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JLL Nordic Outlook Focus: Future of Work

Spring 2025

Dear reader

After a prolonged period of uncertainty in commercial real estate, 2024 marked a turning point. Lower policy rates increased risk appetite, which was evident in falling credit margins and larger bond volumes for real estate companies. Despite global uncertainty and a slow economy, improved financing conditions boosted transaction volumes gradually throughout the year, with the aggregated volume for 2024 ending more than 30 percent higher in the Nordics. The investor base broadened during the year, and the gap that existed regarding price expectations between buyers and sellers is now easier to bridge. We are now seeing more and more bidders per sale object and more categories and geographies of properties being traded. Although conditions vary between geographies and segments, we believe that the real estate cycle has turned.

“ Looking to 2025, we believe that the real estate market has turned a corner.

Erik Nyman Head of Research, JLL Sweden

This is not to say 2025 will be easy. Uncertainties persist at multiple fronts and the Nordics are also impacted. Although the region is expected to see increased growth from last year and relatively stronger growth compared to the euro area, short-term forecasts have been revised down in Sweden and Finland as consumers hesitate to spend, despite rate cuts and real income growth.

The listed real estate market in Sweden ended the year flat after a fourth quarter setback, triggered by rising long-term interest rates. This pattern mirrored global trends, but European, and particularly Swedish, real estate equities experienced a more significant negative impact than their international peers. However, the equity market readily absorbed rights issues geared towards portfolio growth and new real estate initial public offerings (IPOs).

As 2025 kicks off, the commercial real estate industry in the Nordics and elsewhere faces new challenges. The future of work remains uncertain, with questions about work methods and arrangements most relevant. It comes as organisations push for growth and productivity gains to get the best from their employees. The focus article in this edition leverages JLL's Global Future of Work survey on emerging commercial real estate (CRE) trends and aims to provide guidance among these changes, offering insights into the unique perspective of the Swedish and Finnish market within the international context. Topics relate not only to the evolving hybrid landscape but also to sustainability and technology adoption today and in the future.

In addition to our focus article, you will find a comprehensive review of the Nordic real estate markets. This includes analyses of office, retail, logistics and residential sectors across different geographical areas within the Nordic region. We have also included a snapshot on hotels.

Thank you for your interest and engagement with our report. We hope you will find the insights within to be valuable and helpful.

Prague

Bucharest, Luxembourg

Stockholm, Gothenburg, Oslo, Athens, Lyon, Milan, Rome

Cologne

London City, Paris CBD, Warsaw

Berlin, Frankfurt, Hamburg, London West End, Stuttgart

Amsterdam, Barcelona, Brussels, Geneva, Lisbon, Zurich Dusseldorf, Munich

Edinburgh, Madrid, Manchester

Source: Akershus Eiendom, EDC and JLL JLL PROPERTY CLOCK Q4 2024

Helsinki, Copenhagen, Malmö, Budapest

Macroeconomic conditions

The global economic landscape has evolved largely as anticipated, though regional disparities have become more pronounced. While the United States maintains a robust economic performance, key Nordic export markets such as the Eurozone and China are exhibiting clear signs of weakness. Compared to earlier projections, the US GDP forecast has been revised upward, particularly for 2025, whereas the Eurozone's growth outlook has seen a slight downward adjustment.

The US economy continues to demonstrate strength, with household consumption showing significant growth. Yet, although inflation in the US has decreased since the start of the year, it remains stubbornly sticky, with the core Personal Consumption Expenditures (PCE) inflation rate, a key focus for the Federal Reserve, reaching 2.8 percent annually in December. We can also add any impact of government fiscal stimulus to the inflationary worry. Consequently, additional rate cuts have a higher hurdle to pass.

“

Regional disparities are pronounced.

Erik

Nyman

Head of Research, JLL Sweden

In contrast, the Eurozone is experiencing moderate growth, with economic recovery delayed, despite rising real wages. Confidence indicators in the region remain below normal levels, especially in Germany. Likewise, latest incoming Purchasing Managers' Index (PMI) data shows the region's two largest economies in deep contraction. The weak momentum going into 2025 isn’t exactly helped by the political situation in these two markets.

Central banks globally have continued to lower their policy rates. Both the Fed and the ECB cut their rates in December, ending the year 100 basis points lower than at the start of the year, and in January 2025, the ECB also lowered their interest rates by another 25 basis points. Market expectations for central bank policies have diverged, with fewer rate cuts anticipated from the Fed compared to the ECB.

The Nordic region is poised for increased growth this year, with domestic demand expected to be the primary driver. This growth will be fuelled by a cyclical upswing characterised by low inflation, decent wage growth, improved confidence and supportive fiscal and monetary policies. Private consumption is anticipated to rise, while fixed investment is expected to follow with an evident delay.

The policy environment is set to become more growth-supportive, with Nordic governments planning significant fiscal loosening and central banks normalising interest rates at varying paces. Inflation is projected to remain below the 2 percent target in most Nordic countries, with central banks wary of a persistent undershoot that could hinder growth. However, elevated geopolitical and supply-side risks will keep policymakers cautious. In 2025, growth is expected to pick up in all Nordic economies except Denmark, where it’s projected to pick up at a slower rate, but remain above 2 percent.

Sweden's economy is currently in a mild recession, with GDP growing by 1.1 percent in the fourth quarter of 2024 compared to the same quarter in 2023 (GDP indicator). There are indications that the economic cycle may be turning, with improving consumer and business confidence. However, Swedish households remain cautious. The present economic situation is characterised by weak spending and high savings rates. From this point, wage increases are beginning to post real growth again, and lower interest rates along with tax cuts are expected to provide some economic stimulus.

Source: Oxford Economics and JLL

2025 will be better than 2024 but that’s not to say it will be an easy year. We will witness an unsettling level of economic, fiscal and international trade uncertainty. The good thing is that everyone is fully aware and is watching closely. Looking further ahead, 2026 is an election year in Sweden, which is likely to bring additional fiscal stimulus as political parties compete for voter support.

Source: National central banks and Riksbanken.

Note: The diagram shows the cumulative change in the policy rate from January 1, 2024 to January 31, 2025.

Listed property sector in the Nordics

The listed market is providing equity to the property sector in the way it should. The sector not only witnessed a handful of IPOs during 2024 (Prisma Properties, Sveafastigheter and Intea for example), with momentum starting in April, but also delivered capital via new equity issues. JLL recorded more than 30 equity issues in Sweden alone, and, importantly, most of them targeted portfolio growth. The list of listed companies is long. We track no less than 45 companies, with a total property value exceeding €140 billion and a market capitalisation of more than €60 billion, with 90 percent of them being Swedish.

“

Volatility was evident throughout the year in the listed sector.

Adam Denlert Senior Associate, Research, Sweden

Looking back at 2024, the listed sector ended the year at almost the same level as it started. The same is true for a 5-year swap (SEK) that started the year at 2.4 percent and ended at the same rate. Nonetheless,

there was volatility throughout the year. In early October, the sector had gained 18 percent from the start of the year, while the 5-year swap (SEK) troughed at 1.95 percent. We then witnessed higher long-term rates coinciding with a relatively weak listed property sector performance in the last quarter of 2024. The same pattern, but less pronounced, was witnessed for international peers.

For the companies that report a valuation yield, the median in the third quarter of 2024 (the last available quarter) was 5.5 percent, which was unchanged throughout 2024. Those mainly geared to residential reported a 4.7 percent median, whereas those mostly exposed to industrial and logistic assets reported a 6.5 percent median (with office and retail medians coming in between).

There is still a marked variation between sectors and companies with regards to equity valuations. Based on the most recent reported net asset values, the listed sector is trading at a discount of approximately 30 percent (median). Smaller companies tend to trade at higher discounts, so the weighted average is much less. Again industrial/ logistics companies are trading above their reported net asset values, while (most) companies in other segments are trading at significant discounts.

Interest and credit markets

Interest market

After a period of high interest rates, in 2024 the Riksbank decided to cut the policy rate in five out of eight policy meetings, with the 50 basis points cut in November representing the largest reduction in over a decade. 2025 also started with yet another rate cut, which means that the policy rate has been cut by a total of 1.75 percentage points to 2.25 percent since May 2024. At the latest monetary policy meeting, the Riksbank communicated that the policy outlook remains unchanged, although uncertain, and that the the rate would remain unchanged from this point.

The ECB delivered four cuts to its deposit rate during 2024, and yet another one in January this year, which brought the rate down from 4.0 percent to 2.75 percent. At the beginning of January, the market expectation for 2025 was for a minimum of two quarter-point rate cuts by the ECB. In the US last year, the Fed lowered the target interval for federal funds with 100 basis points to a range of 4.25–4.50 percent. And, at the Fed’s policy meeting on December 18, 14 out of 19 Federal Open Market Committee (FOMC) members indicated two quarter-points cuts or less for 2025.

After a two-year low at the beginning of December, the 5-year SEK and Euro Swaps increased by around 50 basis points, to 2.5 percent by mid January. The key drivers behind this recent surge in swap rates are the concerns about higher US interest rates and fears that inflation could start to accelerate again if President Trump’s proposed polices such as tax cuts and higher tariffs are implemented. Continued sticky inflation, in combination with tax cuts and higher tariffs, might force the FED to hike the rates as a next move.

Credit market

Real estate companies issued approximately SEK 90 billion in the SEK bond market during 2024, which could be compared with around SEK 40 billion in issued volume during 2023. A-rated companies (or higher) accounted for around 35 percent of the issued bonds in the SEK denominated market, compared to 65 percent during 2023. The liquidity in the Eurobond market has also improved as SEK 20 billion was issued during 2024, compared with SEK 5 billion in 2023. Nevertheless, the Eurobond market has SEK 70 billion in maturities coming up in the next two years, which means that the appetite from the Eurobond investors needs to improve further to absorb all maturities. The most recent Swedish issuers in the Eurobond market have been Castellum, Cibus, Heimstaden Bostad, Sagax and Sveafastigheter.

Throughout 2024, the capital markets showed a significant improvement for real estate companies with a BBB+ rating or lower as issued volume in this segment started to increase substantially. Bond spreads for companies with a BBB rating or higher have become more attractive in relation to what the banks are currently offering as it is possible for these companies to obtain spreads below 100 basis points on shorter terms. During 2024, the SEK bond market had over 20 different issuers in the high yield segment for real estate, which is almost in line with 2021 when the highest issued volume ever was recorded. Another notable

observation in the high yield segment is that issuers such as Stendörren, NP3 and Emilshus have issued bonds at record low margins during the last six months.

The 25 largest Swedish listed real estate companies have decreased their bank lending against Nordic banks by SEK 15 billion over the last six months, while, at the same time, bank lending towards real estate has increased by SEK 17 billion. This implies that bank lending has somewhat tilted towards small and mid-size companies. The largest companies have instead switched their lending towards the bond market, which is currently offering more attractive terms. The increase in bond volume is almost equivalent to what these 25 companies have decreased in bank volume.

Our view is that Nordic banks are looking to grow their lending portfolios but competition from the bond market is fierce, especially for the stronger real estate companies that the banks favour. Because of this, we have seen some aggressive pricing from banks towards their favoured customers. We also hope that this will make the banks more willing to start up new relations.

The loan-to-value (LTV) levels that Nordic banks offer are still largely decided by the interest cover ratio (ICR). We see very few deals above 60 percent LTV from Nordic banks and amortisation almost seems mandatory, even at low LTV levels.

The opening of the real estate bond market for Swedish issuers has also indirectly benefitted bank market conditions in Finland. We are seeing clearly more appetite towards established investors. In refinancing situations especially, some Nordic banks are offering aggressive terms for best-in-class clients. However, banks are still quite cautious for new clients and in their asset selection. Cash flow of the assets remain as the focus, but the lower rates and lower margins have translated to moderately higher LTVs. Roughly, the offered loan margins have come down some 50 basis points and LTVs were more than 5 percent higher over the course of 2024. Development financing is still scarce and Nordic banks only commit themselves to development financing at moderate loan-to-cost (LTC) levels for projects without any significant leasing risk. International lenders play a significant role in larger and higher LTV refinancing opportunities as well as in the more opportunistic development cases.

Outlook

Even though we are expecting some improvement, the transaction market still remains somewhat subdued and activity levels have not yet picked up significantly. Hence, refinancing arrangements remain the major theme. We are still likely to continue to see bridge-to-sell arrangements as well as continued polarisation between the more liquid and less liquid assets.

New stable rate levels will help to improve overall financing conditions. But major risks will arise from geopolitical developments.

“The issued volume in the real estate SEK bond market during 2024 was SEK 90 billion.

Mattias Baggfelt Head of Debt & Financial Advisory Stockholm, Sweden

TERM RATES IN SEK, NOK, USD AND € (%)

Source: Bloomberg and JLL

Mattias Baggfelt Head of Debt & Financial Advisory Stockholm, Sweden

Eemeli Lehto Head of Debt & Financial Advisory Helsinki, Finland

Investment market Sweden

In Sweden, positive financing conditions have gradually spilled over into the transaction market, but the main impact wasn’t evident until the very end of the year. While aggregated 2024 volumes were 51 percent higher than the year before, fourth quarter volumes more than doubled compared to the corresponding quarter in 2023. Having concluded last year was a significant move in the positive direction, records show that it’s still almost 40 percent below the last 10-year annual average transaction volume.

Increased activity has been evident in virtually all segments. Boosted by a strong fourth quarter and some major portfolio deals, residentials accounted for 28 percent of total transaction volumes throughout the year. More than half of that volume is attributable to three large deals with sellers under some financial pressure indicating a continued need for consolidation and restructuring.

Office also witnessed renewed investor focus, with some SEK 20 billion transacted in the fourth quarter alone, which is more than during the rest of the year in aggregation. There were multiple large single asset deals exemplified by KPA's SEK 3.6 billion purchase in Solna and Wallenstam's SEK 2.8 billion acquisition in CBD Stocholm. Importantly, activity also spread to other geographies with large office deals done in Gothenburg. Swedish institutions continue to dominate the office investment scene. In all, office accounted for 30 percent of transaction volumes in 2024.

The industrial/logistics segment continues to attract a diverse set of buyers and although investment volumes were 25 percent higher than 2023 the segment represent a lower portion of overall volumes (19 percent) than witnessed lately. Retail volumes have also improved from a low base but, at 9 percent, it remains a small portion of the market.

The investor base broadened during the year, and the gap that existed regarding price expectations between buyers and sellers is now easier to bridge. We are seeing more and more bidders per sale object and more categories and geographies of properties being traded. Although conditions vary between geographies and segments, we believe that the real estate cycle has turned. JLL's latest Global Sentiment Survey also points in this direction. In November 2024, we saw the strongest result in almost three years. Most participants believe that conditions will improve further over the next six months.

In recent years, Sweden has faced international scrutiny due to various challenges, drawing negative attention. However, historically, Sweden has been one of the most liquid real estate markets globally. This liquidity has been driven partly by international capital, attracted by the country's political and economic stability, relatively high transparency and favourable demographic trends. Now, Sweden is positioned to outperform much of Europe in terms of growth potential. This shift creates an opportunity for Sweden to regain positive international attention and reestablish itself as an attractive investment destination.

“

The number of bidders per object is increasing and more categories and geographies of properties are being traded.

Daniel Anderbring

Head of Capital Markets, Sweden

Daniel Anderbring Head of Capital Markets, Sweden

Investment market Finland

Real estate investment activity in 2024 hit another record low with a total transaction volume of €1.8 billion, down from €2.3 billion in 2023 and significantly lower than the €6.1 billion in 2022. Although financing conditions have improved, the transaction market is taking longer than expected to bounce back. As we enter 2025, market conditions and sentiment are showing signs of improvement. We expect activity to increase cautiously throughout the year, with transaction volumes likely to grow in the second half of the year.

“

We believe that transaction volumes hit the lowest point in 2024 and the market will improve gradually in 2025.

Tero Uusitalo Head of Capital Markets, Finland

In 2024, industrial and logistics emerged as the largest sector in terms of transaction volume, totalling €615 million. The residential sector followed as the second largest, with transactions amounting to €425 million. Healthcare and retail sectors recorded transaction activities of €325 million and €220 million, respectively. Office transactions remained very low, with a volume of only €120 million.

The financing situation is generally easing with decreasing interest rates. At the same time, geopolitical and economic uncertainties remain significant. Overall, we believe that the property cycle is about to turn, but there are still disparities between different segments and geographies. The gap in price expectations between buyers and sellers has started to narrow down but we are still waiting to see more bidders in the market. The polarisation of assets and the stringent criteria set by buyers remain strong, leaving some properties cold in the market. Investors are primarily seeking prime assets in central locations with appropriate Environmental, Social and Governance (ESG) criteria across all segments.

Looking ahead to the rest of 2025, developments in interest rates and the overall economy will impact the transaction market. Activity in the first half of 2025 is expected to follow the activity levels of 2024, with further increases anticipated towards the second half of 2025.

Source: JLL

In 2024, the transaction volume was record a low 1.8€bn 2024 transaction activity decreased compared to 2023 -25%

Tero Uusitalo Head of Capital Markets, Finland

Investment market Norway

After experiencing the weakest transaction year since 2013, activity rebounded in 2024, with a total transaction volume of NOK 80 billion— up ~40 percent from 2023. Transaction activity continues to closely align with long-term interest rate trends, which, over the past year, have been marked by high volatility. Periods of declining long-term rates have spurred increased activity, while reduced economic uncertainty has significantly lowered credit market risk premiums. Clear signs of market liquidity re-emerged last year, and the positive market sentiment has carried into 2025.

“

Market sentiment is improving on the back of impending rate cuts.

Sindre Vesje Bråtebæk Director, Capital Markets & Research, Akershus Eiendom

The strong increase in transaction volume in 2024 was partly driven by several large deals. There were 18 transactions exceeding NOK 1 billion, accounting for approximately half of the total volume. The largest was Reitan’s acquisition of Entra’s Trondheim portfolio for NOK 6.4 billion.

Following a decline in demand for office properties in 2023, the office segment captured a larger share of the market in 2024, approaching normal levels. This development indicates a renewed attractiveness for office property investments. The Norwegian investment market has also seen a significant rise in demand for logistics and industrial properties, which now account for nearly 30 percent of total transaction volume—which is approximately double the historical average of around 15 percent.

Entering 2025, we are witnessing the emergence of a green shift in the transaction market. Environmental and sustainability considerations are now widely evaluated in purchasing decisions. While not all parties have an active ESG strategy or a high willingness to pay for green buildings, almost everyone is assessing how new environmental regulations impact the properties they own, are looking to buy or are considering leasing. This trend became significantly more pronounced in the autumn of 2024, compared to previous years.

Market interest remains strong, with a noticeable improvement in sentiment throughout last year. Despite rising interest rates and significant volatility, there is slight downward pressure on yields. This trend is driven by factors beyond interest rate movements. Credit margins have approached historical levels, with potential for further decline. Life insurance companies remain underweight in real estate, and real estate funds with institutional capital have substantial funds they aim to deploy in the coming period. We estimate a total transaction volume of NOK 100 billion (~EUR 9 billion) in 2025.

transaction volume 2024

The office market share of total investment turnover in 2024 ~40%

Sindre Vesje Bråtebæk Director, Capital Markets & Research, Akershus Eiendom

Investment market Denmark

The commercial real estate investment market in Denmark remains a robust and attractive sector, supported by the country’s strong economic fundamentals, political stability and transparent regulatory environment. Known for its AAA credit rating and strategic position within Europe, Denmark offers a favourable environment for both domestic and international investors. Transaction volume in 2025 increased to DKK 52.1 billion, an increase of 16 percent compared to 2023.

“

We are seeing a growing intrest in the investment market, and the gap between the buyers and sellers has narrowed.

Helle Nielsen Ziersen Partner, Director, Head of International Relations, MRICS

Residential properties continue to dominate the market, particularly in Greater Copenhagen, which has significant population and economic growth. Prime residential assets in central locations like Ørestad, Nordhavn, and by train or metro stations are especially sought after, due to tenant demand. As such, residential properties accounted for approximately half of the total transaction volume.

Sustainability has become a defining feature of the market, with greencertified properties commanding a premium as investors align with Denmark’s ambitious climate targets.

In addition to the residential sector, logistics properties have gained significant traction. Well-located logistics facilities near major cities and transport hubs are highly desirable, offering strong rental growth potential. Industrial and logistics properties accounted for a quarter of the total transaction volume in 2024, including the largest transaction of the year, DSV's sale of their logistics asset located in Horsens to Swedish investor Catena, for DKK 3.3 billion.

The market has shown resilience amid economic uncertainty and rising interest rates. While higher financing in recent years, costs have led to a moderation in transaction volumes, core assets with strong tenant profiles remain highly competitive. Investors are increasingly focusing on long-term value creation, emphasising sustainability, technological innovation and adaptability to evolving market demands.

Copenhagen leads the commercial real estate market, with its dynamic economy and international appeal. Secondary cities like Aarhus, Odense, and Aalborg are also seeing growing interest, particularly for residential and logistics properties. These cities offer attractive opportunities for investors seeking diversification and higher yields compared to the capital.

The Danish commercial real estate market is poised for steady growth. Despite challenges such as rising costs and shifting tenant preferences, the country’s stable economy, emphasis on sustainability, and demand for modern, high-quality assets will continue to drive investment activity. With a strong foundation and growing focus on green and innovative developments, Denmark remains a key player in the Nordic commercial property market.

investment volume 16% higher in 2024 than 2023

Helle Nielsen Ziersen Partner, Director, Head of International Relations, MRICS

Future of Work: Navigating challenges and opportunities

As 2025 kicks off, the commercial real estate industry in the Nordics and elsewhere faces new challenges amid economic pressures, geopolitical tensions, climate concerns and evolving social demands. The future of work remains uncertain, with questions about work methods and arrangements more relevant than ever. It comes as organisations push for growth and productivity gains to get the best from their employees.

This focus article aims to provide guidance around these changes, offering insights into the unique perspective of the Swedish and Finnish market within the international context. The research is based on JLL's Global Future of Work 2024 survey, a biannual study conducted since 2011. The current edition includes responses from 2,333 real estate decision-makers across 25 key markets worldwide, including 53 from Sweden and 57 from Finland. The unprecedented scale of this study reflects the growing need for industry benchmarks and trends. The study is focused on large corporates across various industries, often with an international presence. In Sweden, 68 percent and in Finland, 45 percent of respondents were from companies with more than 5,000 employees, providing a perspective on large corporate practices. The graph below also illustrates the industry mix represented in the survey across Sweden and Finland jointly.

WHAT IS YOUR COMPANY’S CORE BUSINESS?

(SWEDEN AND FINLAND AGGREGATED)

Banking, insurance or other financial services Technology, technology manufacturing and digital

or consumer goods

Life sciences and pharmaceuticals

E-commerce

Data centres

Real estate

Aerospace and defence

Professional and business services

Media and communications

Warehousing and logistics

Food and beverage

Construction and engineering

Key Areas of Focus:

1.

Office-Centric Culture in a Hybrid World Sweden presents a unique case in the global hybrid work landscape, showcasing a preference for office-based work that sets it apart from many other countries. The data reveals a striking trend: 89 percent of organisations in Sweden have a policy requiring at least three days of office attendance per week. Even more notable is that 47 percent of Swedish companies mandate a full five-day office presence, which is the highest in Europe and significantly exceeds the average of 35 percent.

In Finland, the emphasis is more strongly on a flexible approach that combines the benefits of remote and office-based work. While 80 percent of Finnish organisations require office presence for at least three days a week, only 33 percent expect full-time office attendance —aligning closely with the EMEA average. With a continued gap between employees' expectations and the ask from employers, two-thirds of Finnish organisations consider hybrid work arrangements to be a critical element in shaping their future workplace strategies.

Here are indications of slight cultural differences—while in Sweden the importance of social interaction and teamwork is more strongly emphasised, in Finland there has traditionally been an emphasis on more independent work.

PERCENTAGE OF COMPANIES THAT MANDATE A FULL FIVE-DAY WEEK OFFICE PRESENCE (ACCORDING TO COMPANY POLICY)

Even though there is often a gap between what employers expect and what is happening, CRE leaders must assess whether gradually higher compulsory attendance and a return to office will continue and what it means for space utilisation.

The Swedish office-centric approach is not a temporary measure but appears to be a long-term strategy. Half of the surveyed companies anticipate an increase in office days by 2030, with only one out of five expecting a decrease, indicating a continued commitment to in-person work environments. However, this strong preference for in-office work is not without its challenges.

Swedish companies have been comparatively slower in addressing the needs of a hybrid workforce. Only 51 percent report making significant impact in this area, which stands in contrast to the EMEA average of 64 percent. This suggests that while Swedish organisations are maintaining a traditional office-based culture, they may be lagging or choosing not to adapt to the global trend of flexible work arrangements.

In Finland, the needs of hybrid work are clearly addressed more effectively, with Finland's result (66 percent) being above the EMEA average in this regard. Despite the clear transformation in work culture, it's evident that in Finland too, the office remains a central part of working life. 46 percent of decision-makers expect the number of office days to increase by 2030, although in many organisations this goal may still be implemented within the framework of a hybrid work strategy.

Regardless of the differences in emphasis, both Finland and Sweden show a significant investment trend in space design and fit-outs, with 4 in 10 CRE leaders foreseeing significantly increased spending in this area.

This investment indicates a focus on creating office environments that can compete with the comforts of home working and support diverse work styles within a predominantly office-based culture. Data also suggests a trend towards expanding office spaces and budgets, as most CRE leaders expect to see an increase in occupied space and office location, likely in response to matching business growth. In both countries, these results are higher than the EMEA averages.

The challenge for Swedish companies moving forward will be to balance their strong office-centric culture with the growing global trend towards more flexible work arrangements. They will need to find ways to maintain the benefits of in-person collaboration while also addressing the evolving expectations of employees who have experienced the benefits of remote work.

In Finland, on the other hand, the general challenge is the exceptionally high enthusiasm for remote work among employees in international comparison. Companies have already given much thought to how the office could better support new ways of working, and the importance of explaining to employees how working from the office can benefit them, their teams and company culture.

2. Embracing Technology and AI

Both Swedish and Finnish corporations are demonstrating a strong focus on digitisation and AI adoption in the corporate real estate sector, aligning with global trends but with some distinct characteristics. The survey reveals that over 80 percent of global companies agree their organisations will accelerate investment in AI in the next five years. This enthusiasm is further evidenced by the fact that 6 in 10 CRE leaders are currently piloting or exploring AI use cases for CRE.

The interest in AI extends across various aspects of real estate management:

• Data analysis and market insights

• Personalised customer service and solutions

• Smart building management and space optimisation

• Automated design processes and planning

• Predictive maintenance and risk management

This tech-forward approach is reflected in spending projections, with two out of three CRE leaders in both Sweden and Finland foreseeing increased spending on CRE technology by 2030. This indicates a longterm commitment to integrating AI and advanced technologies into real estate operations.

However, the adoption of AI is not without challenges. Nordic CRE leaders identify costs and budget limitations, data quality and availability, and data and cyber security risks as the top barriers to greater AI adoption. Overcoming these hurdles will be crucial for realising the full potential of AI in reshaping the future workplace.

These challenges highlight the need for strategic planning and investment in data infrastructure and security measures to fully leverage the potential of AI in real estate.

Two-thirds foresee increased CRE technology spending by 2030

As we look towards 2030, the integration of AI in CRE is likely to become more sophisticated. We might see the emergence of truly smart buildings that can adapt in real-time to occupancy patterns, energy needs and even individual employee preferences. However, realising this potential will require ongoing investment in both technology and human expertise to effectively implement and manage these AI systems.

3. Sustainability: A Key Priority

Swedish companies are demonstrating a strong commitment to sustainability that surpasses many of their European counterparts. This commitment is evident in both their current practices and plans.

By 2030, 75 percent of companies foresee increased spending on sustainability performance. This significant majority indicates a longterm commitment to improving environmental outcomes through real estate decisions. In Finland, they are still lagging behind, as only 56 percent of companies anticipate increasing their spending related to sustainability performance. Moreover, 38 percent of Swedish companies are willing to pay a premium to occupy spaces with leading sustainability and green credentials, while in Finland the corresponding figure is 30 percent and in the EMEA region it is only 27 percent. This willingness to invest in sustainable spaces sets Swedish companies apart and suggests that they view sustainability not just as a compliance issue, but as a core value.

The focus on sustainability extends beyond green building certifications. Both Swedish and Finnish companies are also prioritising climate resilience. One out of three Swedish and Finnish companies plan to select only buildings that are resilient to climate events (e.g., drought, flooding, hurricanes) by 2030. This forward-thinking approach demonstrates an understanding of the long-term risks posed by climate change and a commitment to adapting to these challenges.

This strong sustainability focus is reflected in corporate strategies, with 79 percent of Swedish companies having well-defined programs to reduce their environmental footprint. Finland's share is in line with the EMEA of around 70 percent. Interestingly, Swedish companies show a preference for developing these strategies in-house, with 57 percent planning to carry out sustainability strategies for their real estate portfolios primarily in-house the highest percentage in EMEA. This in-house approach suggests a desire to maintain control over sustainability initiatives and integrate them deeply into corporate culture. In Finland, on the other hand, there is a stronger reliance on the help of external consultants, with 40 percent of companies doing so, which is the highest proportion across the entire EMEA level.

Three out of four foresee increased sustainability spending by 2030

The emphasis on sustainability is also reflected in the skills that CRE leaders believe will be important in the future. In Sweden, the majority strongly agree that environmental stewardship is a skillset needed for CRE to add value to business. This indicates that sustainability is not seen as a separate initiative, but as an integral part of real estate strategy and value creation. In Finland, several other areas of expertise are emphasised more, for example, resilience, flexibility and agility, creative thinking and holistic problem-solving.

4. Challenges and Opportunities for CRE Leaders

Real estate decision makers find themselves with multiple organisational priorities. The scope of CRE is evolving swiftly, encompassing business efficiency, digitisation, growth and hybrid adoption all the way through to talent retention, social and environmental impact. The diversification in expectations between short-term pressure and long-term goals, as illustrated by the graph below, also comes with challenges. The demand for cost reduction, for example, a pronounced ask in Finland, comes at the same time as CRE is expected to support business growth.

With several commonalities between Sweden's and Finland's high hopes for CRE to reduce environmental impact and support innovation, it’s also interesting to understand the equally low priority to deliver greater community impact.

The survey also exposes differences between the neighbouring countries, as exemplified by expectations to support hybrid work to a larger extent in Finland and the support CRE is expected to produce for digitisation of operations as well as products in Sweden.

With increasingly cross functional tasks, the CRE function is also faced with accompanied challenges. The survey reveals several key areas of difficulty:

Integration with Business Units: 6 in 10 Nordic CRE leaders find it difficult to add value due to CRE's limited integration with other business units. This suggests a need for better alignment between real estate strategies and overall business objectives. This challenge is even more accentuated in Sweden, whereas it seems to be less of a struggle in other parts of Europe.

Long-term Planning: Almost half of Nordic CRE leaders find it challenging to plan for the long term, given the changing organisational landscape. This indicates the need for more flexible and adaptive real estate strategies that can respond to rapidly evolving business needs.

Notably, international companies are increasingly open to engaging external partners for specialised expertise not available in-house. This is, however, in sharp contrast to the Swedish situation as CRE decision-makers show a stronger preference for in-house management of CRE activities compared to EMEA averages across various functions. This 'DIY' approach presents both opportunities and challenges. While allowing for greater control, it may require significant investment in talent attraction and retention to maintain the necessary expertise.

5. Looking Ahead: Recommendations for Nordic CRE Leaders

As we approach 2030, Swedish CRE leaders must balance their strong preference for office-based work with the need for flexibility and innovation. In Finland, on the other hand, companies are still struggling to get employees back to the office. To navigate these challenges successfully, several key recommendations emerge:

• Align CRE strategies closely with C-suite priorities to support necessary investments. This alignment is crucial, given that almost two out of three Nordic CRE leaders find it difficult to add value, due to limited integration with other business units.

• Engage with business leaders and HR to create compelling Employee Value Propositions that meet changing work patterns and talent demands. This is particularly important, given the need to attract and retain talent in a competitive market.

• Identify CRE activities suitable for 'AI Copiloting' and invest in upskilling CRE talent in new technologies. With 6 in 10 Swedish CRE leaders currently piloting or exploring AI use cases, this will be crucial for staying competitive. In Finland, only 37 percent are doing the same exercise, so this presents an excellent opportunity to stand out from competitors.

• Move from sustainability ambitions to concrete actions by identifying key milestones to achieve ESG goals. Given that most companies already have well-defined programs to reduce their environmental footprint, the focus should now be on implementation and measurable outcomes.

• Redesign the real estate function with new operating models. In Finland, CRE should be positioned as value creators and enablers of change. Swedish companies, on the other hand, should consider selective partnerships that could help fill internal management skill gaps and bring in new knowledge.

By focusing on these areas, Swedish CRE leaders can leverage their strengths in sustainability and technology adoption while addressing the unique aspects of the Swedish work culture and market demands. The challenge lies partly in maintaining the benefits of an office-centric culture while adapting to flexible work and technological innovation.

Finnish companies' progressive adaptation to hybrid work can be considered a strength, and it's worth holding on to that. By exploring and piloting new opportunities, companies can create attractive work environments while ensuring efficient use of resources and meeting future needs.

Hotel investment outlook 2025

European view

The European hotel investment landscape is set for a transformative year in 2025, with several key trends shaping the market's trajectory. After years of uncertainty, the sector is showing strong signs of recovery and growth, driven by renewed investor confidence and evolving market dynamics.

Transaction volumes in the region have yet to fully recover to 2019 levels. However, 2024 was the strongest year for transactions since the pandemic, reaching €21 billion—a 45 percent uplift compared to the prior year. There's potential for further growth in transaction volume, with a real possibility of returning to pre-pandemic levels in 2025.

Economic factors continue to play a crucial role in shaping investment decisions. The focus on interest rates remains paramount, with investors keenly watching for easing of benchmark rates and the subsequent impact on capital stacks. In the UK, attention is centred on assessing the financial implications of the Autumn Budget and the medium-term impact of business rates on the sector. Across continental Europe, the primary considerations revolve around strategies for stimulating economic growth and revitalising domestic markets.

In terms of asset strategies, urban investments are taking centre stage, with increased attention on various property types including office conversions, extended stay properties and select service hotels. The focus on existing assets has intensified due to challenges in new development. Hotel supply growth in EMEA, which has averaged around 3 percent over the past decade, is projected to slow significantly. Over the next five years, it's expected to grow approximately 210 basis points less than the long-term average, primarily due to persistently high construction costs. Value-add investors continue to dominate the hotel buyer landscape, though core capital is gradually re-entering the market. This resurgence includes new players in the core segment seeking diversification, recognising attractive opportunities, aiming to capitalise on the current stage of the market cycle or investing on behalf of separate accounts.

Source: JLL Hotels & Hospitality

While the UK maintains its position as a primary destination for hotel investment, there's been a notable uptick in interest for Mediterranean markets, particularly Spain, Italy and Greece, driven by their solid performance and stability. Looking ahead, there appears to be significant headroom for greater liquidity throughout Europe, especially considering the recent period of subdued activity and supply constraints.

Offshore capital played a significant role during 2024. Europe has always been a net beneficiary of cross-border capital and there's been a notable presence of first-time buyers, private equity and family offices all keen to secure hotel assets across the region. Our analysis shows that there were 110 first-time buyers in Europe in 2024, equating to a third of total liquidity.

Large-scale transactions are also making a significant comeback, with deals valued above $100 million now comprising 60 percent of total liquidity—a level not observed in three years. This surge in high-value investments not only stimulates overall dealmaking activity but also reflects growing confidence in the hospitality sector as a desirable asset class. Complementing this trend, recent findings from JLL’s Hotel Investor Sentiment Survey indicate a widespread expectation of more favourable financing conditions, with 95 percent of respondents anticipating that the cost of capital will either hold steady or narrow meaningfully. Transaction activity, particularly in continental Europe has been fuelled by interest rate cuts in 2024 and pressure on interest margins, leading to high liquidity in the debt markets.

Looking beyond 2025, the outlook for the hotel sector in Europe remains positive. The region's major gateways, which rely heavily on international tourism, are poised for healthy growth in liquidity, performance and branded hotel supply. As the catalysts increase for travellers to visit and spend in these locations, there's strong conviction that the sector will not only recover but exceed pre-pandemic volumes in the near term, provided macroeconomic conditions remain favourable.

Spotlight on the Nordics

The Nordic hotel investment landscape is experiencing a significant transformation, attracting a broader range of international investors due to several key factors. Currency dynamics play a crucial role in this shift, with the weakening of local currencies such as the Swedish krona against the British pound and Euro increasing the attractiveness for international capital. This situation has created opportunities for crossborder investors to leverage currency forwards, further enhancing the appeal of Nordic hotel investments. Adding to this is the favourable financing environment, particularly in Denmark and Sweden, where there is ample liquidity for hotel investments. The attractive margins in these countries are providing an additional incentive for investors, making the Nordic hotel market increasingly compelling for a wide range of global investment strategies.

Concurrent with these currency trends, tourism patterns are evolving in favour of Northern European destinations. International overnight stays have seen substantial increases in countries like Denmark, Norway and Sweden compared to 2019 figures. The growing popularity of 'coolcations' in temperate climates has contributed to this trend, drawing more travellers to explore the region's offerings.

Analysis of hotel performance across key Nordic capitals provides insight into the market's resilience and recovery patterns post-Covid. Stockholm has shown remarkable strength in its average day rate (ADR), reaching €133 in 2024, up €12 since 2019. Similarly, Copenhagen's hotel market is on track to exceed pre-pandemic performance in 2024, closing the year at €140. These trends underscore the pricing power and attractiveness of Nordic hotel assets.

HOTEL PERFORMANCE IN SELECT NORDIC CITIES

Helsinki

57%€ 116€ 6682%97%80%

Copenhagen70%€ 140€ 9891%105%95%

Oslo 64%€ 124€ 7996%113%107%

Stockholm65%€ 133€ 8690%110%100%

Source: STR

However, recovery is not uniform across all metrics. While average rates have generally recovered well, occupancy is recovering at a slower pace. In Helsinki, occupancy is still below the 69 percent reported in 2019, closing 2024 at 57 percent—attributed to geopolitical factors. The city traditionally attracted a substantial number of Asian travellers using it as a transit point to Europe. However, with recent changes in flight routes, Helsinki is experiencing a decline in visitor numbers. In Copenhagen, despite more than 7,000 new hotel rooms entering the market since 2019, the city has managed to absorb the new supply well, with occupancy just 9 percent shy of pre-Covid levels. This disparity between average rate and occupancy recovery creates a notable supply-demand imbalance, presenting attractive investment opportunities across the region.

The resilience of average rates in the face of lower occupancy suggests that the Nordic hotel market has maintained its value proposition to travellers, both leisure and business. This is further supported by the resurgence of corporate travel following a quicker post-pandemic rebound in the region. Some hotel operators have adapted to this trend by incorporating co-working spaces to attract corporate guests, a strategy that aligns well with the observed market dynamics.

Geopolitical and economic factors continue to enhance the appeal of Nordic countries, which are perceived as highly secure and renowned for their quality of service and strong focus on sustainability. The region's appeal is further enhanced by its generally higher Environmental, Social, and Governance (ESG) standards, which are particularly attractive to core capital investors. Countries like Denmark, with its supportive business environment, low bureaucracy and efficient procedures, are particularly attractive to investors. These factors, combined with the strong average rate performance seen in cities like Copenhagen, contribute to the region's growing appeal to international investors.

The current market dynamics also present opportunities for diversification, especially considering uncertainties in the commercial office market. The potential for office-to-hotel conversions and the repurposing of vacant office blocks in prime locations offer innovative investment avenues, particularly in cities where hotel occupancy is still recovering, such as Helsinki and Oslo.

From an investment perspective, the Nordic hotel market continues to offer attractive opportunities. While revenue per available room (RevPAR) in some cities, like Stockholm, has fully recovered to 2019 levels, others still show room for growth. This variance in recovery rates across different Nordic capitals highlights the importance of location-specific analysis in investment decisions.

Nordic hotel market shows resilience post-Covid

These factors collectively enhance the appeal of the Nordic hotel market for a diverse range of investors, including European family offices, private equity funds and institutional core plus investors. The region's high living standards, social equality and political stability, coupled with the demonstrated resilience in hotel average rates and the gradual improvement in occupancy and RevPAR, reinforce its attractiveness for both businesses and investors. As the market continues to recover and evolve, the Nordic hotel sector stands out as an emerging opportunity in the European investment landscape, offering a unique combination of stability, growth potential and favourable market conditions.

Contacts

Stefan Giesemann Managing Director Hotels & Hospitality Capital Markets, DACH, Central, Northern and Eastern Europe

Jessica Jahns Head of EMEA Hotels & Hospitality Research

Thomas Persson Head of Capital Markets, Nordics

Office rents in Europe

The European Office Rental Index demonstrated robust growth in the last quarter in 2024, rising by 2.2 percent quarter-on-quarter. This quarterly movement follows a 2.7 percent quarter-on-quarter increase in the third quarter in 2024 and continues to surpass the 10-year average of 1.1 percent. At 7.3 percent, annual European office rental growth is the fastest since first quarter in 2008 and well above the 10-year average of 4.3 percent. Prime rents are expected to see further growth, driven by a growing appetite and severe shortages of prime stock.

Rental increases were witnessed in 11 of 23 index markets including London (+5.4 percent quarter-on-quarter), Frankfurt (+4.2 percent quarteron-quarter), Paris (+3.8 percent quarter-on-quarter), Stockholm (+3.3 percent quarter-on-quarter), Berlin (+2.2 percent quarter-on-quarter), and Edinburgh (+2.2 percent quarter-on-quarter). The remaining 12 markets saw no rental growth in the last quarter.

Leasing activity in 2024 matched volumes from a year ago, reaching 8.9 million square metres. The last quarter in 2024 recorded 2.4 million square metres, down by 7 percent compared to the last quarter in 2023. Given the improving leasing sentiment and the large pipeline of deals, it is likely that many transactions have been postponed until 2025.

While transaction timelines remain extended, there is evidence that occupiers are becoming more decisive in securing suitable spaces in highly competitive markets.

10 markets saw an increase in office demand. These included Edinburgh (+196 percent year-on-year), Utrecht (+109 percent year-on-year), Amsterdam (+96 percent year-on-year), Dublin (+35 percent year-onyear) and Madrid (+34 percent year-on-year). The remaining 13 cities recorded a fall in take-up, including the Rotterdam (-80 percent yearon-year), Luxembourg (-56 percent year-on-year) and the Hague (-42 percent year-on-year).

European office vacancy increased to 8.7 percent during last quarter in 2024, from 8.5 percent in the previous quarter. This is the highest rate since first quarter in 2015. The rise in poor quality stock and constrained corporate growth are still affecting vacancy rates. Nonetheless, vacancies in premium office buildings situated in central locations remain remarkably low.

10 of the 23 index markets recorded an increase in vacancy during the last quarter in 2024, including Stockholm (+100 basis points to 14.4 percent), Paris (+70 basis points to 10.2 percent), Lyon (+60 basis points to 6.5 percent), Berlin (+50 basis points to 6.7 percent) and Frankfurt (+50 basis points to 9.7 percent). 10 markets saw a decrease in available supply, including the Hague (-80 basis points to 3.1 percent), Utrecht (-70 basis points to 4.2 percent), Prague (-70 basis points to 7.3 percent) and Rotterdam (-50 basis points to 4.2 percent). Dusseldorf, Edinburgh and Munich remained stable.

“

In 2024, completions nearly hit 5 million square metres, with Paris leading the way by accounting for a substantial 1 million square metres of this total.

Alex Colpaert Head of Property Sectors Research EMEA

European office vacancy Q4 2024 8.7% European prime office rental growth Y/Y +7.3%

Source: EDC, Akershus Eiendom and JLL Research January 2025

Office Nordic

The Nordic office market in 2024 demonstrated resilience amid challenges, with a clear trend towards quality and sustainability. Prime office spaces, particularly in central business districts, maintained stable or even increasing rent levels despite rising vacancies in most markets. This reflects a 'flight to quality' trend, with tenants willing to pay premium rates for modern, sustainable and well-located spaces. The focus on ESG and green-certified buildings has become a key driver in both leasing and investment decisions across the region.

The investment market showed signs of recovery, but with large discrepancies between the different Nordic markets. After a 27 percent increase in investments in the first half of the year, we witnessed even stronger growth in the second half of the year. The total Nordic office investment market reached almost EUR 7 billion in 2024, up 34 percent year-over-year, although still more than 40 percent below the 10-year average. Volumes increased significantly in Norway and Sweden, accounting for more than 80 percent of Nordic investment volumes in 2024, whereas they remained relatively flat in Denmark,

and decreased dramatically in Finland, highlighting the uneven nature of the recovery. Office properties accounted for 27 percent of the total investment volume in the Nordics. Yields remained unchanged, with Copenhagen being the exception, seeing a 25-basis point increase. While improved financing conditions and increased risk appetite led to notable transactions in some markets, others continued to face challenges.

The tenant market remained challenging throughout 2024, characterised by rising vacancies and a focus on space optimisation. Vacancy rates increased across most Nordic cities. However, leasing activity showed signs of improvement towards the end of the year, particularly in Oslo and Helsinki. The adoption of hybrid work models and the emphasis on employee well-being continued to shape demand, with companies seeking flexible, collaborative spaces in prime locations. Looking ahead to 2025, while economic uncertainties persist, the Nordic office market is expected to see gradual improvement, supported by the region's strong economic fundamentals and focus on innovation and sustainability.

The office sector’s market share of total investment turnover in the Nordics in 2024 27%

Investment volumes for the office segment in the Nordics in 2024 6.9€bn

Source: Akershus Eiendom,

and

The Stockholm office property market continued to face challenges in 2024, with rising vacancies and subdued demand due to ongoing structural changes in work patterns and a focus on efficiency. However, prime office spaces, particularly in the CBD, showed resilience, with stable or even increasing rent levels. The latter part of the year saw improved conditions in the investment market, driven by more favourable financing terms and increased risk appetite among investors.

Investment market

The office investment market in Stockholm showed signs of recovery in the second half of 2024. The gap between buyers and sellers narrowed, facilitated by improved financing conditions and a more active bond market for property companies. This led to increased bidding activity and transaction volumes. It is worth noting that the office segment accounted for over 50 percent of the total transaction volume in Stockholm in 2024. Furthermore, all the top five transactions in the region were office transactions. These factors, combined with the gradual improvement in investment sentiment—particularly for high-quality assets in prime locations—suggest a potentially more active investment market for office assets going forward.

Tenant market

The tenant market in Stockholm remained challenging throughout 2024, characterised by increasing vacancies and a continued focus on space optimisation. The overall vacancy rate in Stockholm reached more than 14 percent by the end of 2024, an increase of almost 2 percentage points over the year. Notably, central submarkets experienced vacancy increases comparable to other areas, indicating a widespread impact across the market. The CBD, while still performing better than other submarkets, saw its vacancy rate rise to 8.5 percent.

Despite the rising vacancies, prime rents showed resilience, particularly in the CBD where rates increased to SEK 9,500 per square metre per year. This reflects the ongoing 'flight to quality' trend, with tenants willing to pay premium rates for central, modern and sustainable spaces. However, landlords are increasingly offering discounts and investing in property upgrades to retain existing tenants and attract new ones.