Mixed picture for retail property

While last year was a time of normalisation for the retail segment, 2023 will see the brakes applied. But the fact that yields in many cases have not fallen very much in recent years is an advantage.

Published 11.01.2023 18:17

Last changed 11.02.2023 15:34

Private consumption in Norway grew by no less than 6.8 per cent last year, the strongest increase since 1985.1 This rise reflected post-pandemic reopening effects, and it was the service sector which naturally bounced back sharply. But sales of goods have also made good progress when measured in nominal kroner.

Scala Eiendom saw footfall increase by 10 per cent in 2022, while turnover rose 3.6 per cent from the record – and pandemic – year before.Turnover for Olav Thon’s shopping-centre portfolio declined by two per cent in the third quarter compared with the same period of 2021. But it was nevertheless 15 per cent above the third quarter of 2019. Inflation was 13 per cent during the period and, if population growth is taken into account, turnover volume made no progress.

Moreover, 2022 was the year when the urban shopping centres made their comeback. Turnover last year was up 38 per cent for Oslo City and 35 per cent for Aker Brygge. Norway’s 60 largest shopping centres achieved overall growth of 6.8 per cent in 2022.2

Tougher in 2023

We are probably heading into a cyclical downturn where households will be particularly affected. Three big questions will determine how shops perform in the time ahead. 

1. Will pay succeed in keeping pace with inflation? Most forecasters expect real earnings to show only a slight decline or rise – in other words, close to zero – measured against the consumer price index (CPI).

But price growth is still sky-high in a number of important areas. The big grocery chains indicate, for example, that food prices are set to make another jump of almost 10 per cent from 1 February. Another example is Voice, which recently flagged up that it must raise garment pricing by 18 per cent to keep pace with cost growth.

2. What impact will the interest-rate effect have? Although the rate seems likely to be approaching its peak, much uncertainty continues to prevail about how the increases will actually work. The effect will come with a substantial time lag.

3. To what extent are Norwegian households willing to draw down their excess savings? At 30 September, they still held about NOK 250 billion over and above their normal level of saving because of increased retention during the pandemic. That probably explains why Christmas trading proved better than many feared. Great uncertainty exists about how far households are willing to reduce this excess, how these funds are distributed among the population, and how much of them take the form of liquid assets.

Excess household saving by year (NOK bn)

Regardless, the interest-rate rise and the decline in real pay during 2022 will almost certainly affect consumption in the time to come. And companies in the retail sector take the most negative view of future prospects, according to Norges Bank’s regional network.

Expected growth over the next six months

Beneficial that yield has not declined that much

On the investor side, we have seen increased interest in retail property over the past couple of years – a trend which continued in 2022. Apart from 2021, we’ve never seen more retail properties change hands than in last year. Like the rest of the market, this segment naturally experienced a big reversal and slowdown during the second half. But we nevertheless witnessed several major shopping-centre transactions last autumn.

Shopping centre



Amfi Ulsteinvik

Olav Thon

Ulstein family + others

Sørlandssenteret (50%)

Olav Thon

DNB Livsforsikring

Down Town og Sjøsiden

Scala Eiendom


Arkaden i Stavanger

Aurora Eiendom

Steen & Strøm

Gulskogen Senter

Aurora Eiendom

Steen & Strøm

Source: UNION

We have reported earlier how interest in big-box stores took off during the pandemic. A number of these properties are still changing hands. Grocery outlets naturally account for a large proportion, but so does much else – such as car showrooms and players selling products for “house and home”.

Big-box stores, transactions per annum (>NOK 50 mill)

Yield for these big-box stores was driven down a great deal during the pandemic, which will definitively be noticed now that the cost of money has increased a lot. While yields in general have fallen substantially in the property market, however, developments for much other retail property have been more moderate in recent years.

It is naturally difficult to measure precisely how value has developed in the unlisted property market. Combining data from various countries, we see indications which suggest that retail property has experienced a smaller decline in value than many other sectors.

Retail was, for example, among the segments which did best in relative terms during the third quarter of 2022, with MSCI reporting a total negative return of 0.5 per cent. July-September last year was the worst quarter for European property since 2008. The total negative return for all segments combined was 2.2 per cent. Figures for the fourth quarter are not available yet.

We see the same trend for listed property in many countries, with shopping-centre companies taking less of a beating than many other property shares. That is probably because yields have been substantially higher over time, and because the extent of euphoria pricing during the pandemic was smaller.

In other words, retail property presents a fairly mixed picture. 

Stock market developments (1 January 2022 = 100)



1Statistics Norway.
2Kvarud Analyse.