Nordic Inv estment MarketView

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1 Nordic Inv estment MarketView CBRE Global Research and Consulting INVESTMENT, CHANGE FROM -1 INVESTMENT, CHANGE FROM - INVESTMENT, RELATIVE TO AVERAGE - -1% NORDIC INVESTMENT SLOWDOWN IN - SHORTAGE OF PRIME RESTRAINS INVESTMENT ACTIVITY 1 Nordic Inv estment Turnov er QoQ YoY Total Office Retail Industrial Residential Prime Office Yields QoQ YoY Copenhagen Helsinki Oslo Stockholm Prime Retail Yields QoQ YoY Copenhagen Helsinki Oslo Stockholm Prime Industrial/Logistic Yields QoQ YoY Copenhagen Helsinki Oslo Stockholm Chart 1: Nordic Prime Yield Index Nordic Prime Yield Indicies are unweighted averages of the four Nordic capital cities Regional investment activity fell in Economic activity has begun to peter out, but the performance of the Nordic region is still strong in comparison with most other European economies. Property investment activity lost some momentum in, but this should be seen in the context of often being a quiet investment period. Commercial real estate volume in the Nordic region was 3.5 billion in. This was a decrease of 1 from the previous quarter, but close to investment levels in and. Shortage of prime property restrains investment activity across the region. Foreign investors show much interest in the region. Intra-regional transactions normally represent the bulk of Nordic cross-border deals, but in the main source of foreign capital flowing into property came from European countries outside the region, particularly from Germany and UK. Office transactions made a comeback in and were the main drivers of investment turnover in Finland, Norway and Sweden. In Denmark residential property remained the most traded asset type. Prime yields remained largely unchanged in all Nordic capitals compared to the previous quarter. Office Retail

2 Nordic Inv estment MarketView NORDIC INVESTMENT Inv estors attracted by relativ e economic stability Economic activity in the region has begun to peter out and growth is expected to be moderate, although positive, this year and next year. The region is expected to perform well compared to most other European economies. This relative attractiveness is an important driver of investor confidence in the region. Within the region Norway and Sweden lead the way with relatively healthy GDP growth, whereas Finland and Denmark are experiencing sluggish economic activity. However, some convergence in growth rates is expected in 213. Public finances remain relatively well contained and all Nordic countries maintained their triple-a ratings on government debt. Investment slowdown in as usual Commercial real estate volume in the Nordic region totalled 3.5 billion in. This was a decrease of 1 from the previous quarter. Historically, investment activity is low during the summer period. Transaction volume in was close to -levels in and. Shortage of prime property restrains investment activity across the region. Office transactions drive most investment markets Office transactions made a comeback in, both in absolute and relative terms. Office was the most traded property type in Finland, Norway and Sweden. In Denmark, residential property remained the most traded asset type, despite a significant decrease compared to the previous quarter. Nordic retail investment fell too, but this was solely because Finland could not maintain the high level seen in. Denmark, Norway and Sweden all saw an increase in retail investment activity. Industrial property investment contracted in, thus reducing the low liquidity in this market further. Chart 2: Economic Growth Outlook % 1% % -1% Source: Oxford Economics Chart 3: Nordic Investment - ( m) Denmark Finland Norway Sweden Nordics EU Chart 4: Nordic Inv estment by Sector, 2 Foreign inv estors more activ e Foreign investors showed much interest in the region. This was particularly the case in Denmark and Finland, where foreign investors were involved in some of the largest deals. Intra-regional transactions normally represent the bulk of Nordic cross-border deals, but the main source of foreign capital flowing into property in came from European countries outside the region, Germany and UK in particular. Prime yields stabilize across the region Prime yields have stabilized across the region. Some slight yield compression was detected for high street retail in Copenhagen and logistic property in Stockholm, but otherwise yields remained largely unchanged compared to the previous quarter. 22% Office 42% Retail 1 Residential 1 Prime Yields Office Retail Copenhagen, DEN Helsinki, FIN Oslo, NOR Stockholm, SWE

3 DENMARK Chart 5: Danish Inv estment - ( m) Inv estment Investment totalled DKK 4.3 billion ( 57 million) in. Investment turnover fell 4 on the quarter, but was 12% above level. The Danish property investment market has weathered the European economic and confidence crises quite well so far, despite weaker occupier fundamentals and uncertainties ahead. Residential was the most traded asset, although its share declined significantly compared to H1. Most notable in was the influx of UK-based capital into Copenhagen s high-street retail. Prices on prime property were upheld by healthy investor interest (local as well as foreign), a limited supply of prime product and moderate willingness to sell. There are no clear indications of a general shift in prime yields, although a slight decline in high street retail yields was detected. In contrast, secondary yields have softened in the face of deteriorating occupier fundamentals and lack of investor interest. Nordic Inv estment MarketView Chart 6: Danish Inv estment by Sector, Deals Below are some of the major deals concluded in Denmark. 4 19% 3 Office Retail Residential Thylander Gruppen acquires portfolio for DKK 1.3 billion Thylander Group purchased 29 properties for DKK 1.3 billion from the ailing Essex group. The portfolio totals 126, sq m with approximately 1,5 leases, mainly residential. The portfolio is located in Copenhagen, Aarhus, Aalborg, Odense and Esbjerg and other major provincial cities. 1% Source: Estate Media release 16. August 3 Chart 7: Copenhagen Prime Yields 26-9% Office Retail 29 Cph Occupier Market Trends Demand Vacancy Prime Rent Office Retail NCC sells office development project for DKK 39 million The project, located at Sandkaj in the Northen harbour in Copenhagen, was acquired by a group of Danish pension funds, ATP, PFA Pension and Pension Denmark, and is expected to be ready for occupation in April 214. Source: NCC release 1. September DSB sells head office in Copenhagen The property, located at Sølvgade 4 in central Copenhagen, was acquired by Norden for approximately DKK 28 million. Source: Estate Media release 24. September Meyer Bergman buys high street retail in Copenhagen for DKK 25 million Meyer Bergman moved into the Danish market by acquiring Købmagergade in central Copenhagen. The property is from 1882 and has a total retail space of approximately 5, sq m. Source: Estate Media release 4. September 3

4 Nordic Inv estment MarketView FINLAND Inv estment Real estate investment volume in Finland slowed down during. The investment volume during the period was approximately 46 million compared to approximately 55 million in. Office was the most traded asset type representing 6 of the total transaction volume. International investors were active and the three largest deals during were done by international investors. Prime office properties and retail properties with a very good location were also very sought-after by the investors. There is a lack of prime products available in the market which, at least partly, explains the decreasing market activity. Chart 8: Finnish Investment - ( m) Deals Below are some of the major deals concluded in Finland. Chart 9: Finnish Inv estment by Sector, NIAM acquires 17 properties in the Helsinki Metropolitan Area NIAM has acquired 15 office and two retail properties in the Helsinki Metropolitan Area. The total size of the portfolio is more than 1, sq m. The purchase price was approximately 18 million. Source: NIAM release 6. July 12% 11% 11% 1% 6 Office Retail Residential 4 Cordea Savills acquires a property in Helsinki CBD Cordea Savills acquired an office- and retail property in Helsinki CBD from Nordea Life Assurance. The leasable area of the building is 1,519 sq m, of which 7% is office space. The office part is leased to Handelsbanken. The retail premises are occupied by e.g. Hennes&Mauritz and Dressman. The purchase price was approximately 6 million. Source: Cordea Savills release 2. July Peab sells an office property to a German investment company Peab sold an office property in Matinkylä area in Espoo to Union Investment Real Estate GmbH. The leasable area is 14,133 sq m and there are 335 car parking spaces. The property is under construction and will be ready in the summer 214. The purchase price was 62 million. Source: Peab release 1. August Chart 1: Helsinki Prime Yields 26-9% Office Retail 29 Helsinki Occupier Market Trends Demand Vacancy Prime Rent Office Retail

5 NORWAY Chart 11: Norwegian Inv estment - ( m) Chart 12: Norwegian Inv estment by Sector, Inv estment After a quiet second quarter, investment activity increased in. Recorded volume amounted to NOK 5.5 billion ( 75 million), which is a 2 increase from. The third quarter was influenced by several deals with residential development potential representing about half the investment volume. Office transactions accounted for about 3 of the volume, while the industrial sector accounted for merely 2%. Retail transactions equaled 1 of the total volume in. Prime yield remained stable across sectors in the quarter. As in previous quarters, the market activity was mainly driven by local investors, and the majority was situated within or close to Oslo. Nordic Inv estment MarketView Deals 3 Office Below are some of the major deals concluded in Norway. 49% 2% 1 Retail Stortorvet 7 sold to Schage Eiendom. Schage Eiendom acquired Stortorvet 7 from DnB livsforsikring for approximately NOK 1 billion. The property is situated in Oslo City Centre and consists of retail and office space. Stortorvet 7 measures approximately 3, sq m and estimated yield is close to. Source: Schage release - September 5 Chart 13: Oslo Prime Yields 26-9% Office Retail 29 Oslo Occupier Market Trends Demand Vacancy Prime Rent Norwegian investors to develop the Gullaug area outside Drammen. Orica Norway AS sold a plot area of 1.1 million sq m to private investors for about NOK 9 million. The property is located in close proximity to Oslo and Drammen, and has a development potential of 3, residential units in addition to commercial property. Source: nenyheter.no 28. September Icopal sells a property to local investor. A local investor bought Fjellhamarveien 52 for approximately NOK 5 million from Icopal. The property measures 65, sq m and has potential for residential development. The deal includes a total of three properties, all owned by Icopal. Source: nenyheter.no 23. August 5 Office Retail

6 Nordic Inv estment MarketView SWEDEN Inv estment Real estate investment in Sweden was SEK 14.4 billion ( 1.7 billion) in. Transaction volume for the first three quarters of ended up at approximately SEK 5 billion ( 5.8 billion). The investment market in Sweden has become highly correlated to the banks preferences and risk aversion over the last year. This has resulted in an increasing gap in pricing between prime assets and secondary assets. Sweden s healthy state finances and low debt ratio together with its liquid investment market has attracted several investors. International investors have acquired retail and logistic assets, but find it hard to compete for prime offices where the yield is as low as 4.. In four large deals were noted at SEK 1 billion or more. The largest deal was made in Stockholm CBD, Klarabergshuset, sold by Fortin Properties to AFA Fastigheter for approximately SEK 1.45 billion. Chart 14: Swedish Investment - ( m) Chart 15: Swedish Inv estment by Sector, 6 Deals Below are some of the major deals concluded in Sweden. Balder acquires property in central Stockholm The property, Spårvagnshallarna, which mainly contains office, is located in the block between Birger Jarlsgatan, Tulegatan, Rådmansgatan and Tegnérgatan in Stockholm CBD. The property has a lettable area of approximately 23, sq. m. The property value amounts to approximately SEK 1.1 billion. Source: Balder press release 24. September Grosvenor buys Burlöv Center in Malmö for SEK 1.2 billion The underlying property value is SEK billion, giving a yield of 5.. Burlöv Center contains 42,2 sq. m and is situated between Lund and Malmö. Eurocommercial is the seller. Source: Fastighetsvärlden 18. September Klarabergshuset bought by AFA Fastigheter for approximately SEK 1.45 billion AFA Fastigheter acquires Klarabergshuset in Stockholm CBD by Fortin Properties. Klarabergshuset covers 22, sq. m, of which approximately 17, sq. m. is office. The building, which is fully let, underwent an extensive renovation and extension in 27. It was originally built in Source: Fastighetsnytt 8. July Chart 16: Stockholm Prime Yields 26-9% 26 12% 27 2 Office 1 42% Retail Residential Office Retail 29 Sthlm Occupier Market Trends Demand Vacancy Prime Rent Office Retail

7 MAJOR NORDIC INVESTMENT TRANSACTIONS Property Market Property type/sector Price ( m) Buyer Essex portffolio, 27 properties DEN Nationwide Residential 173 TG Partners Ceres Allé DEN Aarhus Office development 97 A. Enggaard Sandkaj DEN Copenhagen Office development 52 ATP, PFA Pension, PensionDanmark Sølvgade 4 DEN Copenhagen Office 38 Norden Købmagergade DEN Copenhagen Retail 36 Meyer Bergman Østergade DEN Copenhagen Retail 23 Cubic Property Fund Nordic Inv estment MarketView Bronda portfolio, 17 properties FIN Helsinki Office, retail 18 Niam Eventes Business Garden FIN Espoo Office 62 Union Investment Real Estate GmbH Aleksanterinkatu 11 FIN Helsinki Office, retail 6 Cordea Savills Alvar Aallonkatu FIN Seinäjoki Office 2 Aberdeen Property Fund Finland Ky Stortorvet 7 Gullaug Fjellhamarveien 52 Maxi Sandnes Dr. Holms NOR Oslo NOR Lier NOR - Lørenskog NOR - Sandnes NOR - Geilo Office 135 Schage Eiendom Development site 122 Canica/Macama/ABGSC Partners Development site/logistic 68 Stig Atle Johnsen Retail 47 Scaga Retail Property Hotel 34 Frydenbo/Berland/Nallow Klarabergshuset SWE Stockholm Office 172 AFA Fasigheter Burlöv Center SWE Malmö Retail 137 Grosvenor Fund Magagement Spårvagnen 4 SWE Stockholm Office 13 Balder Taktäckaren SWE Stockholm Office 119 AxFast 7 7

8 Nordic Inv estment MarketView The Nordics The Nordic countries consist of Denmark, Greenland, the Faroe Islands, Finland, Åland, Iceland, Norway and Sweden. The Faroe Islands and Greenland are both part of the kingdom of Denmark. Åland is part of the republic of Finland. The focus of this report is on the four main countries in the Region; Denmark, Finland, Norway and Sweden and their capitals; Copenhagen, Helsinki, Oslo and Stockholm. CONTACTS For more information about this Regional MarketView, please contact: CBRE Denmark Research Robin Rich Head of Research Denmark Research CBRE Rued Langgaardsvej 6-8 DK-23 Copenhagen t: e: CBRE Norway Research Anders Lunder Head of Research Norway Research CBRE Atrium Dronning Mauds Gate 1 N-25 Oslo t: e: al@cbre.no CBRE Finland Research Jari Lehtinen Business Analyst Finland Research CBRE Erottajankatu 9 B FIN-13 Helsinki t: e: jari.lehtinen@cbre.com CBRE Sweden Research Pernilla Arnrud Melin Head of Research Sweden Research CBRE Mäster Samuelsgatan Stockholm t: e: pernilla.arnrud@cbre.com + FOLLOW US GOOGLE+ FACEBOOK TWITTER Global Research and Consulting This report was prepared by the CBRE Nordic Research Team which forms part of CBRE Global Research and Consulting a network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate investors and occupiers around the globe. 8 Disclaimer CBRE A/S confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.