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Sweden – The Property Market – Commercial Property

Credits: Simon Paulin/imagebank.sweden.seThe commercial property market continues to perform well in Sweden. Assetbase have experience in investing in a wide variety of commercial property including office, leisure, storage and industrial production. Again, Assetbase’s core principle of the property covering all costs, including capital and interest on bank borrowings, has been strictly adhered to over the years. Oversupply risks are limited, with speculative building being – more – exception rather than – norm.
Leases tend to be shorter than what we are accustomed to in Ireland or the UK. Rolling leases of between 1 to 3 years are common, with indexation applying to any leases which run for 3 years or over.
Yield compression has been in play over the last number of years in prime markets. This is expected to continue in the short term. However, supply in markets such as Stockholm, Malmo and Gothenborg is very limited. Opportunities also exist in the secondary markets, where the gap between yield and cost of funding is wider.