STOCKHOLM – A CITY EXPANDING
Sweden’s capital city faces a shortage of land and an ever growing population. For creative architects and developers this presents untold opportunity, ripe for backing by international property investors.
According to the recent PWC & Urban land Institute report on emerging trends in real estate in Europe, this year is seeing renewed interest in Nordic countries. Stockholm’s popularity remains high as a development destination, and it is now also held in higher esteem for investment.
Sweden’s capital has risen to number 11 in the PWC / Urban Land Institute investment league, and ranks number 4 for development – behind the three German cities of Berlin, Munich and Hamburg. However, that position could improve greatly, as Stockholm looks to redevelop a large part of the inner city with its ‘mini-city’ Klarastaden project.
The Stockholm area contributes more than 33% of the country’s GDP and is rated amongst the top 10 regions in Europe by per capita GDP. Seen as the main centre for corporate headquarters in the Nordic region, it is a city of growing importance.
According to the PWC / Urban Land Institute report, Stockholm is expected to see good levels of investment throughout 2016. Two reasons are cited for this: institutional capital seeking yield from real assets and the fact that financing costs are low.
International investors are starting to flock to the market, which now sees 20% of real estate investment coming from overseas. Office space and retail are main drivers in this sector.
Stockholm has one of the highest population growth rates in Europe, with a further 1.5% increase expected on its current population of 900,000 in the municipality in 2016, while the Stockholm Chamber of Commerce has predicted an 11% increase in population between 2015 and 2020.
Add to this a lack of space – Sweden’s capital is spread over 14 islands – and this makes the market ripe for development and investment.
Driving the population growth, and therefore the demand for housing, is Sweden’s immigration policy. The country has accepted more asylum seekers per capita than any other European country. And this is further pushing up the value of residential developments.
JLL’s Destination Nordics 2015 report shows untapped potential, especially in retail development, in the region.
According to Martin Lindgren, Head of Retail Agency, JLL Sweden, 2015 was a record year for new retail brands entering Sweden. He ranks Stockholm as the most attractive detail destination in the Nordics followed by Copenhagen, Oslo, Malmo, Gothenburg and Helsinki.
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