Newsec property outlook autumn 2017 by Newsec Advisory A/S

NEWSEC PROPERTY OUTLOOK AUTUMN 2017

NEWSEC PROPERTY OUTLOOK

CONTENTS Sweden’s strong economy will gradually weaken ............................................... 4 What will trigger the next crisis on the property market? .............................. 6 The Swedish property market ....................................................................................... 8 The Norwegian property market ............................................................................... 14 The Finnish property market ........................................................................................ 16 The Danish property market ......................................................................................... 19 The Baltic property market ......................................................................................... 20 Nordic property financing ............................................................................................ 25 Outlook for the Northern European property market ................................... 26 Macroeconomic data....................................................................................................... 30 Property data ..................................................................................................................... 33 Definitions ............................................................................................................................. 37 The Full Service Property House .............................................................................. 38 Contact and addresses .................................................................................................. 39

Copyright Newsec © 2017 This report is intended for general information and is based upon material in our possession or supplied to us that we believe to be reliable. Whilst every effort has been made to ensure its accuracy and completeness, we cannot offer any warranty that factual errors may not have occurred. Newsec takes no responsibility for any damage or loss suffered by reason of the inaccuracy of this report. Newsec, Box 7795, SE-103 96 Stockholm, Sweden. Phone + 46 8 454 40 00, www.newsec.se. You may use the information in the Newsec Property Outlook but acknowledgement must be made for all quotations and use of data/graphics. Cover photo: iStock

● SWEDEN’S STRONG ECONOMY WILL GRADUALLY WEAKEN

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

SWEDEN’S STRONG ECONOMY WILL GRADUALLY WEAKEN Sweden’s economy remains at a high level of activity. But various forces are pulling in different directions and there is uncertainty about economic policy. Great uncertainty prevails internationally too, not least about geopolitical threats. The basic assessment for 2018 is a gradual slowing for both the Swedish economy in general and for the property market. In recent years the US and China have been the drivers of the world economy. The US has extricated itself from the after effects of the financial crisis significantly faster than Europe. At the time of Trump’s arrival in the fall of 2016 the financial markets were leaping with pleasure at the prospect of upcoming financial stimuli and the dollar strengthened. But these expectations have not been fulfilled. Instead, the American administration have been mired in internal struggles and important policy initiatives have been blocked. After the long economic upturn, a growing amount of industries are now facing capacity problems. A cautious tightening of monetary policy is cooling the economy. The Federal Reserve has raised its key interest rate and is planning

to reduce the size of its balance sheet. As a result, the American economic engine is gradually losing speed and the dollar has fallen back.

Europe is gaining strength Europe is moving in a different direction. For several years weak productivity trends, large debts and unfocused economic policy have slowed down large parts of the continent. But the euro zone is now looking healthier than for a long time. The individual countries are slowly beginning to free themselves from the shadow of the financial crisis. Unemployment is slowly decreasing – although from previously high levels. The German export sector is continuing to benefit from a weak euro. President Macron is promising French reforms.

Even Greece is showing some positive figures. In general, the forecasters believe that the economy in the euro zone will grow almost as fast as in the US during the next few years, despite its weaker demography. This will in turn strengthen the Euro. This is a step in the right direction. But not a very big one. Brexit and uncertainty about the US’s trade policy are continu ing to cause concern. Even if the pace of economic growth is creeping upward it is from a low level. The ‘economic upturn’ is weaker than upturns used to be previously before the financial crisis. There is a lot that indicates that this is the ‘new normal’. Ageing populations and slowly rising productivity are setting a ceiling on growth at the same time as high unemployment and globalisation are holding down costs and prices. Pay increases and inflation therefore remain low even when the economic climate is good and the topmost interest rates are not particularly high. This gives a stimu lus to stock markets and the property market – but also increases the risk of new financial bubbles. We are thus achieving an economy characterised by rather small swings of economic sentiment but where financial volatility is lurking. Geopolitical uncertainty must naturally be added to this. At the time of writing, Britain has still not presented its goals and its timetable for the Brexit negotiations. Renegotiation of the USA’s various trade agreements, as promised by Trump, remains pie in the sky. A war of words between the US and North Korea is currently in progress, which has made stock markets all over the world nervous.

Strong advance in Sweden Sweden is also seeing low inflation and low interest rates, but the economic

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

SWEDEN’S STRONG ECONOMY WILL GRADUALLY WEAKEN ●

» The main domestic risk in the Swedish economy lies in the interaction between the property market and indebtedness«

growth has been stronger than in Europe generally. Exports have benefited from an undervalued currency. Private consumption has benefited from low inflation which has kept real purchasing power high. Housebuilding has increased and is generating comprehensive spin-off investments in everything from concrete to kitchen equipment. In addition, the large volume of immigration during the last two years has resulted in increased public expenditure which has also driven up demand. Employment has increased – as it should in periods of good growth. Unemployment still remains high, not least because recent immigrants and the poorly educated find it hard to get into the Swedish labour market. The labour market thus has obvious structural problems, with high entry requirements that exclude many people. 2017 started strongly, with surprisingly high GDP growth. But the Swedish economy is now beginning to slow down. Shortages of capacity are increasing. Many sectors, not least the building industry and public employers, are finding it hard to recruit labour force. Inflation has crawled up from zero to the Swedish Central Bank’s target of 2%. For this reason the Swedish Central Bank will gradually take its foot off the accelerator during 2018. The key interest rate will be raised cautiously – even though in historical terms and relative to the economic climate, the interest rate level will remain low.

Housebuilding is levelling out Housebuilding is likely to level out during 2018. Costs are rising as shortages of manpower and land become ever more marked. The demand for new housing has grown strongly in recent years because of immigration and urbanisation, but it

is now showing signs of satiation and will dampen down as the interest rate rises. In the heated Stockholm market, prices of tenant-owned apartments have recently stagnated. At the same time a number of regulations and tax rises are being discussed that may impact the property sector. The rules about households’ indebtedness are causing concern and are likely to produce some form of sharpening of lending regulations and increasing the cost of mortgages. Corporation tax may be changed as a way of making housebuilding more expensive. The combined effect of all this will be that Swedish growth in 2018 will be lower than in the last few years. But utilisation of capacity will continue to be high. The main domestic risk in the Swedish economy lies in the interaction between the property market and indebtedness. Some people fear that a levelling out of the property market might be the precursor of a new crash. It is undeniable that indebtedness among households is high. But in fact households save at the same time and the asset side of the balance sheet has also grown. The largest debtors are usually households with well-paid jobs and significant assets. Even if interest rates rise to some degree, it is unlikely that they will reach the levels that prevailed before the financial crisis. Interest costs will therefore not rise to anywhere near the heights created by the financial crisis at the beginning of the 1990s. The banks now stress-test their credit portfolios and base their granting of credit on the borrowers’ cash-flows, not on the expected rises in property values.

in the European Economic and Monetary Union. Within Sweden a fall on the property market could be triggered by the regulators applying a number of tightening measures simultaneously – a debt-ratio ceiling, a limit on interest deductions, strict amortisation requirements etc – regardless of the overall position. The uncertain parliamentary situation of recent times and uncertainty about the Government’s ability (or inability) to carry through its policies, have not produced any major economic concern up to now. It appears that companies and market players have grown accustomed to a regime of weak governments. For domestic policy to cause significant economic problems it is probably necessary that a government crisis coincides with some serious external disturbance. Amid this uncertainty, there are optimists who say that the rise in property prices to their present levels mainly reflects the market’s rational assessment that the interest rate will remain historically low (even if it rises a little from today’s extreme levels). In this case, the price rise is not some sort of bubble that will collapse when interest rates rise. Rather, we have seen a reasoned rise to a new plateau, at which prices will level out – but not fall – when interest rates are raised. I do not dare to be as optimistic as this. I believe that there is some air in the prices – and that some of the developers and builders who have invested in continued rapid rises and record prices will come to grief.

International and domestic risks

But the most important point is that there is great uncertainty.

A crash on the finance and property market could also be triggered by some major external shock such as a trade war, armed conflict in Korea or even a serious crisis

Contact: Klas Eklund, Senior Economist SEB

● WHAT WILL TRIGGER THE NEXT CRISIS ON THE PROPERTY MARKET?

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

WHAT WILL TRIGGER THE NEXT CRISIS ON THE SWEDISH PROPERTY MARKET? In recent years the Swedish property market has been red-hot. Property prices have soared upwards, transaction volumes have increased strongly and Swedish property shares have increased in value. The industry has flourished for a number of years – at the same time as risks and uncertainties have been increasing. Now we are asking ourselves the question that everyone in the industry is wondering about: what will trigger the next crisis on the property market? During the historically long rising phase on the Swedish property market since 2010, Newsec has continuously revised its forecasts about when a change may come. Transaction volumes have achieved new record levels in the last years, culminating in last year’s transaction volume of more than SEK 200 billion. The first half of 2017 has been another strong transaction period on the Swedish property market, although a little less active than the record year of 2016. This year’s first-half total of SEK 82 billion can be compared with 2016’s first-half total of SEK 94 billion. A slightly decreasing transaction volume is not a sign of a stagnating market in itself, as the rather lower half-year volume is largely due to the limitied supply of properties on the market not matching the high demand. In many property segments a good financing climate is continuing to reign, with low interest rates and low return from alternative investments. In conjunction with the more volatile stock market, this leads in turn to properties becoming even more of a prioritised investment segment forinvestors and asset managers. Viewed historically, the property market has been cyclical, both in Sweden and internationally. The underlying rental markets are governed on the demand side by changes that are sometimes quite rapid, depending on changed conditions for economic activity, increased inter national competition in important seg ments, changed consumer behaviour and so on. At the same time the supply

side cannot compensate in the short term for a changed demand. The risk always exists that, after a long period of high demand for commercial premises and strongly rising rent levels, production of new premises will start and emerge onto the market when the economy has turned downwards. Historically, this has reinforced the cyclical tendencies. Trying to predict, from a historical perspective, what may trigger a future downturn on the rental and property markets is difficult as each one of the earlier crises was triggered by different factors. Deregulation of the financial markets, strong economic growth during the 1980s and very high level of new production, followed by a downturn and extremely high interest rates, led to the comprehensive financial and property crashes at the beginning of the 1990s. The crisis was primarily a domestic crisis resulting from political decisions. The economy recovered in the latter part of the 1990s with a rapidly expanded IT and telecoms sector. This expansion, which was often based on unrealistic expectations of company values and share prices in these sectors, then contributed to the downturn in the early years of the new century. This can be seen as a more classic bubble that burst when reality failed to live up to expectations and which was driven by an international IT crisis. Then, in 2008, the downturn on the property market was the result of a global financial crisis, driven among other things by incomprehensible packaging of loans and ‘structured’ finan-

cial products in an increasingly globalised market. The only common factor in each one of these crises has been that downturns on the property market have always followed after relatively long periods of increasing rents and property values. Some factors of concern in today’s situation may be noted: • The interest-rate position. The negative key interest rate of the past few years has really fueled the property market. A rise in the interest rate should therefore affect the property market through a downward adjustment of values and a slackened pace of transactions. However, the likelihood that the Swedish Central Bank will raise the key interest rate drastically is low, since that would tend to create new crises in all sectors. We are likely to move out of the negative key interest rate but to a new low-interest climate even in the future. However, what we are already seeing today is a wide spread in loan interest rate levels between different property investors. • A tightening on financing from banks. The banks are less willing to lend money for property investments, and it is especially difficult for new development projects. • A politically troubled environment may affect the whole market, including the property market. So far, however, political events such as Brexit and Trump have not affected the market significantly. • External shocks. Trade wars, armed conflict in Korea, deep crisis in the European Monetary Union. Investors become cautious and the market comes to a halt or falls.

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

WHAT WILL TRIGGER THE NEXT CRISIS ON THE PROPERTY MARKET? ●

Photo: Shutterstock

» Downturns on the property market have always followed after relatively long periods of rising rents and property values«

• Proposals regarding limitation of tax deduction of loan interest for companies as well as the proposal from a government committee (“Paketerings utredningen”) about removing the ability to postpone capital gain tax. These proposals may be the greatest concrete threats to the investment market, but have no direct impact on the rental market. • Overproduction of housing – not matching the demand in the segment – together with restraining measures for private home owners such as debt ratio ceilings, limits on interest deductions and stringent amortisations, is affecting the Swedish private housing market. • Difficulties to attract new equity to property investment vehicles with high risk profile or incoherent business

logic. Signs of this are some unsuccessful issues of new shares and planned stock-market listings as well as large discounts on share prices compared to net asset values in several listed property companies. So, what will trigger the next downturn on the property market? At the moment it is hard to see what single factor might lead to a downturn in the near future, but some of the factors above working together, where one of them sets off a chain reaction, might come to form the basis of the next property downturn. We have already seen a softening of the overheated residential market, which will have a negative impact on values for building rights. This will especially hit some project-intensive companies and residential developers.

This will not necessarily affect other segments of the property market in a shorter perspective. However, together with threats such as increasing tax burden for the property sector and political anxiety provoked by an external shock at the peak of an economic cycle, we believe that there is a substantial risk that the next general downturn in property market will be trigged within the next 18 months. This downturn will certainly not have the same devastating effect as the crisis of the 1990s but will rather be a thorough cooling-down of the property market.

Contact: Jan Rosengren, jan.rosengren@newsec.se Ulrika Lindmark, ulrika.lindmark@newsec.se

● THE SWEDISH PROPERTY MARKET

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE SWEDISH PROPERTY MARKET A STRONG HALF-YEAR ON THE SWEDISH PROPERTY MARKET The investment market Last year the Swedish property market reached a new record level, with a transaction volume exceeding SEK 200 billion (for transactions greater than SEK 40 million). The total transaction volume in the first six months of 2017 amounted to SEK 82 billion in a total of 283 transactions, whereas the corresponding figure in 2016 was SEK 94 billion. The transaction volume in Sweden has been historically high every year since 2014. Even though the first half of 2017 had a slightly lower volume than previous year, the transaction volume still demonstrates a strong year on the Swedish property market. Newsec believes that the lower volume is not due to a weakening property market. Rather, it is an effect of the limited supply of properties not matching the high demand. The highest monthly volume so far in 2017 was recorded in June which amounted to SEK 30 billion. The Swedish economy has developed strongly in the past few years. Last year ended with a slightly more balanced growth, where exports in particular were surprisingly positive. The state the world is in will remain highly important in 2017 – not least due to the political turbulence in Europe with Brexit and Donald Trump’s ambiguous policies. In an uncertain world, Sweden has excellent prerequisites for continued growth, with low national debt, competitive export industries and a high savings ratio. Together with easy access to financing, a lack of high-yielding alternatives and a low key interest rate, good prospects for the property market in 2017 and 2018 are offered. Investors’ interest in the Swedish property market has been persistently high for the past couple of years and the negative key interest rate since February 2015 has further enhanced the attractiveness of the property market. The

central bank decided at its last meeting in September to keep the key interest rate at -0.5% and the rate is not expected to start rising before the middle of 2018. The low yields on the bond market and the volatility of global stock markets are other factors that contribute to investors’ enthusiasm. On the selling side, private property companies and property funds have been the most active players during the first half of 2017. On the selling side, private property companies accounted for 34% of the transaction volume whilst property funds accounted for 16%. Together they completed transactions with a total value of SEK 38 billion. On the buying side, private property companies and listed property companies have been the largest investors during the first half of 2017 and accounted for more than half of the transaction volume. Geographically, with the largest shares of the transaction volume, Stockholm and Other Major Cities remain the most attractive areas. Other major cities remained at the same level as in 2016, with 27% of the transaction volume during the first half of 2017. With 33% of the transaction volume, Stockholm retains the largest share during the first six months of 2017. In 2016, Malmö took a larger share than Gothenburg with a volume of 8% compared to Gothenburgs 7%. But in the first half of 2017 Gothenburg, with a volume of 12%, passed Malmö, which had a volume slightly above 5%.

located in west Stockholm, commonly known as Bromma Blocks. One reason for the continuing interest from international capital is that the Swedish property market persistently offers a better risk-adjusted return than other European markets. In the first half of 2017, 26% of the investment volume was foreign and during the past three quarters foreign investors have been net buyers for the first time since before the global financial crisis in 2008. During the first two quarters of 2017 residential properties have formed the most popular segment, with a 31% market share totalling SEK 25 billion. There has been a steady increase of interest in this segment in recent years and a number of major housing projects are planned or under way. The Swedish population has increased substantially and in May it was reported that 255 of Sweden’s 290 municipalities are experiencing a housing shortage, which is an increase of 15 municipalities since last year. Only one municipality reported a housing surplus. The combination of a growing population and changing demographics – with both an ageing population and baby booms – has generated a greater interest in public properties as well. In the first half of 2017 public property transactions took a 10% share, against 2% ten years ago. The second largest segment after residential properties was office properties with 17% of the total transaction volume, followed by retail properties with 16%.

The office market Domestic investors continue to dominate the transaction market. However, the largest transaction during the first half of 2017 was between two American companies. CBRE Global Investment Partners acquired a portfolio worth SEK 2.2 billion from Starwood Capital. The acquired portfolio consists of four retail premises

Newsec estimates the total office stock in Greater Stockholm to approximately 12.4 million m2. The office space is mainly located in the municipalities of Stockholm CBD and Stockholm Inner City, Solna, Sundbyberg, Nacka, Sollentuna, Järfälla, Danderyd and Upplands Väsby. Stockholm CBD is considered to be the

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE SWEDISH PROPERTY MARKET ●

» Newsec believes that the lower transaction volume is not due to a weakening property market. Rather, it an effect of the supply of properties not matching the high demand«

● EXECUTIVE SUMMARY

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE SWEDISH PROPERTY MARKET ●

26 % FOREIGN INVESTORS most attractive office area, with a stock of approximately 1.9 million m2, while Stockholm Inner City excluding the CBD has an office stock of about 4.4 million m2. In recent years it has become common for major companies to combine several existing offices and set up new operations in the inner suburbs. Newsec estimates that around 130 000 m2 of new or rebuilt office space will be completed in Greater Stockholm during 2017, representing approximately 1% of the total office stock. In the new space that will be completed this year, about 85% of the office area is already let. The corre sponding figure for 2018, when about 175 000 m2 of new or rebuilt office space will be completed, is 60%. This indicates a continuing high demand for newly produced office space in Stockholm. The location of new office development in Stockholm has changed in recent years and is now concentrated in areas outside central Stockholm, most commonly in the inner suburbs north of the city. These areas are attractive due to their good communication links to both the inner city and Arlanda Airport. A well-functioning infrastructure is vital when judging an office project and recently started and ongoing infrastructural changes will have a great impact on the development of Stockholm. The new Citybanan railway, which opened in July, will have a positive impact on the office market in the western areas of the CBD. The railway will double the passenger capacity through central Stockholm, with two new stations at Odenplan and T-Centralen. A number of office development projects in Stockholm, both completed and currently in progress, were started speculatively and large parts of these projects have been fully let before completion. They include Fabege’s Uarda 6 in Arena staden, Skanska’s Sthlm Seaside and

Sthlm 03 in Hammarby Sjöstad and Fabege’s Pelaren 1 at Globen. During the first half of 2017 the Stockholm office property market continued to perform well. A strong service sector, few completed new-production projects in Stockholm CBD and a shortage of attractive premises in inner city locations in general indicates that the vacancy rate in the CBD will remain at low levels around 2% throughout 2017. The low vacancy and high rents have caused many large companies to take the decision to move out of central Stockholm, which affects availability across the office market. The low vacancy level has also led to new building and rebuilding projects in or adjoining the CBD. Swedbank’s old premises in Gallerian are undergoing a huge transformation led by AMF. The project, called Urban Escape, will provide approximately 70 000 m2 of new or rebuilt office space when it is completed in 2019. Additionally, there are several plans for further expansions in Stockholm CBD which are awaiting approval from the City Council – for example Pembroke’s development of Hästen 21. Outside the central city, a current major redevelopment is Fabege’s Grand Central project, which will make 30 000 m2 of office space available in Sundbyberg during Q3 2018. The market rent for office premises in Stockholm CBD at the end of Q2 2017 was about SEK 5 750 per m2 and is expected to be at SEK 6 000 per m2 by the end of the year. Top rents close to SEK 6 600 per m2 have been confirmed by some of the major office owners in the CBD. The high demand together with the low supply of newly built modern office premises in the CBD contributes to the high rent levels. The market rent is expected to continue increasing until 2019.

Gothenburg is Sweden’s second largest city and as the Nordic region’s largest port, it is the hub of Sweden’s export industry. Although the service sector has grown steadily stronger in recent years, Gothenburg’s economy is still dominated by manufacturing and particularly the motor industry. The commercial office market in Gothenburg and its neigh bouring municipalities comprises an office stock amounting to approximately 4.8 million m2. Gothenburg CBD consists of 860 000 m2 of offices while the office stock of the inner city excluding CBD, which covers a large geographical area, is estimated at around 900 000 m2. By the end of 2017 Newsec estimates that about 55 000 m2 of office space will have been added to the office stock in Gothenburg. For example, the Gamlestadens Torg project will add 10 000 m2 to the office stock when completed and Eklandia’s and Skanska’s projects on Lindholmen will provide a further 17 000 m2 of office space. Newsec estimates that about 10 000 m2 of office space will be added to the office stock in Gotenburg CBD in the next two years. There are several projects under development that are scheduled to be completed in time for the city’s 400th anniversary celebrations in 2021. In June 2016, Jernhusen presented a project that includes a 22-storey-high tower and will provide mainly offices but also retail stores and restaurants. There will also be a supply of new office space in Gårda/ Ullevimotet in the next few years, where Skanska and Platzer are working on a zoning plan to build high-rise blocks providing a total gross area of around 60 000 m2. Both Skanska’s Göteborg City Gate project and Platzer’s Gårda Vesta project are scheduled to start towards the end of 2017. Serneke’s spectacular Karlastaden project, which includes the much-discussed Karlatornet skyscraper,

● THE SWEDISH PROPERTY MARKET

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

SEK 82 BILLION TRANSACTION VOLUME FOR THE FIRST HALF OF 2017 was approved by the Gothenburg City Council in June this year. The planned skyscraper will be 240 metres high, making it the tallest building in the Nordic region. Apart from Karlatornet, the area will consist of a number of blocks providing housing, offices, retail and services and is planned to be completed around 2021. Karlastaden is part of the Nordic

region’s largest city development project Älvstaden. Between 2015 and 2016 the vacancy rate in Gothenburg CBD decreased from 4.7% to 4.2%. It currently stands at 4.2% and is expected to rise towards 4.6% during 2017. However, modern premises over 1 000 m2 remain hard to find in the CBD

and as a result companies are resorting to newly built premises elsewhere, with a positive effect on Gothenburg’s Inner City, outside CBD. The rent level in Gothenburg CBD is continuing to increase. Currently, the market rent lies at SEK 2 750 per m2, while the top rent in the CBD is estimated

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE SWEDISH PROPERTY MARKET ●

» During the first two quarters of 2017 residential properties have formed the most popular segment, with a 31% market share totalling SEK 25 billion«

at SEK 3 350 per m2. The market rent in the Inner City excluding CBD has also increased during the year and lies around SEK 2 250 per m2, with top figures around SEK 2 850 per m2. The highest rents in the Inner City outside CBD are found in the newly constructed stock at Ullevi. Newsec expects that the rental market in Gothenburg will continue to be stable, since demand is expected to remain at a constant level. The commercial office stock in Malmö totals around 2 million m2, with the largest single submarket being Malmö CBD with 600 000 m2. In past years the construction of new office space has been high. 54 000 m2 was added to the existing office stock in 2015 and 35 000 m2 in 2016. There is a large amount of available land in attractive areas such as Hyllie and the area surrounding the Central Station which provides good opportunities for a continuing high pace of new construction in Malmö. However, this affects the older office stock, which must constantly compete with the new. As a result Newsec has observed a number of conversions to apartments in older office buildings situated in good locations. The vacancy rate in Malmö CBD continued to decrease during Q2 2017 and stands at a level around 6%. The market rent in the CBD is estimated at around SEK 2 350 per m2, while a top rent of around SEK 3 050 per m2 has been reported. Newsec forecasts that the rent levels continues to be stable throughout 2017 with a slight upward tendency. The City Tunnel and the connection across the Öresund benefit the Malmö region. About 18 000 people commute each day between Sweden and Denmark, which compares with the total of about 18 500 people who commute to work between the Swedish cities of Lund and Malmö.

Commuting to work across the Öresund has decreased in recent years but is still twice as high as the level measured in 2005. The region will receive a further boost when the Fehmarn Belt tunnel linking Denmark and Germany is completed and opened in 2021.

The retail market Thanks to the strong general economy, 2015 was an exceptional year for retail sales. The category achieved a growth of 5.7% which have not been seen since before the financial crisis in 2008. In 2016, according to HUI Research (The Swedish Institute of Retail), total retail sales were slightly above SEK 750 billion, representing a growth of 3.3%, with convenience goods achieving 2.5% growth and consumer durables 4%. Black Friday and a record high Christmas trade both made strong impacts, but a downward-sloping trend has become apparent and HUI’s forecast growth for 2017 has been revised downward to 3%. Factors such as a stable labour market, low interest rates and an increasing population should continue to benefit retail trade. During the first half of 2017 retail property transactions accounted for 16% of the total transaction volume. This is a slight decrease from both 2015 and 2016, when the figures were 18% and 19% respectively. Up to 2025 there will be an average population increase of 110 000 people a year in Sweden. This record population growth will drive the ongoing urbanisation, which in turn will heavily affect demand in all the major cities. The growing population in combination with the rising trend towards e-commerce has led to fierce competition between different types of shopping destinations, which makes factors like location and quality of premises increasingly important when attracting both consumers and tenants. In 2016 the total level of e-commerce grew by 16% to

SEK 58 billion. In 2017 e-commerce is expected to grow by 17% to SEK 68 billion, which represents 9% of the total volume of retail sales. Shopping malls have been increasing in size and their premises are being let at record top rents. Moreover, the rent levels in newly built and redeveloped shopping malls in the best regional locations outside Stockholm are at the same level as the top rents in Stockholm CBD. Mall of Scandinavia, which opened in Solna just north of Stockholm in 2015, is the largest retail establishment in Sweden, with 224 stores and a GLA of over 100 000 m2 . Since many large establishments have been built outside city centres, developers are now starting to look at the possibility of developing the inner city to compete with the out-of-town centres. Today, what a good centre sells is not enough to attract consumers. It also depends on the destination itself and the overall experience it offers, where good restaurants, cafés and service play a crucial part.

Contact: Anders Elvinsson, anders.elvinsson@newsec.se Alexandra Lövgren, alexandra.lovgren@newsec.se

● THE NORWEGIAN PROPERTY MARKET

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE NORWEGIAN PROPERTY MARKET STRONG START OF THE TRANSACTION YEAR The Norwegian economy is showing signs of improvement following an unexpected stagnant first two quarters of 2017. As the CPI stabilises and employment expands, current market conditions imply a greater probability of an interest rate rise than a rate reduction. GDP is also improving after years of moderate growth, with Q1 figures exceeding expectations. In the next three years the Norwegian Central Bank expects core inflation to stabilise around 1.5%, which is significantly below current inflation levels of 2.5%. An early rise in interest rates is therefore unlikely, which is in line with the Central Bank’s projections that suggest an interest rate rise at the end of 2019. The Norwegian economy is still suffering the effects of the oil bust in 2014, but fiscal policy care packages are helping the economy to bounce back. The weakened NOK, coupled with slower wage growth and tax reductions, has laid a solid foundation for a better business climate. The historically low interest rates and expansive fiscal policies are boosting domestic demand for goods and services. Such underlying fundamentals have created the basis for future optimism in the Norwegian economy as capital seeks higher returns in the property market. The commercial property market was impervious to the stagnant economy in the first half of 2017. The transaction volume was reportedly NOK 42 billion across 161 transactions during the first six months, compared to NOK 35 billion across 125 transactions in the first half of 2016. The final transaction volume for 2017 is expected to total around NOK 85 billion – a similar figure to last year. A major contributor to the high transaction volume is the renewed appetite for Norwegian property among foreign investors – accounting for 25% of the transaction market in the first half-year, compared with 11% in 2016. The

prime yield for office and retail property fell from 4.0% at the end of 2016 to 3.75% by Q2 2017. Yield compression is currently affecting all major cities in Norway including Oslo, Stavanger, Bergen and Trondheim, as well as the residential market, where the prime yield fell from 4.0% to 3.0% in 2016. As favorable economic conditions, strong transaction and leasing volumes support a highly competitive business environment and higher asset valuations, the second half of 2017 is likely to continue with the same strong performance as in the first two quarters of 2017. Although value creation may prove more challenging to achieve than in previous years in the cycle, those seeking higher returns can gain considerable value by raising rents. To the contrary, the looming possibility of a housing downturn may have adverse consequences for the commercial property market.

The investment market 2017 began strongly with new transactions completed very early in the new year. Following an incredible year in 2016 with a total transaction volume close to NOK 80 billion, Norway may be on track for another record year – but this depends on the impact of new government financial restraints that could disrupt the pace of transactions. The introduction of the Financial Supervisory Authority’s guidelines for banks and life insurance companies are likely to affect debt markets negatively and thereby limit available capital in the second half of 2017. The prime yield in Norway is currently 3.75%, which is a decrease from the 4.00% level last year. As a market reaction to rising interest rates, which will minimise the yield-gap, the prime yield is expected to remain unchanged. In 2016, foreign investors accounted

for only 11% of transactions in Norway, compared with 43% in 2015 and 24% in 2014. Injections of foreign capital on the Norwegian property market has however recovered during 2017. The most notable foreign investor is the Swedish company SBB i Norden, which acquired DNB’s ‘Midtbygget’ in Bjørvika in March for NOK 4.3 billion.

The office market In recent times a number of companies have co-located their subsidiaries and sister companies, which has sometimes resulted in companies moving prior to the completion of their lease. Last year there was a also a growing trend to subletting premises. This is negative for the market, as sublet premises are often offered at heavily discounted prices, causing negative short-term effects in local markets. International economic trends that influence Norway to a greater extent than previously are resulting in continued challenges for property owners. Harder work to retain office tenants is required, and measures such as rent exemptions, refurbishment of existing premises and discounts are seen more often than before. A surprisingly large share of vacant premises is located in buildings that have been vacant for a long time. However, the strong increase in house prices has saved some of these buildings because there has been a growing trend to convert office buildings to housing as a result of high housing prices and highly selective office tenants. The improving Norwegian economy and increased conversion of offices to housing could now affect rents positively. Early in 2016 the vacancy rate in Oslo stood at a record high of around 8.6%, but by Q2 2017 the level had fallen to a vacancy rate of about 7.5%. The vacancy is expected to continue to fall towards

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE NORWEGIAN PROPERTY MARKET ●

Photo: iStock

» The commercial property market was impervious to the stagnant economy in the first half of 2017«

6.75% by the end of the year. This will lead to further pressure on rent levels and since the end of 2016, the rent level has increased by 10%.

ised shops located close together. The old Aker Brygge shipyard has been converted into a lively seafront promenade with entertainment, dining and ground-floor retailing.

The retail market With cheaper land available and the development of big grocery supermarkets, the main retail areas for all functional items have become shopping centres in suburban and out-of-town locations instead of the city centre. Today the aim of city-centre shopping is more focused on the overall experience, where social aspects such as eating out, conversation and leisure activities are of great importance. In Oslo, the premier street Karl Johans gate now has a mixture of cafés, restaurants, small theatres and special-

In 2016 total retail sales (excluding the sale of motor vehicles) were NOK 475 billion, amounting to a 2.9% increase from 2015. E-commerce enjoyed the highest annual increase with a 13.8% rise from 2015, while wholesale trade increased by 9.6%. Although e-commerce accounts for only 4% of total retail trade, the subcategory, unsurprisingly, is continuing to outperform all others in 2017. The subcategory had a 9.9% increase in the first two months of 2017 compared with the same period last year.

The largest retail transaction so far in 2017 occurred in January when Coop Hordaland acquired a 100% stake in the 40 000 m2 Horisont retail centre in Åsane, Bergen. Coop previously held a 50% stake in the asset. The transaction was valued at roughly NOK 1.15 billion or NOK 28 750 per m2. The centre was completed in 2014 and has 73 stores with an annual sales revenue of NOK 1.3 billion. The retail sector accounted for 10% of the total transaction volume in the first half of 2017. Contact: Oyvind Johan Dahl, ojd@newsec.no

● THE FINNISH PROPERTY MARKET

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE FINNISH PROPERTY MARKET

CONTINUED STRONG TRANSACTION MARKET

Photo: iStock

Views of the Finnish economy have improved markedly since the start of the year. Many banks and research institutes have changed their forecasts for the year: Nordea Bank recently increased its forecast of Finland’s GDP growth in 2017 from 1.3 % to 3%. The main reason behind

the better opinion of the Finnish economy is the country’s high domestic demand. In particular, construction investment remain at a very high level. At the same time consumer confidence remains remarkably high. The consumer confidence indicator for May to June was the highest

ever recorded since the index was created in 1995. These factors are contributing to attracting foreign investors to Finland to an ever increasing extent. In the first half of 2017 foreign investors accounted for

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE FINNISH PROPERTY MARKET ●

» Retail properties have been the most traded property type so far 2017, accounting for about 37% of the volume«

approximately 40% of the total transaction volume, but this figure will probably rise to nearly 70% towards the year-end when two big property company deals are expected to be closed.

The investment market Investment activity on the property market has continued at a high level during this year. In the first half-year the transaction volume reached EUR 2.5 billion, compared with EUR 3.8 billion at the same time last year. Retail properties have been the most traded property type so far, accounting for about 37% of the volume. On the other hand residential properties have represented only 15% of the total volume, compared with almost 40% last year. There are several reasons behind this change. Last year’s record volume was largely based on a few major residential portfolio transactions. In addition, investors now have a number of residential building projects under construction in their balance sheets, and are waiting to see how the increased housing supply will react to the high demand for the apartments. During the first two quarters there have been many single office property transactions in the Helsinki Metropolitan Area (HMA). Due to the relatively high yield levels compared to the main office markets in Europe, the assets are seen as good investment opportunities. How ever, yield compression has been strong, especially in the Helsinki CBD area. But at the same time as yields have decreased in the prime areas (with the net yield even below 4.0% where the supply is short), there have been many single Class B office property transactions with higher yields in the HMA. As mentioned above, two major property company deals in Finland are expected to be closed during this year. Blackstone’s

Polar Bidco will purchase all the issued and outstanding shares of Sponda Plc and affiliates of China Investment Corporation (CIC) will acquire the Finnish portfolio of the logistics company Logicor owned by Blackstone. As a consequence a new transaction volume record is likely to be set this year. There have been many shopping-centre transactions in the Finnish real estate market so far this year. The largest and most significant single transaction was the acquisition of a 50% stake in the Kamppi shopping centre by European Cities Fund, managed by TH Real Estate. The competitive yield levels and the improved economic indicators are continuing to attract foreign investors to Finland. One of the newest foreign investors is the Swedish property company Skandia Fastigheter which has bought an office property in the Ruoholahti district of Helsinki.

The office market The office property market in the HMA is characterised by the fact that there are many office properties that are too old and are located at unsound locations. Companies are seeking modern premises close to good services and with good accessibility. Therefore the supply and the demand in the market do not properly match. In response there are currently more than ten office projects under construction in the HMA, and the stock of new offices is expected to increase by about 84 000 m2 by the end of this year. The new office space is being constructed mainly in the vicinity of good public transportation. For example, the new headquarters of the K Group is being built close to the metro station in the Kalasatama district.

space, there are many current building projects converting old office buildings into apartments. For example, the former headquarters of the previously mentioned K Group, located in the Katajanokka district of Helsinki, will be converted for residential and hotel use. By reducing the vacant office space in the HMA, the occupancy ratio of the remaining office space is improved and the market will partly correct the situation to a more sustainable level over time.

The retail market Because of the low interest rates, private consumption in Finland is high and together with the improved economic confidence this is reflected in the property market. The demand for good retail properties is currently very obvious and the many retail property transactions outside Helsinki indicate the increased liquidity of retail properties in the smaller municipalities as well. However, the shopping centres can in some ways be divided into two groups: old properties with convenient grocery and department stores, and new shopping centres with a much wider range of services. It is apparent that the market values of the older retail properties may fall as the supply of new retail properties with different kinds of services continues to increase. Contact: Kauri Melakari , kauri.melakari@newsec.fi

Alongside the building of new office

Photo: iStock

● THE DANISH PROPERTY MARKET

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE DANISH PROPERTY MARKET ●

THE DANISH PROPERTY MARKET

GOOD INVESTMENT CLIMATE LEADS TO AN INCREASING TRANSACTION VOLUME The Danish economy and the Danish property market are both in a good state and have a positive future outlook. Low interest rates are a driver for investments and are contributing to the increasing number of investors in the Danish property market. The European Central Bank has an announced target inflation rate of 2%, whereas inflation in Denmark was reported at 0.26% at the end of 2016. However, the rate is expected to rise and reach a level of 1.25% in 2017. The GDP growth rate is demonstrating increasing tendencies, with a forecast growth of 1.4% in 2017 and 1.8% in 2018. At the same time, real wages increased by 1.8% in 2016 and are forecasted to grow by 2% in 2017. Nevertheless, the increase in wages in the country remains below the euro zone average, which indicates that it is cheaper to produce goods in Denmark than in other countries. Unemployment increased by 2.6% during 2016, but the rate has stabilised and is expected to fall by 0.8% during 2017.

The investment market Following the American presidential election and the Brexit vote during 2016, a large number of political uncertainties and risks are affecting the investment climate. Despite this, the Danish economy is growing at an increasingly positive pace, with low fiscal deficits as well as a continuing decline of the already low debt ratio. While uncertainty in Britain rose sharply following the Brexit vote, Denmark’s economic and political

stability has led to an increasing number of foreign investors, as the country can be seen as a ‘safe haven’ in comparison.

increasingly becoming more intelligent and flexible.

The retail market The low interest rates enable investors to benefit from historically cheap funding, which in turn leads to an increasing number of investments in property. In order to take advantage of the benefits that diversification brings, pension funds and larger institutional investors are increasingly investing in the Danish property market to broaden their portfolio. At the same time, areas outside prime locations such as Copenhagen have become progressively more interesting for investors. For example, the Danish pension fund PFA has recently invested DKK 850 million in offices in Aarhus and other transactions of similar size have been completed by other professional investors.

The office market Copenhagen is the area with the highest demand for offices and the office market remains relatively stable with slightly increasing rent levels. The average market rate is DKK 1 950 per m2 for primary locations and DKK 1 400 per m2 for secondary locations with an average yield of 4% and 5.25% respectively. The overall vacancy for offices in CBD is 6.8% and the number of offices being produced in the inner suburbs is increasing. As the demand for offices increases, many properties are being adapted to the tenant’s needs in order to reflect the tenant company’s culture and identity. In addition, offices are

During 2016, private consumption in Denmark rose slightly and a similar increase is expected throughout 2017. The digitalisation of retailing is increasing in both Denmark and the rest of Europe. Danske Bank’s MobilePay app for smartphones, which enables direct in-store payments to retailers has 3.6 million users in Denmark and many in Norway and Finland. MobilePay has recently announced an agreement with Retail Payment in Norway, which is a development firm for mobile-payments made by Nordic retailers and restaurants. E-trade during 2016 amounted to DKK 111 billion and according to the Danish business organisation Dansk Erherv, a continued rapid increase is to be expected. For this year, the level of e-trade has already been estimated at DKK 120 billion. Further research has shown that foreign e-trade is increasing at an even faster pace. In 2016, domestic e-trade increased by 14% whilst foreign e-trade increased by DKK 32,4 billion, which represents 20%. Contact: Mathias Hartmann Bonde, mathias.bonde@newsec.dk

» Copenhagen is the area with the highest demand for offices and the office market remains relatively stable with slightly increasing rent levels« 19

● THE BALTIC PROPERTY MARKET

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE BALTIC PROPERTY MARKET CONTINUES TO BE AN ATTRACTIVE INVESTMENT MARKET Estonia There are currently no major economic or political risks that might affect the real estate market negatively in the short term, and the economic outlook in Estonia remains positive. Because there are many new development projects there is a slight risk of oversupply, especially in the retail segment. In 2018, when the new T1 and Porto Franco projects are completed, the GLA of shopping centres in Tallinn will be over 1 m2 per capita. The increased supply may increase vacancy and create downward pressure on rents.

The investment market The investment market in Tallinn is active. During the first half of 2017 the K-Rauta DIY store, VGP Logistics Park and several other large investment properties were sold. The demand for quality properties is strong and this has pushed yields steadily downward. A few transactions with yields below 7% were made and we forecast the trend to continue in the next few years. The most active investors are mainly domestic and Scandinavian property funds.

The office market The office stock in Tallinn increased by 23 500 m2 during the first six months of 2017, a rate lower than the nearly 60 000 m2 of growth during 2016. Vacancies in Class-A buildings are close to zero. The top rent for A+ premises is currently estimated at around EUR 16 to EUR 17.5 per m2 per month and for Class-A, EUR 13.5 to EUR 17 per m2 per month. The average rent for Class-B offices lies between EUR 8 and EUR 12 per m2 per month, although rents in quality buildings with sufficient parking located close to the City Centre are as high as EUR 10 to EUR 13 per m2 per month. In the second half of 2017 the office market is expected to remain stable. Vacancy rates or rents are not expected to change significantly.

In 2018 the expected delivery of new office space will be over 100 000 m2. This will increase vacancies and may put pressure on rent levels – especially for buildings located outside the CBD – until the premises are absorbed. Vacancy rates in the buildings completed in the first half of 2017 are still high, indicating that the supply of Class-B buildings is exceeding the demand.

The retail market The expansion of the Norde Centrum shopping centre will be opened in Tallinn in the second half of 2017, adding 12 000 m2 to the stock. Vacancies there have been close to zero in recent years. Two new shopping centres (T1 and Porto Franco) with a total GLA of 90 000 m2 are currently under construction with plans to open in 2018. The Ülemiste shopping centre is planning an expansion of 13 000 m2 that will be opened in spring 2019. New shopping centres and expansions are focusing on entertainment and restaurants in order to attract more customers. Rent levels have been stable for several years. Rents for anchor tenants lie between EUR 8 and EUR 13 per m2 per month and for other tenants between EUR 10 and EUR 50 per m2 per month. We expect rent levels to remain stable through 2017.

Lithuania Lithuania is among the leaders in Europe in terms of its recent rate of development. Statistics Lithuania reports that the country’s GDP increased by 4.0% in the first half of 2017. Together with a significant year-on-year increase in annual gross wages as well as positive trends in foreign direct investments, inflation and employment, the Lithuanian economy and its property market have good

development prospects in the near future.

The investment market The beginning of 2017 was very active in terms of property transaction volume. Lithuania recorded a volume of more than EUR 215 million in the first half of 2017, which is only 20% less than for the whole year of 2016. Retail and office were the most active sectors and accounted for nearly 85% of all investment volume in the half-year. The logistics segment was also active, taking nearly 10%. In the second half-year only an insignificant increase in the investment volume is expected. Average yields for prime retail and office assets in Vilnius remain around 6.5%, with the most attractive properties being bought at yields up to 50 basis points lower. Secondary properties are producing yields around 7.50%. Local Baltic, Nordic and Eastern European investors are still the key players in Lithuania, but more interest from Western European investors has recently been noticed and this trend is likely to increase in the near future.

The office market By the end of June 2017 the stock of modern office premises in Vilnius was 550 000 m2. During 2017 the total office stock has increased by 14 000 m2 of leasable area and it is expected that between now and 2019 a further 150 000 m2 of new office space will be completed in Vilnius. Developers are still focusing mainly on prime schemes, and more than 70% of the new stock will consist of Class-A offices in the CBD. The latest openings of new office projects have increased office market vacancy rates in Vilnius to an average of 3.0% in Class A properties and 5.3% in Class-B properties. The overall average vacancy

EXECUTIVE SUMMARY ●

Photo: iStock

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

● THE BALTIC PROPERTY MARKET

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

» The beginning of 2017 was very active in terms of property transaction volume for Baltics«

rate for classified office buildings in Vilnius is now 4.5%, which is expected to grow further due to scheduled openings in coming years.

Photo: Shutterstock

After the first six months of 2017, the average market rent for prime office space in Vilnius CBD ranged from EUR 14 to EUR 16 per m2 per month, with top figures of EUR 17 per m2 per month in a few cases. In other central areas rents range

from EUR11 to EUR14 per month, while rents in Class-B offices further away from the city centre averaged EUR 8 to EUR 11 per m2 per month. The average rents for both Class-A and Class-B properties have increased slightly for several years.

The retail market At mid-year 2017 the stock of modern shopping centres in Vilnius was nearly 370 000 m2. No significant new retail

projects have been completed this year, but a trend towards the expansion or reconstruction of existing projects has been seen in Vilnius lately. Two investors have updated their ambitious plans to start the development of Central Mall (60 000 m2) and the second Akropolis shopping centre (up to 70 000 m2) in Vilnius, but no earlier than 2018–2019. At the end of June 2017 the average

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE BALTIC PROPERTY MARKET ●

EUR 50 MILLION TRANSACTION VOLUME IN LATVIA FIRST HALF OF 2017 vacancy rate in the largest shopping centres in prime locations in Vilnius stood at around 2.0%. Demand in the retail market is increasing as the majority of retailers have expansion in their plans. All of the largest shopping centres are attracting new ‘big brand’ tenants and improving their tenant mix by replacing small and medium local brands with internationally famous brands. Rents in shopping centres are set according to the size of the tenant and vary from EUR 7 to EUR 50 per m2 per month in the capital. The average rent level in Vilnius prime shopping centres is increasing slightly year by year and stood at EUR 22 per m2 per month half way through 2017.

Latvia In the last two quarters the Latvian economy has grown at rates well above those seen in the recent past. Cyclical recovery is apparent not only in Latvia but throughout the Baltics and the whole of Europe. In many Latvian markets of different kinds, growth is faster than was forecast a few years ago and will remain positive in the near future.

attractive gap compared to Western European levels. Average yields for prime retail and office assets remain around 6.75% to 7%, and for prime industrial properties around 8.25% to 8.50%.

The office market At the end of June 2017 the Riga office stock totalled 610 000 m2. Although recent completions of modern new offices have been relatively insignificant – around 20 000 m2 – projects totalling over 80 000 m2 are now under construction or planned to start construction in the near future. These include Teodors, Business Garden Riga and Z-Towers. At the end of the first half-year the average vacancy in modern office buildings in Riga reached 7.5%, ranging from about 5.0% in prime Class A offices to 8.5% in Class-B offices, Vacancy rates are expected to rise a little further due to scheduled openings in coming years. Average rents for modern offices in Riga have continued to increase slightly. At the end of the first half-year, rents for prime office space in Riga ranged from EUR 14 to EUR 16 per m2 per month, and for Class-B offices from EUR 10 to EUR 13 per m2 per month.

which will have a total area of nearly 100 000 m2, including 9 000 m2 of offices. Earlier there were announcements about the expansion of two shopping centres – Alfa (+18 000 m2) and Origo (+16 000 m2) – and the construction of the first IKEA store in Latvia (about 35 000 m2) in the near future. The vacancy rate in the most successful shopping centres in Riga has ranged from 1% to 2% during 2017. However the overall average vacancy rate in the retail market reached 5%. The rents in shopping centres are set according to the size of the tenant and the micro-location and may vary from EUR 10 to EUR 60 per m2 per month. The average rents in the largest shopping centres in prime locations in Riga are currently around EUR 20 to EUR 25 per m2 per month.

Contact: Gintaras Tolocka, g.tolocka@newsec.lt

The investment market After a successful period in 2015 and 2016 when Latvia achieved a property transaction volume of more than EUR 300 million a year, the country has started 2017 with a struggle. In the first half of the year Latvia recorded a property investment volume of only about EUR 50 million. However, a significant increase is expected in the second half year. For the third year in a row the retail segment is the most active in terms of transaction volume. Although yields have decreased signifi cantly in recent years, there is still an

The retail market The main shopping destination in Latvia is Riga, which has 16 shopping centres. Only four projects are larger than 40 000 m2, the rest being classed as medium or small local shopping centres. The total stock of shopping centres in Riga remains unchanged from 2011, when the Damme shopping centre was opened. Recently, however, the largest Lithuanian developer, Akropolis Group, has finally started the construction of a big new shopping complex in Riga – Akropole,

● NORDIC PROPERTY FINANCING

NEWSEC PROPERTY OUTLOOK • SPRING 2017

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

NORDIC PROPERTY FINANCING ●

NORDIC PROPERTY FINANCING BANKS ARE BECOMING MORE AND MORE CAUTIOUS The market is now in full swing again after the summer holidays. Even during the summer there was a fair amount of activity, but there has been a great upturn in activity during August. The senior banks are becoming more cautious than ever: holding back as regards to loan-to-value ratio and placing even more focus on amortisation and perhaps most of all on interest cover ratio. Some banks seem completely paralysed and are finding it hard to take on new clients. However, there are still a couple of banks that are showing a good appetite for transactions with both existing and new clients. In these dealings they are far more focused on the transaction in itself and on making sure that both borrower and cash flows are stable, rather than on smothering the deal with more or less unreasonable demands for covenants, securities or cash-flow parameters. On the contrary, these banks appear to see an opportunity to win good clients and a growing and sound loan portfolio. The smaller banks continue to be very active. They include both some that make senior loans – often to clients who also place their capital management with the banks – and some that make junior loans, i.e. place a loan on top of the senior loan. There are two players who are completely dominant in terms of their business understanding and their willingness to undertake transactions. Pleasingly, the bond market is also continuing to develop – both in regards to liquidity and in separating what is secured (both senior and junior loans) and what is not secured. Apart from the listed companies we are continuing to see fewer players in property than in other sectors. Perhaps because traditional bank financing, historically, has benefited the property companies in particular because of the securities that can be

offered. But with the diminishing interest among the senior banks, the bond market will probably be an even more attractive alternative for the medium and smaller property companies too. Here as everywhere else it is of great importance to structure the deals in the right way so that both bond investors and borrowers can feel comfortable and safe.

consider just how and why securities etc are to be pledged. It is going to be an interesting autumn with a great variety of opportunities!

Contact: Mats Karlsson, mats.karlsson@newsec.se

An even faster-growing source of senior financing consists of lenders who are not traditional senior banks who are beginning to lend money bilaterally. Either by using their own funding or with what could be described as a type of direct lending – that is, they fund themselves through (for example) institutions and then lend money bilaterally to the borrower. This is a very exciting market. Previously, direct lending has been conducted mainly through investment banks, etc. Now it is the players themselves who have seen that there is a large hole to be filled where the senior banks used to be. Naturally this places great demands on the internal credit committee and on documentation and structure, but provided these are properly supervised, a decision about really competitive time scales can probably be taken, and there is great access to loan capital. In this area three players lead the way in being able to provide this loan product on more of a commodity basis. Crowd funding continues to develop. Here a number of less structured players have already been weeded out, and one player is especially prominent. The volumes are beginning to move forward from very small to rather less small, and this too may be a good complement to the borrower’s senior financing, whether it comes from a bank or another lender. As always it is very important to create a well-thought-out structure and to

● OUTLOOK FOR THE NORTHERN EUROPEAN PROPERTY MARKET

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

OUTLOOK

FOR THE NORTHERN EUROPEAN PROPERTY MARKET Due to our local presence in all the Nordic countries as well as in the Baltics, Newsec is able to continuously make predictions about the commercial property market in Northern Europe. The basis for our forecast is our perspective regarding the macroeconomic development of the countries in the region and how that, in turn, will affect the commercial property market in each country. Yield, rental and vacancy trends for each market segment and area are estimated by our local experts and applied in a financial model to predict the optimal risk/return relationship between assets. The analysis that follows indicates where Newsec thinks the commercial property market in Northern Europe is heading during the next few years.

For further information concerning the assumptions behind the analysis, please contact us and we will support you in making the optimal investment and allocation decisions in the years to come.

Logistic properties in Finland is expected to earn the highest return for the lowest risk in 2017–2018. During the period 2017–2018, logistic properties have demonstrated a relatively low volatility in total returns and are expected to earn a high risk-adjusted total return. However, investors seeking to allocate capital to logistic properties in Finland should choose their submarket carefully, as there is a spread in the risk-adjusted returns in the various submarkets. In order to limit exposure to

unnecessary risk, analysing the location of logistic properties in Finland remains essential, since some locations are predicted to earn similar returns while having higher volatility. The highest risk-adjusted return for logistic properties is expected to be earned in Oulu. The other regional growth centres of Finland have a slightly higher volatility but are expected to earn approximately the same return. Predicted increases in rents combined with continuous yield compression could explain the high expected riskadjusted returns. Office properties in Sweden, in particular in Stockholm CBD, Stockholm Central and Stockholm Prime Suburbs, are expected to earn the highest level of risk-adjusted

Total Return/Market Risk — 2017E—2018E

Average Total Return 2017E—2018E

Percent

Source: Newsec

Office Sweden

Retail Sweden Logistics Sweden 12

Residential Sweden Office Norway Retail Norway

Logistics Norway Office Finland 8

Retail Finland Logistics Finland Residential Finland

Office Denmark Retail Denmark 4

Office Baltic Region Retail Baltic Region Logistics Baltic Region

2 2

32 Percent

Standard Deviation in Total Return 2008—2016

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

OUTLOOK FOR THE NORTHERN EUROPEAN PROPERTY MARKET ●

● OUTLOOK FOR THE NORTHERN EUROPEAN PROPERTY MARKET

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

» Office properties in Sweden are expected to earn the highest level of risk-adjusted returns«

Expected Average Capital Growth 2017E—2018E Average Capital Growth, Percent

Source: Newsec

9 8 7 6 5 4 3 2 1

Logistics

Residential

Retail Oslo Prime

Office Malmö Prime

Logistics Gothenburg Prime

Retail HMA Prime

Office HMA Prime

Logistics Malmö Prime

Office Tallin Prime

Retail Malmö Prime

Office Vilnius Prime

Retail Riga Prime

Retail Copenhagen Prime

Retail Tallin Prime

Logistics Tallinn Prime

Retail Vilnius Prime

Logistics HMA Prime

Residential HMA Prime

Office Oslo Prime

Office Riga Prime

Logistics Riga Prime

Logistics Stockholm Prime

Retail Gothenburg Prime

Residential Malmö Prime

Logistics Vilnius Prime

Office Gothenburg Prime

Logistics Oslo Prime

Retail

Retail Stockholm CBD

Residentials Gothenburg Prime

Office Stockholm CBD

Office

Residential Stockholm Prime

Office Copenhagen Prime

returns, but are a slightly more volatile investment with a standard deviation ranging around 12%. The high expected returns in this segment are driven by low vacancy rates and continuously rising rent levels. Historically during the past ten years these three sub-segments have earned returns well above 10% on average and are expected to show returns at the same level for the period 2017–2018. The residential property market in Finland is also demonstrating a relatively high risk-adjusted total return. Except for two outliers, HMA Other and HMA Prime, which earn a lower return with higher volatility, there is a stable volatility ranging around 7%. In addition, office properties in Finland are showing a high

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

OUTLOOK FOR THE NORTHERN EUROPEAN PROPERTY MARKET ●

» The lowest risk-adjusted return is expected to be earned in the Norwegian retail segment«

risk-adjusted return with low standard deviation. This segment and submarket spread enables investors to choose the location and segment based on their risk profile and still get exposure to the residential, office or logistic market in Finland. The lowest risk-adjusted return is expected to be earned in the Norwegian retail segment, more specifically in the Oslo Category A segment. This subsegment has a volatility of 12% while it is expected to show a return of only about 5%. If an investor wishes to invest in the Norwegian retail market, other subsegments are expected to demonstrate a more stable volatility and a higher average return. Logistic properties in the Baltics are showing a historically high volatility compared to the rest of the Northern European property market, but are still expected to earn a high level of returns for the period 2017–2018. Retail properties in the Baltics are demonstrating a stable rate of return but have a wide submarket volatility spread ranging from 14% to 23%, indicating that in order to avoid exposure to an investment with an

unnecessary risk level in relation to total return, it is essential that the submarket selection is properly analysed. Moreover, residential properties in Sweden, in particular the Rest of Greater Stockholm, Other Major Cities and Rest of Sweden submarkets, are expected to constantly earn stable total returns ranging from 9% to 11% with relatively low volatility around 5.5%. This segment has been characterised by decreasing yield levels and expected rental increases. However, there is a wide spread of risk-adjusted returns, with Gothenburg Prime being the most volatile sub-segment. Investors seeking to maximise their risk-adjusted return during the forecast period should allocate capital towards well selected logistics properties in Finland or, if the investor is risk-tolerant, the investment should be allocated towards the office market in Sweden, in particular the Stockholm region.

In contrast to previous years, no subsegments are expected to demonstrate negative capital growth rates during the forecast period. Logistics in Gothenburg and Retail in Oslo are expected to show the lowest capital growth rates of 1.1% and 0.8% respectively. Investors chasing maximum capital growth and are risk tolerant during the forecast period should allocate capital to office properties in central Stockholm.

The interest in offices is expected to continue, with the segment having the highest capital growth in 2017–2018. Office properties in Copenhagen are expected to show the highest capital growth

Total Return | Baltic Region

Total Return | Nordic Region Percent

Source: Newsec

Percent

Source: Newsec

20 18

16 14

10 8

6 4 2 0

in 2017–2018. The average yearly capital growth for the sub-segment is predicted to reach approximately 9% and office properties in Stockholm are also demonstrating high expected capital growth of slightly above 8%. Further, residential properties are expected to show an average capital growth rate of 8%, driven by a combination of yield compression and rental growth.

5 2011

2012

Prime Office

2013 Prime Retail

2014

2015

Prime Residential

2016

2017E

Prime Logistics

2011

2012

Prime Office

2013 Prime Retail

2014

2015

2016

2017E

Prime Logistics

● MACROECONOMIC DATA

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

MACROECONOMIC DATA Sweden Interest Rates

Economic Indicators Percent

Source: SCB, Newsec

Percent

Source: Swedbank, Swedish Central Bank

6 5

4 3

2 1

0 -1

-1

2010

2011

2012

2013

GDP, Annual Percentage Change Inflation, Yearly Average

2014

2015

2016

2017E

2010

2011

2012

2013

Central Bank Interest Rate

Private Consumption

2014

2015

2016

2017E

STFIX 5Y

STIBOR 3M

Employment

Norway Interest Rates

Economic Indicators Percent

Source: BNP

Percent

Source: BNP

5 4

3 3 2

2 1

1 0 -1

2010

2011

2012

2013

GDP, Annual Percentage Change Inflation, Yearly Average

2014

2015

2016

2017E

2010

2011

2012

2013

Central Bank Interest Rate

Private Consumption

2014

2015

2016

2017E

SWAP 5Y

NIBOR 3M

Employment

Finland Interest Rates

Economic Indicators Percent

Source: BNP

Percent

Source: BNP

4 3

2 2 1

1 0

0 -1 -2

2010

2011

2012

2013

GDP, Annual Percentage Change Inflation, Yearly Average

2014

2015

2016

Private Consumption Employment

2017E

-1

2010

2011

2012

Central Bank Interest Rate

2013

2014

2015

EURIBOR 3M

2016 SWAP 5Y

2017E

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

MACROECONOMIC DATA ●

Denmark Economic Indicators

Interest Rates

Percent

Source: BNP

Percent

Source: BNP

3 2 2 1

0 0 -1 -2

2010

2011

2012

2013

GDP, Annual Percentage Change Inflation, Yearly Average

2014

2015

2016

2017E

-1

2010

2011

2012

2013

Central Bank Interest Rate

Private Consumption

2014 CIBOR 3M

2015

2016

2017E

SWAP 5Y

Employment

Estonia Economic Indicators

Interest Rates

Percent

Source: BNP

Percent

Source: BNP

8 6

4 2

-2 -4 -6

2010

2011

2012

2013

GDP, Annual Percentage Change Inflation, Yearly Average

2014

2015

2016

2017E

-1

Private Consumption

2010

2011

EURIBOR 3M

2012

2013

2014

2015

2016

2017E

SWAP 5Y

Employment

Latvia Interest Rates

Economic Indicators Percent

Source: BNP

Percent

Source: BNP

2 1 0 0

-2 -4

2010

2011

2012

2013

GDP, Annual Percentage Change Inflation, Yearly Average

2014

2015

2016

Private Consumption

2017E

-1

2010

2011

RIGIBOR 3M

2012

2013

2014

2015

2016

2017E

EURIBOR 3M

Employment

● MACROECONOMIC DATA

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

MACROECONOMIC DATA Lithuania Interest Rates

Economic Indicators Percent

Percent

Source: BNP

6 4

2 2 0

-2 0 -4 -6

2010

2011

2012

2013

GDP, Annual Percentage Change Inflation, Yearly Average

2014

2015

2016

-1

2017E

Employment

GDP Growth GDP Growth 2016—2017E Percent

Source: Swedbank

1 2016 2017E

2016

2017E

2010

2011

VILIBOR 3M

Private Consumption

2012

2013

EURIBOR 3M

2014

2015

2016

2017E

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

PROPERTY DATA ●

PROPERTY DATA Office rents Prime Office Rents (CBD) | Nordic Region

Source: Newsec

Percent

EUR/m2

Prime Office Rents (CBD) | Baltic Region

Source: Newsec

Percent

EUR/m2

700

210

600

180

500

150

400

120

300

200

100

Stockholm Gothenburg

Malmö

Oslo

Helsinki

Copenhagen

Tallinn

Riga

Vilnius

Average Annual Rental Growth 2011—2016 (left axis)

Average Annual Rental Growth 2016—2017E (left axis)

Rent Level 2017E (right axis)

Office yields Prime Office Yields | Baltic Region

Prime Office Yields | Nordic Region Percent

Source: Newsec

Percent

Source: Newsec

6.0 5.5

9 5.0 8

4.5 4.0

7 3.5 3.0

2010

2011

2012

Stockholm Oslo

2013

2014

Gothenburg Helsinki

2015

2016

2017E

2010

2011

Tallinn

Malmö Copenhagen

2012

2013

Riga

2014

2015

2016

2017E

Vilnius

Retail rents Prime Retail Rents | Nordic Region

Source: Newsec

Percent

EUR/m2 4000

12 10

3000

Source: Newsec

Percent

EUR/m2

300

2.5

250

200

1.5

150

100

2000

6 4

1000

2 0

0 -2

Prime Retail Rents | Baltic Region

Stockholm Gothenburg

Malmö

Oslo

Helsinki

Copenhagen

0.5 0

Tallinn

Riga

Average Annual Rental Growth 2011—2016 (left axis)

Average Annual Rental Growth 2016—2017E (left axis)

Rent Level 2017E (right axis)

Vilnius

● PROPERTY DATA

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

PROPERTY DATA Retail yields Prime Retail Yields | Nordic Region

Prime Retail Yields | Baltic Region

Percent

Source: Newsec

6.0

Percent

Source: Newsec

5.5

5.0 8 4.5 7

4.0 3.5

2010

2011

2012

Stockholm Oslo

2013

2014

Gothenburg Helsinki

2015

2016

2017E

2010

Malmö Copenhagen

2011

Tallinn

2012

2013

Riga

2014

2015

2016

2017E

Vilnius

Logistics rents Prime Logistics Rents | Nordic Region

Source: Newsec

Percent

EUR/m2 200

12 10

150 8 100

6 4

50 2 0

Stockholm

Gothenburg

Malmö

Oslo

Helsinki - East

Prime Logistics Rents | Baltic Region

Source: Newsec

Percent

EUR/m2

Tallinn

Riga

Vilnius

Average Annual Rental Growth 2011—2016 (left axis)

Average Annual Rental Growth 2016—2017E (left axis)

Rent Level 2017E (right axis)

Logistics yields Prime Logistics Yields | Nordic Region

Prime Logistics Yields | Baltic Region

Percent

Source: Newsec

Percent

Source: Newsec

10 7 9 6 8

2010

2011

Stockholm Oslo

2012

2013

Gothenburg Helsinki - East

2014

2015

Malmö

2016

2017E

2010

2011

Tallinn

2012 Riga

2013

2014 Vilnius

2015

2016

2017E

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

PROPERTY DATA ●

Residential rents Prime Residential Rents | Nordic Region

Source: Newsec

Percent

EUR/m2

Prime Residential Yields | Nordic Region Percent

400

300

200

100

Stockholm

Gothenburg

Malmö

Helsinki

Source: Newsec

2010

2011

2012

Stockholm

Average Annual Rental Growth 2011—2016 (left axis)

2013

2014

Gothenburg

2015 Malmö

2016

2017E

Helsinki

Average Annual Rental Growth 2016—2017E (left axis) Rent Level 2017E (right axis)

Annual transaction volumes Transaction Volumes — Annual | Nordic Region

Transaction Volumes — Annual | Baltic Region

BEUR

Source: Newsec

BEUR

Source: Newsec

500 400

300 10 200 5

100

2010

2011

Sweden

2012

2013

Norway

2014

2015

Finland

2016

2017E

2010

Denmark

2011

2012

Estonia

2013

Latvia

2014

2015

2016

2017E

Lithuania

Quarterly transaction volumes Transaction Volumes — Quarterly | Nordic Region BEUR

Transaction Volumes — Quarterly | Baltic Region Source: Newsec

MEUR

Source: Newsec

250 200

150 4 100 2

0 2010

2011

2012

Sweden

2013

2014

Norway

2015

Finland

2016

2017E

Denmark

2010

2011

Q1 Q3 2010 2010 Q1 2010

Q3 2010

Q1 2011

Q3 2011

Q1 2012

Q3 2012

Q1 2013

Q3 2013

Q1 2014

Q3 Q1 Q3 2014 2015 2015

2012

Estonia

Q1 2011

2013 Latvia

Q3 2011

2014

2015

2016

2017E

Lithuania

35 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 2012 2012 2013 2013 2014 2014 2015 2015 2016

● PROPERTY DATA

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

PROPERTY DATA Office stock

Office new construction Office New Construction (Capital Office Market)

Source: Newsec

Office Stock Q2 2017 (Capital Office Market)

Thousand m2

Percent of stock

Million m2

150

Source: Newsec

14 12

100

10 8 6

4 2

Stockholm

Oslo

2016 (left axis)

HMA

Copenhagen Tallinn

2017E (left axis)

Riga

Vilnius

2017E (right axis)

Stockholm

Oslo

HMA

Copenhagen Tallinn

Riga

Vilnius

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

DEFINITIONS ●

DEFINITIONS Offices

Retail

Logistics

• In the Nordic region, the forecast refers to new or newly refurbished modern and flexible office premises with normal area efficiency.

• Rent levels refer to attractive, modern High-Street or centrally located shopping-centre retail premises with a prime location on the High Street or in the shopping centre.

• In the Nordic region the size of the premises is assumed to be 5 000—20 000 m2 with 5—10 years lease agreement.

• In Finland, the forecast refers to office premises with normal area efficiency in office buildings in office areas. • The size of the premises is assumed to be around 1 000 m2. • In the Baltic region, the forecast refers to new or newly refurbished stand-alone modern business centres. • In Sweden the market rent includes heating and excludes Property Tax. • In Finland the market rent includes heating and Property Tax. • In Norway and Denmark the market rent excludes heating and Property Tax.

• In Norway, rents refer only to shopping centres. • The rents do not refer to premises used for groceries and daily necessities (except in the Baltic region). • The size of the premises is assumed to be around 250 m2. • The rent excludes heating and Property Tax in all Nordic countries except Finland where heating and Property Tax are included. • In the Baltic region the market rent excludes all applicable taxes.

• In the Baltic region the market rent excludes all applicable taxes.

• In the Baltic region the size of the premises is assumed to be from 3 000 m2 with 3—5 years lease agreement. • In the Nordic region the rent excludes heating and Property Tax. • In the Baltic region the market rent excludes all applicable taxes.

Residential • The forecast refers to attractive locations. • The standard assumes buildings constructed in the late 1990s and with an apartment area of around 60—70 m2. • The rent includes heating and Property Tax.

Exchange rates All rents and transaction volumes are calculated using exchange rates from August 2017.

NEWSEC’S ANALYSIS PRODUCTS Thanks to Newsec’s comprehensive knowledge we are able to offer a number of analysis and market reports which give you a valuable summary of the property market. Order your English report at www.newsec.com/insights/market-reports/ Order your Swedish report at www.newsec.se/insikter--rapporter/marknadsrapporter/

● THE FULL SERVICE PROPERTY HOUSE IN NORTHERN EUROPE

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

THE FULL SERVICE PROPERTY HOUSE IN NORTHERN EUROPE Newsec — The Full Service Property House in Northern Europe — is by far the largest specialised commercial property firm in Northern Europe. Newsec manages more properties and carries out more transactions, more lettings and more valuations than any other firm in Northern Europe. Through this great volume, and the knowledge and depth of our various operations, we acquire extensive and detailed knowledge of the real estate market. In turn, we can quickly identify business opportunities that create added value. Our prime market is Northern Europe, but through our alliance membership with BNP Paribas Real Estate, we offer our services on the global market. This makes Newsec Northern Europe’s only full service property house, and provides us with a unique ability to forecast the future.

The Group expanded internationally into Finland in 2001, Norway in 2005, the Baltic countries in 2009 and Denmark in 2016. The Norwegian asset and property management companies First Newsec Asset Management and TM Partner were acquired in 2012. In 2013, Newsec acquired Jones Lang LaSalle’s Swedish property management operation. In 2017, Newsec grew with the acquisitions of Norwegian Basale and Danish Datea, further strengthening the position within Property Asset Management.

across the seven Nordic and Baltic markets. Newsec has approx. EUR 39 billion under management and annually signs lease agreements of some 760 000 square meters, manages transactions of some EUR 3 billion and does real estate valuations of underlying property worth almost EUR 180 billion. Thanks to large volumes, local presence combined with in-depth understanding of a range of businesses, Newsec has a unique expertise of the real estate market in northern Europe.

Newsec was founded in 1994 and is today a partner-owned company with some 2 000 co-workers spread

A history of growth Newsec is the result of a unique history of growth, characterised by constant originality of thinking. The first issue of the comprehensive market analysis, Newsec Property Outlook, was published in 2001.

OULU

TRONDHEIM

TAMPERE BERGEN OSLO STOCKHOLM

HELSINKI TALLINN

GOTHENBURG RIGA AARHUS COPENHAGEN

MALMÖ

VILNIUS

NEWSEC PROPERTY OUTLOOK • AUTUMN 2017

CONTACT AND ADDRESSES ●

CONTACT AND ADDRESSES Sweden

Norway

Finland

Estonia

info@newsec.se

info@newsec.no

info@newsec.fi

info@newsec.ee

Stockholm

Oslo

Helsinki

Tallinn

Stureplan 3 P.O. Box 7795 SE-103 96 Stockholm, Sweden Tel: +46 8 454 40 00

Filipstad Brygge 1 P.B. 1800 Vika NO-0123 Oslo, Norway Tel: +47 23 00 31 00

Mannerheiminaukio 1 A P.O. Box 52 FI-00101 Helsinki, Finland Tel: +358 207 420 400

Roseni av. 7 EE-10111 Tallinn, Estonia Tel: +372 664 5090

Trondheim

Tampere

Beddingen 8, 3. etg. NO-7042 Trondheim, Norway Tel: +47 98 67 (24t)

Aleksanterinkatu 32 B FI-331 00 Tampere, Finland Tel: +358 207 420 400

Latvia

Stockholm Humlegårdsgatan 14 P.O. Box 5365 SE-102 49 Stockholm, Sweden Tel: +46 8 55 80 50 00

Gothenburg Sankt Eriksgatan 5 P.O. Box 11405 SE-404 29 Göteborg, Sweden Tel: +46 31 721 30 00

Gothenburg Kungsportsavenyn 33, 5 tr SE-411 36 Göteborg, Sweden Tel: +46 31 733 86 00

Öresund Office Davidshallsgatan 16 SE-211 45 Malmö, Sweden Tel: +46 40 631 13 00

Denmark Newsec Advisory in Denmark info@newsec.dk

info@newsec.lv

Riga Vilandes av. 1-16 LV -1010 Riga Tel: +371 6750 84 00

Lithuania info@newsec.lt

Copenhagen Silkegade 8 1113 Copenhagen Tel: +45 33 14 50 70

Aarhus Banegårdspladsen 20 8000 Aarhus C Tel: +45 87 31 50 70

Vilnius Konstitucijos ave. 21C, Quadrum North, 8th floor LT-09306 Vilnius, Lithuania Tel: +370 5 252 6444

Newsec Datea datea@datea.dk +45 26 01 02

Lyngby Lyngby Hovedgade 4 2800 Kgs. Lyngby

Aarhus Viby Ringvej 2B, #. 8260 Viby J

Næstved Ringstedgade 24, 1.tv 4700 Næstved

THE FULL SERVICE PROPERTY HOUSE IN NORTHERN EUROPE