Total investment volumes in the Nordics reached new record highs €63.6bn in 2021, up 44% in 2020 with also Sweden and Norway posting record investment volumes. Record levels of investment headed towards the multifamily sector in 2021 with several large platform deals in the Nordics.
Recovery continued in the Nordics with real estate investment setting new all-time highs for 2021, €63.6 billion, up 44% from 2020, with the investment level surpassing the previous record in 2017 by 38%. Sweden received the largest share of volumes in the Nordics, €28.1 billion, followed by Norway (€15.9 billion), Denmark (€12.7 billion) and Finland (€7 billion). Last quarter of the year also reached a new record high, €21.4 billion (+24% y-o-y), led by strong tailwinds for offices (€9.4 billion), residential (€4.1 billion) and I&L (€3.1 billion). Sweden and Norway ended the year on a high note with both countries posting record numbers in the last quarter and annual volumes.
Residential investment market
Residential investment reached record levels in the Nordics in 2021 with transactions amounting to €21.2 billion, up 54% from the previous year. The record year was largely driven by several large platform deals including the €9.1bn sale of Akelius’ residential business in Germany and the Nordics to Heimstaden, where CBRE acted as financial and real estate advisor. This increase in M&A and portfolio activity was a main conduit through which investors allocated larger volumes of capital to residential real estate. The residential investment market is witnessing strong momentum across the Nordics and there has been intense competition and bidding in prime residential assets and portfolios. This trend is expected to continue into 2022.
Office investment market
The office market was also particularly strong in the Nordics, and office investment was over €20 billion in 2021 and grew by 117% from 2020. There is a large number of investors looking to deploy more capital into modern offices with strong transport locations and green credentials, and office investment will remain active in 2022. Industrial and logistics continued to attract capital in 2021, and this sector recorded €8.5 billion in investment volumes, a robust growth of 32% from the previous year. Tailwinds from the growth in e-commerce drive the logistics sector throughout the Nordics, and strong occupier demand drives the steady rental growth and keeps vacancies in modern stock low.
Cross-border capital looking to invest more in the Nordics
International investors were active through 2021 in Nordic countries, and 2022 is expected to see an increased number of cross-border investors looking to deploy more capital in Nordic real estate markets. German open-ended real estate funds continued their growth and positive capital inflows in 20211, and German capital remained active in all Nordic markets taking part in various deals in different sectors. For example, German investors were on the buy-side in five over €70 million residential deals in Helsinki Metropolitan Area in Finland during 2021. Asian institutions, which were active before the pandemic, are now making their return and are keen to allocate more capital into Nordic real estate markets.
Growth expected to continue in 2022
The real estate market in the Nordic region is in strong health and the growth is expected to continue for 2022. Rebound in investment activity will continue in 2022 led by residential, office, and logistics tailwinds and the amount of deployable capital targeting the Nordic countries remains high. Furthermore, we see a pipeline of many large-scale and platform transactions to be completed this year, where opportunities of scale continue to be highly sought after.
Patrik Kallenvret, Head of Capital Markets in the Nordics, adds:
“We saw a strong rebound in investment volumes in 2021, and we are anticipating the positive momentum to continue. The recovery has been supported by the low-interest rate environment and strong economic growth in all Nordic countries. Rising inflation and the continued emergence of Covid-19 variants remain challenges for the well-founded recovery. Following a record performance in the Nordic multifamily sector, we are anticipating further strong appetite from investors for this asset class in 2022. The office recovery is now well underway, and the sector is heading for another active year. “
1Bundesbank, CBRE Research. Capital flows of German open-ended real estate funds (GOEFS & Spezialfonds), 2022.