The first half of the year is almost over and the summer weather is upon us. Before we take a rest, maybe in a hammock, I wanted to share my reflections on the first half of the year.
Inflation and interest rates
The macroeconomic environment has posed new challenges after the pandemic, such as supply chain congestions, a major war in Europe and an inflation crisis that shows no sign of easing. The rapid rise in inflation has in turn pushed up the expected trajectory of interest rates. While more expensive financing is already impacting construction and investment, real estate continues to be an excellent inflation hedge – as always.
The second strongest Q1 on record
Activity has been high across the Nordic region, with Q1 investment volumes reaching EUR 11.8 bn. This corresponds to a year-on-year increase of 33%. It is actually the second strongest Q1 on record, only surpassed by the first quarter of 2020 before the pandemic struck. As the deal pipelines are significant for the Nordic Capital markets’ team, the cautious expectations for H2 volume are high. Industrial & logistics and residential sectors started strongly, followed by office which has enjoyed a post-pandemic tailwind.
Office Occupier Sentiment Survey
Office leasing sentiment has improved drastically after the pandemic and 72% of the companies in CBREs recent survey now employ a hybrid work policy. You can read more about the survey and its findings in this blog post at the Nordics Real Estate blog.
Extremely tight vacancy rates
The logistics occupier market has experienced intense activity after the spike in e-commerce during the pandemic, which made many occupiers outgrow their premises. The vacancy rates in the Nordic markets are extremely low. Several grocery chains are opening large warehouses for online deliveries in the Nordic capital region this year. The retail sector is experiencing relief in the city cores with the opening-up effects, with increased footfall and both domestic and foreign tourists returning.
ESG Consultancy
ESG continues to be high on the agenda for many of our clients. In line with the increased demand, we are reinforcing our strategic advisory business in ESG. We have a growing number of experts in the region, in addition, many of our Senior leaders have participated in Sustainable Real Estate at the University of Cambridge Institute for Sustainability Leadership.
We wish you a great summer!
It has been a successful first half of the year throughout the Nordic region and the remaining part of 2022 remains promising – but work still to be done. When we look back at this year, it is with great pleasure to see that our cross-border initiatives are liberating more business than we would have previously experienced.
I hope and wish that you all - our customers, employees, and partners can enjoy a beautiful, Nordic Summer. Take the opportunity to meet your loved ones and recover.
Lastly, I encourage you to visit our Nordic Real Estate Blog, where we share our data, insights and experiences and knowledge from all our advisors and experts. Make sure to sign up for a free subscription for all articles. New articles will be published in August.
I wish all our clients and employees a very pleasant summer holiday!
Stay well!
Colin
