● THE NORWEGIAN PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • AUTUMN 2020
THE NORWEGIAN PROPERTY MARKET
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AND SO CAME THE BLACK SWAN
As years have gone by and markets have steadily reached new highs, many have asked themselves »how long can this last« and »what will the next black swan event be?«? These kinds of questions are difficult to answer until it is too late, but in the first half of 2020 the black swan arrived – in the form of covid-19. The Norwegian economy has fared well in the wake of covid-19, and the economy is expected to decline by 4.6% in 2020, which is among the lowest rates of decline in Europe. Norway’s unemployment rate has risen to slightly under 5% in the wake of covid-19, from a pre-covid level of around 2.3%, which is also a fairly minor increase. Norway continues to outperform the European
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average in terms of its macroeconomic stability. The outlook for Norwegian real estate remains strong in 2020. Real estate players with properties that have solvent tenants, long contracts and core locations will be the ones that perform best during this period. The long horizon for investment in commercial real estate is now proving to be a strength, where players can wait with making decisions until the market returns to normal in the long-run. Prospects are worse for those who have to sell in today's market. Many players now expect a discount because of the current uncertain situation, creating a vacuum where buyers and sellers are
some distance apart.This will result in fewer transactions in 2020 than in the last 5–6 years, but Newsec believes that activity will pick up somewhat throughout the second half of the year. H1 2019 saw a volume of NOK 43.3 billion, which can be compared to NOK 36.6 billion this year. For the year as a whole, a volume of around NOK 70 billion is expected, a little lower than the historical average.
Contact: Øyvind Johan Dahl ojd@newsec.no
