Sweden Real Estate Market Outlook 2025

Turning to positive in 2025

After over two years of challenging economic conditions, the Swedish economy is well positioned to rebound in 2025, driven by decreasing interest rates, improving real disposable incomes and slowing inflation.

Inflation and interest rates are moving in the right direction, Riksbank is ahead of the curve in rate cuts and the financing market is open for business, which are all important factors for the real estate market recovery.

The Swedish investment market has turned a corner into more positive sentiment and the pricing environment is more predictable through lower rates. We expect the recovery to continue well into 2025 and the investment volumes are forecast to grow by 10% in 2025.

Executive Summary 

Swedish economy gradually recovered back to growth in 2024 with the GDP growing by 0.7% year-over-year, while higher interest rates and decreasing business and consumer demand continued to weigh on the economy. Inflation continued to cool down to 2.8% in 2024, while the Riksbank started the rate cutting cycle early on in 2024 as one of the first central banks in Europe and the policy rate ended up 150 basis points lower through six consecutive cuts. Swedish economy is expected to grow by 2.6% and inflation will cool down further to 1.2% in 2025. Recovery is still slow, but the gradual uptick in exports and domestic demand aided by falling inflation and interest rates will drive the growth in 2025.

The Swedish real estate investment market recovered in 2024 through the return of the larger lot size deals and total investment reached SEK 138.5 billion in 2024, up 66% year-over-year. Residential was the largest sector with 28% of total investment followed by offices (27%) and industrial and logistics (19%) in 2024. Domestic investors were again active in the Swedish real estate market, closing 90% of the total volume, and the listed real estate companies and all-equity investors were deploying more capital into real estate.

The bond and financing market opened for business in the second quarter of 2024, even though, in a selective manner. Nordic banks were active in restructuring and refinancing for commercial real estate and the much-anticipated distress did not surface after all for the Swedish real estate investors in 2024. Yields stabilized during 2024 and started to compress in the last quarter as interest rates trended lower and the gap between buyers and sellers narrowed. Investment activity in the Swedish investment market is anticipated to increase 10% in 2025 driven by the ahead-of-the-curve rate cutting trend from the Riksbank and the continued favorable funding environment and active domestic capital base. We are at the turning point of the economic cycle, and the sentiment in the investor market is once again becoming optimistic, which is expected to increase activity in the Swedish market going forward.

Read more from the Sweden Real Estate Market Outlook 2025 report.