Nordic Investment MarketView Q3 2015 FINAL · RETAIL INDUSTRIAL / LOGISTICS RESIDENTIAL OTHER TREND...

MARKETVIEW

Q3 2015 CBRE Research © 2015, CBRE Ltd|

The Nordics’ strong path

continues in the third quarter

Nordic Investment Q3 2015

1

Investment change from Q2 2015

-10%Investment change from Q3 2014

56%Relative to Q3 avg. 2011-2015

79%

Figure 1: Investment volume Europe and Nordics 2010 – 2015, (€ mn)

Source: CBRE Research, Q3 2015.

• Q3 transaction activity in the Nordic region amounted to an investment volume of approx. € 9.1 billion representing 13% of the total European investment volume.

• Another strong quarter for Norway with investment volume of € 3 billion representing approx. 33% of the total Nordic investment volume, which is close to Sweden representing 36%.

• Investments in both Denmark and Norway more than doubled from previous year’s figures in Q3.

• The office sector dominated, representing 35% (€ 3.2 billion) of the total Q3 volume.

• Prime yields remained relatively stable across the region.

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Europe excl. Nordics Nordics Nordics share Average

MARKETVIEW

NORDIC TRANSACTION MARKET

Transaction activity in the Nordic region resulted

in yet another strong quarter with total

investment volume reaching approx. € 9.1

billion, which is an increase of 56% when

compared to Q3 2014. The investment volume

was mainly driven by large cross-border deals as

well as large portfolio deals in Sweden and

Norway.

When compared to Q2 - transaction volume, the

Nordic activity witnessed a slight decrease of

10%, while the total European investment

market increased by approximately 5.5 % due to

high activity in mainly France, Germany, UK and

Belgium. Together with the H1 volume of € 16.4

bn, the Q1 – Q3 2015 volume ended up

historically high at € 25.5 bn. Compared with the

same period last year, 2014, the transaction

volume has increased by 44 %.

A STRONG QUARTER FOR DENMARK, NORWAY ANDSWEDEN

Sweden has traditionally been the largest

contributor to the Nordic transaction volume and

for Q3 the Swedish share ended up at € 3.3

billion, representing 36%. However, Norway

continued on a strong path with investment

volumes in Q3 reaching up to € 3 billion

representing approx. 33% of the total investment

volume.

Denmark contributed to approx. € 1.6 billion

(17%) and Finland approx. € 1.2 billion (14%) of

the total investment volume. Both Denmark and

Norway saw investment volumes more than

double in comparison to Q3 2014, and Sweden

witnessed an increase of 73%.

HIGH ACTIVITY IN THE OTHER SECTOR

When compared to the European sector

allocation, the Nordics continued to differ

slightly. The office segment dominated,

representing 35% (€ 3.2 billion) of the total Q3

volume, due to major deals in Sweden and

Norway. This is followed by the other sector,

representing 33% of all sectors.

Q3 2015 CBRE Research © 2015 CBRE, Ltd | 2

NORDIC INVESTMENT

Figure 2: Nordics investment volume 2010 - 2015

Figure 3: Nordic vs. Europe Total sector share of total, Q3 2015


Other includes residential, hotel, mixed-use and community properties


3.2

2.5

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1.6

Q3 INVESTMENT VOLUMEPER SEGMENT (€ billion)

OFFICERETAILINDUSTRIAL / LOGISTICSRESIDENTIALOTHERTREND (Q-t-Q)


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Denmark Finland Norway Sweden

MARKETVIEW

CONTINUED HIGH INTEREST FROM INTERNATIONAL CAPITAL SOURCES

Despite domestic investors still dominating the

markets across the region, we continue to see an

increase in interest and net buying trend from

international investors, as predicted. On average,

the foreign share of the total Nordic transaction

volume represented 53% for Q3 2015. For Q2, the

foreign share was 54%, which denoted an

increase of 21% when compared to Q1 2015

(33%).

Investors’ investment criteria are widening, both

in terms of geography and investment profile; a

result of the demand-supply imbalance.

STABLE PRIME YIELDS WITH MINORDOWNWARDS MOVEMENT

Attributable to increased demand from

international investors and favorable financing

costs, there is continued pressure downwards on

prime yields across the region, which is reflected

mainly in the office and retail sectors.

We expect continued high liquidity and likely

sharpening of yields within most segments in the

next quarters ahead.


NORDIC INVESTMENT

Prime Yields Office Q2 - 15Retail –

High StreetQ2 - 15

Industrial/Logistics

Q2 - 15

Copenhagen, DEN 4.50 � 3.70 � 6.25 �

Helsinki, FIN 4.30 � 4.25 � 6.25 �

Oslo, NOR 4.20 � 4.20 � 5.50 �

Stockholm, SWE 4.00 � 4.00 � 5.75 �

Nordics, averageNordics, averageNordics, averageNordics, average 4.254.254.254.25 �� 4.004.004.004.00 �� 5.905.905.905.90 �

Prime Yields and Rents per market and segment Q3 2015

Prime Rents (Local currency) Office Q2 - 15Retail -

High StreetQ2 - 15

Industrial/Logistics

Q2 - 15

Copenhagen, DEN (DKK) 1,700 � 20,000 � 425 �

Helsinki, FIN (Euro) 444 � 1,800 � 144 �

Oslo, NOR (NOK) 4,250 � 18,500 � 1,200 �

Stockholm, SWE (SEK) 5,100 � 14,500 � 900 �

Figure 4: Foreign share of the total investment volume

Figure 5: Nordics Prime Yields, 2010 - 2015

Indices are unweighted averages of the four Nordic capital cities

Source: CBRE Research, Q3 2015

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MARKETVIEW


NORDIC INVESTMENT

Figure 7: Segment share of total, Q3 2015

Figure 8: Prime Yields



Figure 6: Investment volume Denmark (€ mn)


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Retail

Industrial/logistic

Residential

Other

DENMARK, SUMMARY

According to preliminary figures, the investment

volume in Denmark totaled approximately DKK

11.7 billion (€ 1.6 bn) in Q3 2015, which

represents a 44% growth q-o-q, and a 117%

growth y-o-y. The estimated investment volume

in the first three quarters of 2015 has reached

DKK 29.4 billion, marking thus a 57% growth

compared to the same period of 2014. There is a

general sentiment of optimism regarding the

Danish commercial property investment market.

It is apparent that the liquidity is high. We expect

the 2015 volume to be around DKK 45-50 billion.

Residential properties were the most traded

property type in both Q3 and Q1-Q3 2015, with

44% and 29% shares in the total volume

respectively. The share of offices and retail

properties in Q3 lies at 18%. We estimate the

cross-border share of investment volume to be

around 60% in Q3 2015.

Prime office yields contracted again and stand at

4.5% as per Q3 2015, while prime retail yields

have remained stable at 3.7%. The trend for both

market segments is stable.

DEALS

Some major deals concluded in Denmark in Q3

� Galleri K shopping arcade in Copenhagen CBD Galleri K shopping arcade in Copenhagen CBD Galleri K shopping arcade in Copenhagen CBD Galleri K shopping arcade in Copenhagen CBD has been acquired by Patrizia Nordicshas been acquired by Patrizia Nordicshas been acquired by Patrizia Nordicshas been acquired by Patrizia Nordics

Patrizia Nordics has acquired Galleri K shopping arcade in Copenhagen city center for 200 million €. According to the buyer, the purchase was made as a co-investment with an undisclosed German pension fund. The sellers were Unipension and the Bank of Ireland. In addition to 13,000 sq m of retail space, the property comprises some 10,000 sqm of offices.

Source: Patrizia press-release, 2015

� Regina property in Aarhus sold to Standard Life Regina property in Aarhus sold to Standard Life Regina property in Aarhus sold to Standard Life Regina property in Aarhus sold to Standard Life InvestmentInvestmentInvestmentInvestment

The prominent Regina property on the corner of Søndergade and Sønder Allé has changed owner. The 12,000 sq m large property was sold for 37 million €. CBRE has conducted the transaction on behalf of the seller, while Capital Investment A / S has advised the buyer.

Source: CBRE, 2015

MARKETVIEW


NORDIC INVESTMENT





Figure 9: Investment volume Finland (€ mn)


Q3 2015 CBRE Research

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FINLAND, SUMMARY

The transaction volume in Q3 2015 was ca. EUR

1.23 billion of which ca. 0.53 billion were

portfolio sales.

Retail was the most traded asset class (40 %)

including the sale of Shopping centre Kaari in

Helsinki, which represents the biggest sale of the

quarter. The second largest activity was

witnessed in office assets (24 %).

Foreign investors remained active representing

ca. 55 % of total volume. Although there has

been yield compression for prime assets in

Finland as well, yields still compare favourably

with many other Northern European markets.

The total year-to-date transaction volume is

currently at ca. EUR 3.6 billion and we expect the

total volume for 2015 to be at the level of EUR 4.5

billion.

DEALS

Some major deals concluded in Finland in Q3

� Swedish Swedish Swedish Swedish NiamNiamNiamNiam acquires Kaari Shopping Centre acquires Kaari Shopping Centre acquires Kaari Shopping Centre acquires Kaari Shopping Centre in Helsinkiin Helsinkiin Helsinkiin Helsinki

HOK-Elanto and Swedish Niam have entered into an agreement for the sale of Shopping Centre Kaari in Kannelmäki, Helsinki. HOK-Elantoremains as the main tenant in the premises. Kaari comprises of an lettable area of 48,700 sq m and it is the 9th largest shopping centre in Finland with 5.3 million annual customers. Last year the sales volume of the centre was EUR 178 million.

Source: HOK-Elanto’s press release Sep 21st 2015

� Sirius completes several grocery store Sirius completes several grocery store Sirius completes several grocery store Sirius completes several grocery store acquisitionsacquisitionsacquisitionsacquisitions

Sirius Fund I Grocery SCSp has, through eleven completed transactions, completed the acquisition of 47 grocery store assets. The acquisitions range from single-asset to smaller portfolios and the sellers include private investors, domestic institutions, foreign investors and listed real estate companies. The largest portfolio was acquired from the Finnish listed real estate company Citycon. The aggregate portfolio consists of small and mid-sized grocery stores with a total lettablearea of more than 150,000 sqm. The portfolio includes stores operated by all the four main grocery retailers Kesko, S-Group, Lidl and SuomenLähikauppa. One third of the properties are located in the Helsinki Metropolitan area.

Source: Sirius’s press release – Sep 1st 2015

24%24%24%24%

40%40%40%40%

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19%19%19%19%Office

Retail

Industrial/logistic

Residential

Other

MARKETVIEW

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NORDIC INVESTMENT





Figure 12: Investment volume Norway (€ mn)


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NORWAY, SUMMARY

The Q3 investment volume totalled some NOK

28.1 billion (€ 3.1bn) – a decrease of approx. 13%

compared to extremely strong Q2. The year-on-

year growth, however, stands at an astonishing

147%. The total investment volume in Q1 – Q3

2015 stands at some NOK 80bn, an increase of

158% compared to same period in 2014. Majority

of the volume remains driven by large portfolio

transactions. Cross-border inflow into Norway

remains at almost 50% in Q3, down from 55% in

Q2, substantially higher than the long-term

average. Although prime yields have compressed

substantially over the last 12 months, we see that

there is some scope for further yield compression

within prime high street retail and office asset

classes. Our view is supported by strong demand

from foreign investors, continued low interest

rates, local currency depreciation and a well-

functioning domestic investor market. Our

expected investment volume for 2015 is revised

up to NOK 100 billion - which would result in the

highest number recorded in the Norwegian real

estate market.

DEALS

Some major deals concluded in Norway in Q3

� PromonadenPromonadenPromonadenPromonaden Property AS acquired by Meyer Property AS acquired by Meyer Property AS acquired by Meyer Property AS acquired by Meyer BergmanBergmanBergmanBergman

Meyer Bergman acquired Promonaden Property AS from Søylen Eiendom and Madison International Realty. The 11 property portfolio consisting mainly of prime high street retail assets located in Oslo was sold for a price of NOK 5.3 billion, indicating a NIY below 4%.

Source: Søylen Eiendom press release – 1st October 2015

� Salto Eiendom acquired by Salto Eiendom acquired by Salto Eiendom acquired by Salto Eiendom acquired by SchageSchageSchageSchage Eiendom.Eiendom.Eiendom.Eiendom.

Majority owner Schage Eiendom acquired the remaining shares in the company owning 19 retail properties across Norway. The indicative property value equates to some NOK 5bn.

Source: Schage Eiendom press release – 19th August 2015

� DNB Liv sold DNB Liv sold DNB Liv sold DNB Liv sold ØstbyggetØstbyggetØstbyggetØstbygget at at at at BjørvikaBjørvikaBjørvikaBjørvika

DNB Scandinavian Property Fund acquired Østbygget, located at CBD Bjørvika in Oslo. The 17,800 sq m property is fully let to DNB ASA. Total transactions price equates to NOK 1.2bn indicating a NIY of 4.5%.

Source: DNB Liv press release – 6th July 2015

MARKETVIEW

SWEDEN, SUMMARY

The investment volume for Q3 ended up at

SEK 31.2 bn (€ 3.3 bn). The total investment

volume Q1 – Q3 2015 ended up at the whole of

SEK 85.1 bn, an increase of 12% when compared

to Q1 – Q3 2014 (SEK 76 bn).

There is a continued strong interest from

international capital sources and an increase in

the net buying trend for the non-Swedish

investors. For Q3, cross-border deals represented

46% of the total transaction volume, and during

Q1 – Q3 it stood at 31%.

Sweden has posted an uptick in retail

investment. During Q1 – Q3 2015 transactions in

the retail sector amounted to SEK 17.5 bn,

representing 21% of the total investment volume.

When compared to the same period in 2014, the

share increased by 84%.

Investors’ investment criteria are widening, both

in terms of geography and investment profile; a

result of the demand-supply imbalance. We

expect continued high liquidity and likely

sharpening yields within most segments in the

quarters ahead. Volumes, however, are held back

somewhat due to lack of available product.

DEALS

Some major deals concluded in Sweden in Q3

� AreimAreimAreimAreim FundFundFundFund II II II II acquire acquire acquire acquire Solna PortSolna PortSolna PortSolna Port

Areim Fund II acquires the property Brahelund 2 in Frösunda, Stockholm from Commerz Real. The property is a modern and flexible office property with a newly built restaurant and gym. The total lettable area is ca 41,000 sq m, of which ca 18 000 sq m office premises are vacant today.

Source: Areim – September 28th 2015

� Areim sells Areim sells Areim sells Areim sells “Lindhagensporten” in Stockholm “Lindhagensporten” in Stockholm “Lindhagensporten” in Stockholm “Lindhagensporten” in Stockholm Inner City to Inner City to Inner City to Inner City to Invesco Real EstateInvesco Real EstateInvesco Real EstateInvesco Real Estate

Areim has redeveloped the property into modern offices with high standards and an environmental focus. Securitas and Stanley Security Solutions are two examples of large and well known tenants in the property. The last phase of the office project with 11,000 sq m of new modern office space is estimated to be completed in Q4 2016.

Source: Areim – September 1st 2015


NORDIC INVESTMENT





Figure 15: Investment volume Sweden (€ mn)


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MARKETVIEW

THE DEAL OF THE QUARTER

SUMMARY

Veritas Pension Insurance has sold an office

building located in Leppävaara, Espoo to RREEF

Investment GmbH, a real estate investment

business of Deutsche Asset Management.

PurchaserPurchaserPurchaserPurchaser: RREEF Investment Gmbh

Purchaser agent: Purchaser agent: Purchaser agent: Purchaser agent: Newsec

Seller: Seller: Seller: Seller: Verities Pension Insurance

Seller agent: Seller agent: Seller agent: Seller agent: CBRE

Size: Size: Size: Size: 16,936 sq m

Price: Price: Price: Price: Approx. € 70 million

Market Property / Address Type / Sector

Size(Sq m)

Price (€ m)

Purchaser Seller

Denmark Galleri K shopping arcade Retail 16,675 200 Patrizia Nordics Unipension and the Bank of Ireland

Denmark Øresund Strandpark project Residential 42,000 160 Fastighets Balder Skanska

Denmark Tietgens Have Office 42,000 100 Niam Finn Harald Simonsen

Denmark Søndergade 53, m.fl. Retail/mixed 12,000 37 Standard Life Investments I/S Lorenzen Ejendomme

Finland Kaari Shopping Centre Retail 48,700 n/a Niam AB HOK-Elanto

Finland 47 grocery stores with 11 transactions Retail 150,000 n/a Sirius Capital Partners Several including Citycon

Finland 4 airport properties occupied by Finnair Mixed 60,000 n/aGlobal Net Lease REIT managed by Moor Park Capital Partners

NV Property Fund I Ky

Finland Sola Business Valley / Espoo Leppävaara Office 16,936 Approx. 70 RREEF Investment Veritas Pension Insurance

Norway Promenaden Property AS Retail 76,884 580 Meyer Bergman Søylen Eiendom, Madison International

Norway Salto Eiendom AS Retail 307,000 550 Schage Eiendom Verner Kapital, AVA Invest, et.al.

Norway Østbygget, Bjørvika Office 17,862 134 DNB Scandinavian Property Fund DNB Liv

Norway Gullfaks, Hinna Park, Stavanger Office 17,900 76 Wintershall Norge Entra ASA

Sweden PortfolioOffice,Industrial

659,000 1,000 Blackstone Obligo

Sweden Portfolio Residential 132,000 173 Rikshem Lulebo AB

Sweden Portfolio Mixed Use 70,480 158 Parnters Group Sveafastigheter Fund II

Sweden Gångaren 10 “Lindhagensporten” Office 35,200 158 Invesco & Sirius Partner Areim

Q3 2015 CBRE Research © 2015, CBRE Ltd | 8

NORDIC INVESTMENT

Major investment deals during Q3 2015

Sola Business Valley was built in 2011 – 2012 and it is located next to Sello Shopping Centre. Theproperty is fully leased as HQ premises. The high standard office building has received LEED Goldcertification and main tenants are Schneider Electric, Aditro and Lujatalo, all of which have theirheadquarters in the building. Sola Business Valley is located by excellent connections in the junction ofRing I and Turku highway, in the immediate vicinity of the Leppävaara railway station.

MARKETVIEW

Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy andcompleteness. 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.

NORDIC INVESTMENT

CBRE OFFICES

CBRE SwedenCBRE SwedenCBRE SwedenCBRE SwedenJakobsbergsgatan 16SWE-111 44 Stockholm

CBRE CBRE CBRE CBRE Atrium NorwayAtrium NorwayAtrium NorwayAtrium NorwayDronning Mauds Gate 10N-0250 Oslo

ACBRE FinlandCBRE FinlandCBRE FinlandCBRE FinlandKluuvikatu 7, 5th floor FIN-00100 Helsinki

CBRE DenmarkCBRE DenmarkCBRE DenmarkCBRE DenmarkRued Langgaardsvej 6-8DK-2300 Copenhagen

To learn more about CBRE Research, or to access additional research reports, please visit the Global Research Gateway at www.cbre.com/researchgateway.

For expert advice, please contact CBRE’s in-country Heads of Capital Markets:

CBRE Sweden

Daniel AnderssonDaniel AnderssonDaniel AnderssonDaniel Andersson

Head of Capital Markets+46 3525 [email protected]

CBRE Atrium NorwayPaul John Morice, Paul John Morice, Paul John Morice, Paul John Morice, MRICSMRICSMRICSMRICS

Head of Capital Markets +47 9224 [email protected]

CBRE FinlandHarriHarriHarriHarri SaravuoSaravuoSaravuoSaravuo

Head of Capital Markets+358 (0)40 1959 [email protected]

CBRE DenmarkMikael Mikael Mikael Mikael GludGludGludGlud

Executive Director+45 7022 9601 [email protected]

CONTACTS

CBRE Sweden

Cecilia GunnarssonCecilia GunnarssonCecilia GunnarssonCecilia GunnarssonResearch Analyst, Responsible for Research+ 46 8 4101 [email protected]

CBRE Atrium NorwayIgor PetkovicIgor PetkovicIgor PetkovicIgor PetkovicResearch Analyst+47 9303 [email protected]

CBRE FinlandMatti ChristerssonMatti ChristerssonMatti ChristerssonMatti ChristerssonAssociate Director, Research

+358 50 321 [email protected]

CBRE DenmarkDragana MarinaDragana MarinaDragana MarinaDragana MarinaHead of Research

+45 3525 [email protected]

Nicolaj Rud NielsenNicolaj Rud NielsenNicolaj Rud NielsenNicolaj Rud NielsenResearch Analyst, M.Sc. (Economics)

+45 3525 [email protected]

The Nordics

The Nordic countries consist of Denmark, Greenland, theFaroe Islands, Finland, Åland, Iceland, Norway andSweden. The Faroe Islands and Greenland are both partof the kingdom of Denmark. Åland is part of the republicof Finland.The focus of this report is on the four main countries in theRegion; Denmark, Finland, Norway and Sweden and theircapitals; Copenhagen, Helsinki, Oslo and Stockholm.

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