Heated transaction market
After a complete standstill in March and April, the transaction market is now in full vigour. Many properties have recently been sold or are in a sale process, and we have seen several examples of attractive properties being snapped up before the bidding round.
A case in point is Tjuvholmen allé 1-5. A few days after this was advertised in the market, seller Eiendomsspar reported that it had agreed on a price with Canica Eiendom.
In all, 150 transactions totalling about NOK 50 billion have been concluded this year. That compares with 166 for a total of NOK 51.5 billion at the same time in 2019. And we had not “lost” a quarter then, which is in practice the case for 2020.
Source: UNIONGiven developments in interest rates, the big interest in attractive properties with secure cash flows is not surprising. Nevertheless, the market has undoubtedly bounced back much more strongly than most people expected around Easter.
In addition to strong demand for good office buildings, logistics properties are one of the winners. The consequences of Covid-19 have both reinforced online shopping trends and increased the value of long and secure leases.
On the other hand, substantially greater uncertainty has prevailed in the retail sector. But retailing seems to be managing better than many feared, which is naturally positive for a lot of retail properties. That applies particularly to grocery boxes, but many big-box premises and shopping centres have also seen a positive trend. City-centre retailers, who depend heavily on tourists and high passing footfall, are having a much tougher time.
Hotels stand out as the segment experiencing the greatest difficulties at present. The only transaction we have registered so far this year is the sale of Grims Grenka by hotel investor Asmund Haare to Realkapital Hotell AS.
By contrast, interest in housebuilding land and residential development companies is high. Telenor Eiendom and Telenor Pensjonskasse have sold a portfolio of 85 development properties for NOK 1.4 billion to a consortium of industrial investors assembled by Pareto. Another example is the acquisition of Veidekke Eiendom by Norwegian Property, Fredensborg Bolig and Union Real Estate Fund III. It recently also became clear that Profier Gruppen has acquired Neptune Properties. And, as previously reported, the NRK site at Marienlyst in Oslo was sold to Ferd Eiendom during the winter.
Despite closed national borders and a worldwide economic downturn, foreigners have maintained their level of activity in Norway unchanged. This is probably because the world looks considerably worse elsewhere. Infection rates have been at very different levels, and the reopening of society and economy has gone much more slowly. We see that more people have become aware of the robustness of the Norwegian economy. Monetary and financial policies and a well-organised society are key words.
We have seen a number of large transactions with foreigners on the buyer side. These include Samhällsbyggnadsbolaget i Norden (SBB), which acquired a portfolio of 138 day care nurseries in Norway from Læringsverkstedet for NOK 4.25 billion. The seller has signed a 35-year sale and triple net leaseback agreement for this 114 000 m² portfolio.
Source: UNION