the longer term.

Tenant market

During the last year, we have seen a historical growth rate in rental prices in Norway. According to Eiendom Norge, rental prices have resulted in a growth of 9.3 percent nationally, with Oslo, Stavanger and Sandnes having the highest growth rates.


Sustainability is reshaping the residential market by driving innovation in multiple elements of development projects. As environmental concerns continue to grow, the integration of sustainable features and practices will likely become even more central to property developers. This is reflected in the growth of residential projects with Building Research Establishment Environmental Assessment Methodology (BREAAM) certifications. In existing buildings, there is an increased focus among homeowners to improve the existing constructions with sustainable features.

Outlook for 2023

Norges Bank expects housing prices to have zero growth in 2023, with prices expected to drop in the second half of 2023. We expect rental prices to keep the high growth rate because of the market imbalance in the rental market.

Financial highlights


Share of residential transactions in the first half of 2023

Residential Denmark


Average increase in rental price from the last year

Demand for the residential segment remains high, yet high interest rates and building supply costs mean that development activity is expected to be lower in the short term.

Investment market

The residential segment has been a thriving investment market and has has been attracting both local and international investors. Consistent rental demand makes it appealing for investors seeking a low-risk investment asset. Investors are keen on acquiring properties that cater to the preferences of a diverse and demographically changing population, especially in central and well-connected neighbourhoods.

Tenant market

Changing demographics, limited supply of new residential properties, as well as difficulty for individuals to secure funding, signifies that demand remains high. Furthermore, long-term tenant demand is expected to continue its positive trajectory, due to a growing population as well as the continued urbanisation trend.

Funding status

Financing has become more difficult, particularly for older standing assets. Additionally, higher interest rates have decreased the number of development projects. We anticipate an influx of new developments when interest rates decline again.


Sustainability is a key focus in the residential segment. Developers are integrating green building practices, energy-efficient technologies and eco-friendly materials into residential projects.

Outlook for 2023

In the short term, the residential segment is expected to experience lower development activity, due to high interest rates and increased costs of building materials. Yet, as we look further into the future, the outlook for the Danish residential segment remains positive and transaction volume is expected to increase once the macroeconomic environment settles.

Financial highlights


Prime yield for new residential properties in Copenhagen


Person population growth in Copenhagen Municipality in the last 12 months

JLL Nordic Outlook Autumn 2023 39
“There is an imbalance in the market and we expect housing prices to fall in the second half of 2023.”
Kristian Småvik Analyst, Research, Akershus Eiendom
“Interest rates and the increasing cost of building supplies mean that development activity is expected to be lower in the short term.”
Jacob Lykke Bruun Partner, Capital Markets, EDC Poul Erik Bech


Services in Sweden

JLL is a world leader in real estate services, powered by an entrepreneurial spirit. We are in business to create and deliver value for our clients in a complex and constantly changing world.

JLL is a leading professional services firm that specialises in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with operations in over 80 countries and a global workforce of nearly 92,000 employees. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit or

Linus Ericsson, CEO JLL Sweden

+46 8 545 017 05

Capital Markets

Through proactive and inventive advice, our Capital Markets team creates value and makes transactions happen in the Nordic real estate market. We have an experienced transaction team, all of whom are passionate about real estate. Our edge is a unique combination of competence within transaction advisory services, corporate finance and financing through our Capital Markets team, together with the Debt & Financial Advisory team. Capital Markets has a broad knowledge base with strong local representation and a global network to help you succeed with your transactions, regardless if it is local transactions, cross border transactions, mergers & acquisitions or equity raising.

Daniel Anderbring, Head of Capital Markets Sweden

T: +46 8 453 5086

Thomas Persson, Head of Capital Markets Nordic

T: +46 8 453 5268

Debt & Financial Advisory

JLL Debt & Financial Advisory offers leading-edge financial advice with a primary goal to help clients find the best available financial solution for their investments and to manage their debt portfolios efficiently. JLL Debt & Financial Advisory is authorised by the Swedish Financial Supervisory Authority to trade in securities, which allows us to provide a full range of financial advice on conventional bank loans, mezzanine financing and derivatives, as well as raising funds from financial markets in the form of commercial papers or bonds. After the acquisition of HFF, JLL is the leading debt advisor globally.

Joakim Nirup, Head of Debt & Financial Advisory

T: +46 8 545 017 10

Valuation & Strategic Analysis

Knowledge of a real estate’s market value is a prerequisite for a successful property transaction—whether an investor is buying or selling. JLL Valuation & Strategic Analysis provides essential input during property transactions, for mortgages and financial statements, or when reporting to the MSCI Global Property Index. Our valuation team is certified in accordance with both national and international standards. We appraise all types of commercial real estate, from office and industrial/logistics facilities to retail premises and apartment buildings.

Patrik Löfvenberg, Head of Valuation & Strategic Analysis

T: +46 8 453 5246


At Agency we offer leasing and development advisory to property owners, and strategic advisory and tenant representation to corporates. JLL Leasing helps property owners find the right tenants for vacant premises and helps them make the right investments for commercially viable leasing terms. With our specialist expertise in the office, warehousing & logistics, and retail segments, we provide accurate, detailed knowledge upon which to base strategic decisions. JLL Tenant Representation helps corporates with their strategic real estate issues during establishment or relocation. We provide advisory during the process of finding premises that best support specific business operations through an inspiring occupational environment at an efficient rental cost. Our strength lies in our extensive market knowledge due to our local and global presence, which unlocks added value for our clients.

Erik Skalin, Head of Markets

T: +46 8 453 5289


JLL Research produces accurate, relevant analysis that underpins strategic decisions and contributes to successful property transactions. We monitor and measure current market trends and collect data on, for example, vacancy rates, take-up volumes and rental levels. For the past 20 years, we have compiled unique data sets. No matter what the property type—logistics facility, office space or retail premises—you can be sure that we will add knowledge and depth to your decision making.

Niclas Höglund, Head of Research

T: +46 8 453 5186

Project & Development Services (P&DS)

JLL P&DS offers strategic advisory and project management services during office changes or property development. Our goal is to ensure that projects are profitable for our clients and that they are implemented efficiently. Our experienced project managers possess broad knowledge of the processes involved in construc tion, technology (IT, security and AV), architecture/ interiors and change management. Guiding organisations through the process of either developing their property or implementing changes in their office (relocation or refurbishment) is an integral part of our core business.

Maximilian Keysberg, Head of Project & Development Services

T: +46 8 453 5125

ESG & Sustainability Services

Our ESG & Sustainability services team brings you the most up-to-date insight regarding what investors, tenants and banks appreciate in real estate when it comes to sustainability. Our specialty is assessing the key ESG parameters driving property value, and based on that recommend prioritized action plans and strategies. Regardless of where you are in the investment lifecycle, from setting up a fund to developing assets to divesting a portfolio. We can also deliver ESG DDs, Net Zero Carbon audits or help with more technical assessments.

Tuomas Vuorinen, Head of ESG & Sustainability Services

T: +358 503 023 037


Services in Finland

JLL Finland offers Capital Markets, Debt and Financial Advisory, Valuations, Strategic Consulting, Leasing, Tenant Representation, Asset Management and Development & Design Services to domestic clients and international investors in, and occupiers of, real estate in Finland. Our extensive global platform and in-depth knowledge of local real estate markets enable us to serve as a single-source provider of solutions for the full spectrum of our clients' real estate needs.

Capital Markets

Our Capital Markets team is the market leader in property transaction advice, delivering tailored solutions and providing strategic advice to clients looking to acquire or sell properties or portfolios. We advise our clients in both sell and buy side transactions across all property sectors, combining first-hand knowledge and comprehensive market data with rigorous analysis to maximise value and deliver results.


Uusitalo, Head of Capital Markets Finland

T: +358 400 103 450

Valuation & Strategic Consulting

Our expertise encompasses valuation of single assets and portfolios to complex development schemes and ranges from shopping centres to residential properties. Valuations are carried out in accordance with International Valuation Standards (IVS), RICS Valuation Standards and local AKA/KHK guidance. Our strategic consulting services include data-driven advice on high-level investment strategies, portfolio planning, market entry strategies, asset-level business plans and commercial due diligence. For occupiers, we provide network, location, and real estate strategies.

Kaisu Pienimäki, Head of Valuation & Strategic Consulting

T: +358 407 032 783

Debt and Financial Advisory

Our debt team is dedicated to helping clients to find the best possible financing, regardless of that being a senior term loan, a construction facility, mezzanine financing, a bond or a commercial paper program. The service encompasses procuring financing for acquisitions and developments, arranging and negotiating the terms of refinancing, assessing and optimising the portfolio capital structures as well as developing or updating financial risk management and hedging strategies. JLL is the leading real estate debt advisor in Europe, which enables us to reach to broad European debt markets and financing sources.

Eemeli Lehto, Head of Debt and Financial Advisory Finland

T: +358 503 245 919


Our Leasing team is the number one leasing agent in the Helsinki Metropolitan Area and is best known for offering tailored leasing solutions for landlords and investors to maximise the profitability of their investment. We specialise in office, logistics and retail properties with services ranging from traditional leasing to facelifts, property development and property branding.

Klaus Koponen, Head of Markets

T: +358 503 854 571

Tenant Representation

Our Tenant Representation team provides corporates and public institutions with strategy, services and technology that enhance the performance of their workplaces, real estate, and people. Our mission is to create and shape the future of workplace and real estate for our clients. We advise our clients in all aspects of their workplace and real estate matters to secure optimal functional and financial outcome. Due to our global reach, we can provide these advisory services to clients that have international real estate portfolios.

Klaus Koponen, Head of Markets

T: +358 503 854 571

Development & Design

Our Development & Design services consists of three service lines: Property Development Services, Project Management & Design Services and Workplace & Design services. With our three service lines, we help property owners in creating and executing a new revolutionary step for their properties. We design and execute minor and major renovation projects, help our customers analyse their current work environments and create a new work environment, best suited to the user's future business needs.

Tomi Tiainen, Head of Development & Design

T: +358 503 440 986

Asset Management

Our Asset Management service is aimed at both domestic and foreign real estate investors. We provide a holistic and result oriented approach to asset management. As part of the service, we create portfolio and property-specific strategies for leasing and property development, identifying the potential for profit and value creation. The portfolio’s strategy is achieved by leading, leasing, key customers, Property Management service providers and ESG development professionally.

Julia Aarni, Head of Asset Management

T: +358 40 768 4885

ESG & Sustainability Services

Our ESG & Sustainability services team brings you the most up-to-date insight regarding what investors, tenants and banks appreciate in real estate when it comes to sustainability. Our specialty is assessing the key ESG parameters driving property value, and based on that recommend prioritized action plans and strategies. Regardless of where you are in the investment lifecycle, from setting up a fund to developing assets to divesting a portfolio. We can also deliver ESG DDs, Net Zero Carbon audits or help with more technical assessments.

Tuomas Vuorinen, Head of ESG & Sustainability Services

T: +358 503 023 037

JLL Nordic Outlook Autumn 2023 41

Services in Denmark

EDC Poul Erik Bech

EDC Poul Erik Bech was founded in 1978 and currently has 140 employees located across Denmark in 19 commercial business centres. Hard work, ethics and a solid business sense are the three pillars on which the company was founded in 1978. EDC Poul Erik Bech is primarily owned by the Poul Erik Bech Foundation, which supports non-profit organisations where volunteer enthusiasts make a difference for children.

EDC International Poul Erik Bech

EDC International Poul Erik Bech is the one point of entry for international clients, which ensures efficient communication and services tailored to your business. EDC International Poul Erik Bech will ensure that the best team is assembled for the job, whether these are local estate agents or external business partners.


Services in Norway

About Akershus Eiendom:

Akershus Eiendom was established in 1992, offering services within transactions and leasing advisory of Norwegian commercial real estate. The company has taken part in many of the largest transactions in the Norwegian commercial real estate market. In 1997, the company established a separate leasing department in order to focus further on the Oslo office leasing market, and in 2001 the department for research and valuation was added to the organisation. In 2015, the tenant representation department was started.

In 2001, Akershus Eiendom entered into a cooperation agreement with JLL, one of the world’s leading commercial real estate agents. The cooperation has led to considerable synergies between the companies both in tenant representation, research and large transactions advisory.


Helle Nielsen Ziersen

Partner, Director, Head of International Relations, EDC Poul Erik Bech, MRICS

T: +45 33 30 10 17 | M: +45 40 99 99 46

Joseph Alberti

Head of Research, EDC Poul Erik Bech,

T: +45 58 58 74 67


• Capital markets

• Buyside advisory

• Due diligence

• Corporate solutions

• Letting and tenant representation

• Project development

• Valuation

• Research

• Property management

Jørgen Haga

Head of Capital Markets, Akershus Eiendom

T: +47 907 27 359

Kari Due-Andresen

Head of Research, Department: Research, Akershus Eiendom

T: +47 911 30 526


• Capital markets

• Buy- and sell-side advisory

• Due diligence

• Leasing

• Tenant representation

• Project development

• Valuation

• Research


Property Data Definitions

Prime Office Rent

Represents the top open-market rent that could be expected for a notional office unit of the highest quality and specification in the best location in a market, as at the survey date (normally at the end of each quarter period). The rent quoted normally reflects prime units of over 500 square metres of lettable floor space, which excludes rents that represent a premium level paid for a small quantity of space. The Prime Rent reflects an occupational lease that is standard for the local market. It is a fair rent that does not reflect the financial impact of tenant incentives, and excludes service charges and local taxes. It represents JLL’s market view and is based on an analysis/review of actual transactions for prime office space, excluding any unrepresentative deals.

Prime Yield

Represents the best (i.e. lowest) 'rack-rented' yield estimated to be achievable for a notional office property of the highest quality and specification in the best location in a market, as at the survey date (normally at the end of each quarter period). The property should be let

at the prevailing market rent to a first class tenant with an occupational lease that is standard for the local market. The prime initial net yield is quoted, i.e., the initial net income at the date of purchase, expressed as a percentage of the total purchase price, which includes acquisition costs and transfer taxes. The Prime Yield represents Jones Lang LaSalle’s 'market view', based on a combination of market evidence, where available, and a survey of expert opinion.


Vacancy represents completed floor space offered on the open market for leasing, vacant for immediate occupation on the survey date (normally at the end of each quarter period), within a market. It includes all vacant accommodation inclusive sub-letting space irrespective of the quality of office space, or the terms on which it is offered. Vacancy excludes 'obsolete' or 'mothballed' office property, i.e. floor space held vacant and not being offered for letting, usually pending redevelopment or major refurbishment.

JLL Nordic Outlook Autumn 2023 43



Birger Jarlsgatan 25

Box 1147

SE-111 81 Stockholm

Tel: +46 8 453 50 00


Kungsportsavenyn 21

SE-411 36 Gothenburg

Tel: +46 31 708 53 00


Keskuskatu 7, 4th floor

FI-00100 Helsinki

Tel: +358 207 61 99 60

In cooperation with Oslo

Akershus Eiendom AS

Ruseløkkveien 30 (10th floor)

NO-0251 Oslo

Tel +47 22 41 48 00


EDC International Poul Erik Bech

Bremerholm 29

DK-1069 Copenhagen K

Tel: +45 33 30 10 00

© 2023 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in this document is proprietary to JLL and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of JLL and shall be kept confidential. Reproduction of any part of this document is authorized only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorization of JLL. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof.

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