Commercial Real Estate Market in Scandinavian Countries - Industry Analysis and Forecast | Growth Market Reports

The commercial real estate market in Scandinavian countries is projected to expand at a CAGR of 7.4 % during the forecast period, 2021-2028. The growth of the market is attributed to low interest rate for business coupled with strong economy growth.

Scandinavia’s strong macroeconomic environment and political stability provide safe investment opportunities for investors in the region. The uncertainty over Brexit is one of the key factors shifting investors to these nations over Europe. Over the years, there have been significant increase in the number of international investors pouring capital into commercial real estate. Foreign net investments rose mainly in Sweden, while for Norway and Denmark, it is growing at a sluggish rate.

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Denmark is the country with the lowest borrowing costs owing to its unique mortgage system. Copenhagen, a city in the Denmark, offers several new large urban development areas near the city. The country offers a high yield in various retail properties located in the capital. Overall, the Scandinavian market offers remunerative opportunities opportunities for real estate investments.

Market Drivers, Restraints, Trends, and Opportunities

• Rising investments into the logistics industry is expected to propel the market growth. This is owing to the rapid growth of the e-commerce activities, which in turn, has encouraged to lease warehouses.
• The COVID-19 pandemic had disrupted the real estate industry across the globe. Government state bodies had announced lockdown of manufacturing facilities, retail stores, and corporates to mitigate the spread of virus. This, in turn, reduced the purchasing power, hampering the market growth.
• Declining case of the COVID-19 cases owing to relaxation in stringent norms is expected to stimulate the growth of the market.
• Growing foreign investments is expected to further create opportunities for the market growth.

Market Segment Insights

Offices segment to account a large market share

Based on types, the market is segregated as office, retail, industrial, logistics, hospitality, and multi-family. The office segment is projected to account for a large market share during the forecast period. Office buildings dominated with a total market share of around 40% in 2020. Increasing number of companies entering the Scandinavian countries to expand their market share has grown the development of commercial real-estate.

On the other hand, the logistics segment accounted for more than 20% of the market share, while the retail segment contributed 16% of the market share in the same year. The logistics segment is anticipated to account for a significant market share during the forecast period. Rising e-commerce activities owing to increasing number of e-commerce companies and rising consumer preference to buy products online. This, in turn, is driving the segment growth.

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Geographical Outlook

On the basis of geographies, the commercial real estate market in Scandinavian countries is categorized as Denmark, Norway, and Sweden. The market in Denmark is anticipated to grow at a sustainable rate in the coming years. Rapid urbanization and industrialization is expected to drive the market growth in the country. Moreover, increasing investment in Denmark owing to strong economic growth amidst the COVID-19 pandemic is propelling the growth of the market in the country. On the other hand, Sweden is expected to hold a considerable market share during the forecast period. Rising tourism and government initiatives to encourage foreign investors to establish their hotels, corporate offices, and manufacturing facilities is driving the growth of the market in the country.

Competitive Landscape

Some of the major players in the market are Vasakronan AB, Jeudan A/S, Citycon, NREP, BPT Group. The commercial real estate market in Scandinavia is fragmented and competitive.

Major industry players are engaging in partnerships with local construction developers, and are also focusing on acquisitions to expand their market share.

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