Sweden Real Estate Market Outlook 2020

The Sweden Real Estate Market Outlook 2020, provides an overview of Sweden's real estate landscape for the upcoming year, highlighting key trends across various sectors.

Key Takeaways

• Growing Cities & Demographics: Sweden's population is projected to grow by 6.6% by 2030, with continued urbanisation. While the rural population is no longer decreasing in absolute numbers, the majority of future working-age population growth is concentrated in the three largest cities, particularly Stockholm. This growth presents infrastructure challenges, especially in Stockholm, necessitating higher-density development and smart solutions like sharing economy models to optimise land use and manage traffic congestion.

• Economic Outlook: GDP growth in Sweden is expected to be slightly higher in 2020 than in 2019 (1.3% vs 1.2%). Sweden maintains one of Europe's best five-year GDP growth potentials, with a slightly stronger SEK anticipated. Despite household debt concerns, the high savings rate (15% compared to 5% in the Euro Area) and attractive real estate returns relative to other asset classes are expected to continue appealing to investors.

• Capital Markets: Favourable conditions for real estate, strong M&A activity, and megatrends will drive investment decisions in 2020. Attractive returns will push investors towards the riskier end of the spectrum, leading to converging yields and narrowing risk premiums. Strong M&A activity is expected, with high-valuation companies acquiring lower-valued ones. New regulatory changes for lending to commercial real estate may push larger property companies towards bond markets for financing.

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