NEWSEC PROPERTY OUTLOOK - SPRING 2019
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NEWSEC PROPERTY OUTLOOK SPRING 2019
NEWSEC PROPERTY OUTLOOK
THE ONLY CONSTANT IS CHANGE
There are several global mega trends impacting seek, identify, and implement new solutions;
our world today. Digitalization is one of the to lead the development of new services and
most powerful ones, with the potential to products; and to have the courage to break
fundamentally change our society and the way with tradition. So yes, the future might be
we act in many areas. It could even be argued scary, but change is inevitable.
that digitalization will have the same impact
on society as industrialization did. No matter Within real estate, co-working is the sharing
the industry, digitalization will affect most of a economy word on everyone’s lips at the
company's processes, ranging from products moment. Larger as well as smaller Nordic
and services to marketing. and Baltic cities have seen an influx of co-
working locations in recent years, with both
Digitalization and sustainability have laid the local and international operators choosing
foundations for the booming sharing economy. to establish and increase their presence.
This paradigm shift in life patterns impacts In this edition of the Newsec Property Outlook,
everything – from the way we transport we take a closer look at the co-working
ourselves to how we shop, work and live. phenomena – and dive into the opportunities
Digitalization and the development of new and challenges.
technologies is now truly starting to have a
visible impact on our society. Despite this Sharing economy initiatives are a driving
still being the early stages of transformation, force for innovation within real estate. We have
we already see new concepts and phenomena really exciting times of innovation ahead of us
appearing one by one, including different – I welcome this and think that the entire
arrangements for renting, sharing or industry can benefit from working together
borrowing things, rather than owning them in creative ways and renewing the business
ourselves. model. But I also need to give a word of warning
and emphasize the importance of economic
I happened to be in California during the initial sustainability. I believe the sharing economy
launch of the electric scooters and the reaction is here to stay, but it won’t be for everyone.
was very strong and two-sided. On the one It isn’t enough to come up with a great idea
hand, these new innovations are viewed as that solves a problem – you also have to find
exciting, environmentally friendly and a way to make it profitable, if you want to
economically sustainable, but on the other succeed.
hand they are seen as cluttering the city
and limiting accessibility. The opposers are With that, I wish you an enjoyable read!
advocating a ban because they are scary and
challenge the traditional way.
I personally believe strongly in the importance
of being open and receptive to innovation, and
this is also one of Newsec’s core values. We Max Barclay
express this as the desire and the ability to Head of Newsec Advisory
3
CONTENTS
Downhill – how fast? ...................................................................................................... 7
Love actually..................................................................................................................... 10
(Co-)working 9 to 5 – is that the new way to make a living?............ 12
The Swedish property market ............................................................................. 16
The Norwegian property market ....................................................................... 18
The Danish property market .............................................................................. 20
The Finnish property market .............................................................................. 23
The Estonian property market .......................................................................... 24
The Lithuanian property market ...................................................................... 26
The Latvian property market ............................................................................. 28
Macroeconomic data................................................................................................. 30
Property data ................................................................................................................. 33
Definitions ......................................................................................................................... 36
Newsec’s market reports ....................................................................................... 37
The Full Service Property House ..................................................................... 38
Contact and addresses ............................................................................................ 39
Copyright Newsec © 2019
This report is intended for general information and is based upon material in our
possession or supplied to us that we believe to be reliable. Whilst every effort has
been made to ensure its accuracy and completeness, we cannot offer any warranty
that factual errors may not have occurred. Newsec takes no responsibility for any
damage or loss suffered by reason of the inaccuracy of this report.
Newsec, Box 7795, SE-103 96 Stockholm, Sweden. Phone + 46 8 454 40 00,
www.newsec.se.
You may use the information in the Newsec Property Outlook but acknowledge-
ment must be made for all quotations and use of data/graphics.
5
YOUR
PARTNER IN
THE NORTH
Newsec, the Full Service
Property House in Northern
Europe, is the solid choice
of partner within Advisory and
Property Asset Management.
With sharp analyses, hard facts
and just the right skill set,
we’ve got you covered.
NEWSEC PROPERTY OUTLOOK • SPRING 2019 DOWNHILL – HOW FAST? ●
Photo: Shutterstock
DOWNHILL – HOW FAST?
Klas Eklund, Senior Economist, Mannheimer Swartling
The global economy has taken a turn for the worse. Europe, China and Japan are all slowing down. The US economy is
in better shape for now, but will nonetheless experience a slowdown during 2019. Sweden will face tough headwinds,
while development is diverging in the other Nordic countries. Finland will experience some deceleration, albeit from
strong levels. Denmark shows resilience and Norway might actually pick up speed. In growth terms, Sweden will be
the straggler. This will affect housing and construction, with Sweden being the weakest performer. Low inflation and
the economic slowdown will keep interest rates low. This will act as a cushion for the housing market. But the risks are
clearly on the downside.
Synchronised global downturn retail sales fell abruptly around the also beginning to feel the pinch of
In 2018, financial markets experienced turn of the year. The Fed has indicated the “trade war.” Nonetheless, it is
scares from the combination of ex- it is nearing the peak of the rate hike currently difficult to envisage a hard
pected economic slowdown and pro- cycle – earlier, and at a lower level, landing for the American economy.
jected interest rate increases, coupled than previously expected. The result
with geopolitical concerns. The result has been a certain rebound in market Europe is in worse shape. After a
was two sharp setbacks for stock optimism. However, the economic strong 2017 and a good first half
markets, one at the beginning of the signs still indicate a slowdown for of 2018, the Eurozone economies
year, and the other during late autumn. the US over the course of 2019. The decelerated abruptly at the end of last
In many countries, housing markets effects of President Trump’s tax cuts year. Italy is already in recession, with
were also negatively affected. will gradually wane, the labour market negative growth for two consecutive
will become increasingly strained, and quarters. More surprisingly, Germany
In the US, the beginning of 2019 has the Fed’s rate hikes have led to tighter has also slumped, partly owing to the
still seen a strong labour market. But credit conditions. Some sectors are automotive sector and its suppliers
7
● DOWNHILL – HOW FAST? NEWSEC PROPERTY OUTLOOK • SPRING 2019
Photo: Shutterstock
beginning to feel threats from the reduce the risks emanating from the ECB may expand its QE strategy even
trade war. For the Eurozone as a trade war. further and perhaps buy more dis-
whole, growth forecasts now indicate tressed assets. However, it is difficult
the area is near stagnation. Inflation is All in all, the big economies are to see this substantially improve the
stuck below the ECB’s target. losing momentum. When analysed in situation.
isolation, a hard landing does not look
The European outlook is clouded by likely for any of them. But the down- At the same time, fiscal policy is also
the uncertainties still surrounding turn is synchronised, which means blocked in many countries, due to
Brexit. As of now, PM May is involved there is a risk that one region will drag weak government finances and large
in a “chicken race” where she wants another one down, which will have debts. Structural reforms are needed,
to force Brussels on the one hand and repercussions on yet another region, but the backlash against President
her own Parliament on the other to and so on. And with Brexit and trade Macron’s attempts to modernize
accept her deal. This may succeed, wars looming on the horizon, risks are France show the political difficulties of
although the chances are low. There clearly on the downside. such an undertaking. The result of the
may also be a period of “fudge and upcoming elections to the European
delay”, leading to a soft Brexit later Policy headaches parliament will probably make reforms
this year. But a hard Brexit, with the As the world is slowing down, economic even more difficult. Instead, we may
UK crashing out of the union with- policy is facing difficult challenges, very well see more populist and
out a deal, cannot be excluded. That most noticeably so in Europe. The nationalist policies.
would create hassle and disruptions to ECB’s nominal key rate is still negative,
foreign trade. and rolling back quantitative easing The US has more room to maneuver,
has not really begun in earnest. Con- since the Fed has already hiked rates
In Asia, both Japan and China are sequently, the Eurozone is entering to levels which are close to neutral.
slowing. Japan still shows positive the downturn with most expansionary But the fiscal position is a long-term
growth, despite demographic head- tools in the monetary policy toolbox headache; the budget deficit is high,
winds. But a planned consumption tax already exploited. Furthermore, it is despite several years of solid growth.
hike constitutes a downside risk. The difficult to see the ECB hiking rates This will not concern markets in the
Bank of Japan is far below its inflation or tapering liquidity according to near future, though. The consensus is
target, meaning that its ultra-loose previous projections. That train has that rates will probably fall during the
monetary policy will remain in place. already left the station. second half of 2019.
China is slowing in a controlled way;
the grey credit market and the shadow Thus, monetary policy is more or less The Nordics begin to diverge
banking system have been reined in. blocked. Interest rates will remain The Nordic region has done relatively
The government is now loosening low. Should worse come to worst and well in recent years. Now, the different
the screws on credit somewhat, to Europe enter a real recession, the countries are moving in different
8NEWSEC PROPERTY OUTLOOK • SPRING 2019 DOWNHILL – HOW FAST? ●
»The Nordic countries are diverging, with Finland and
Sweden slowing down, Denmark remaining stable,
while Norway is actually shifting up a gear«
directions, with Finland and Sweden 2017–2018, which was a beneficial last year’s new regulations regarding
slowing down, Denmark remaining correction after booming construction compulsory amortization of mortgage
stable, while Norway is actually in previous years. Now, there are signs debt. This creates high thresholds
shifting up a gear. that a trough has been reached; for entry onto the housing market,
housing starts have rebounded. In especially for low income households
Finland has shown good growth in most regions, house price increases and young families.
recent years. Now, however, exports have recently been modest and are
are slowing. Capital expenditure is still presently pulling in different direc- In total, the growth in GDP per capita
performing well. A “competitiveness tions: up by real income growth, down will slow to a crawl, and inflation will
pact” between government and the by rising interest rates. However, in fall back below target. At the beginning
social partners has held back nominal the oil exploration cities on the west of the year, inflation came in far below
wage increases. Government debt coast, a new property boom seems to the central bank’s projections. Thus,
has been falling, which provides some be under way. With regard to mone- the Riksbank will not be able to hike
room for a slightly expansionary fiscal tary policy, Norway is the odd man out rates according to its own plan. Interest
policy. The outlook for the housing in the Nordic region. Norges Bank is rates will remain historically low. The
market is so-so, with upward price not part of the Euro system, while fiscal situation is strong, making it
pressure in Helsinki, but declining rising domestic wage costs and possible to carry out a moderately
prices in smaller cities and towns. Con- inflation will cause key rate hikes to expansionary fiscal policy.
struction will fall and be a drag on the markedly higher levels than in neigh-
economy. Household debt has risen, bour countries – also strengthening The new coalition government has
but not as much as in Sweden. the krone. put forth a rather ambitious reform
program, including tax reform and
The Danish economy seems to be well Sweden in decline reform of the housing market. Among
positioned to cope with the global In Sweden, both household and issues to be investigated are a gradual
slowdown. Agricultural exports and business sentiment indicators are deregulation of rent control, as well
shipping are on the rise. The govern- deteriorating. Household consumption as lower taxes on the sale of property.
ment’s fiscal position is strong, as has come to a dead stop. Manufactur- However, the cooperating parties
government debt is low. Unemploy- ing is still performing well, but exports have already started to quarrel about
ment is falling and the labour market will face increasing headwinds in 2019, the directions of reforms. Further-
is showing strains. But monetary mainly from weakening markets in the more, several of these measures will
policy is aligned with the ECB’s, which Eurozone. Competitiveness is still fair take years to implement, and will not
has kept rates low; consequently, but seems to be declining – which is affect housing or construction in 2019.
monetary policy will continue to visible in the shrinking current
stimulate the economy. The housing account surplus, despite the All in all, the Swedish outlook is rather
market has started to cool, which from historically weak krona. bleak, with a weakening economy,
a macro perspective is a good thing, monetary policy in a quandary, and
given the previous risks of overheating The biggest drag on GDP in 2019 is a government in a precarious parlia-
and excessive price increases. Low the construction sector. At present, mentary position. Even worse, the
interest rates will cushion any an oversupply of housing is causing risks to this view are stacked on the
turbulence on the housing market. a contraction in construction, with downside. The combination of over-
strong, negative multiplier effects. supply of housing and financial strains
Despite lower oil prices during 2018, This is also preventing house prices for several property developers could
Norway’s investments in the energy from rising. Price expectations are lead to a much sharper downturn
sector are rising and pulling the uncertain and volatile, but the risk for the housing market – with nega-
country’s economy along. Inflation is still on the downside, given the tive ripple effects for the rest of the
has risen to the central bank’s target oversupply of housing. Demand for economy.
level. Residential investment fell in new housing is being depressed by
9● LOVE ACTUALLY NEWSEC PROPERTY OUTLOOK • SPRING 2019
LOVE ACTUALLY
In the previous issue of the Newsec Property Outlook we took a look at the Nordic love story that has been brewing
for some time now, in the rise of inter-Nordic investment between the Nordic countries. In this issue, we revisit the
topic and take a look at how trends have evolved over the past year, and whether the love story still persists.
The Love Story Continues 1. Transactions in the Nordics
The graph (1) indicates that by all Volume (billions of EUR) Per cent
means, Nordic buyers remain interest- 80
80
ed in each other’s countries. However,
inter-Nordic investment did not quite
reach the levels forecast in early 2018, 60
60
and instead remained at roughly the
same levels seen in 2017. Foreign
investment as a whole made up 39 per 40 40
cent of total investment in the Nordics
in 2017, and in 2018, has remained
at roughly the same level. Although 20 20
transaction volumes in 2018 did not
rise, 2018 instead saw the number of
unique foreign investors rise compared 0 0
to previous years, indicating that the 2014 2015 2016 2017 2018
Nordic markets are attracting a wider Total Volume Domestic buyers %
range of interest. At the same time, the Domestic buyers Non-Nordic %
average deal size has also increased, Non-Nordic buyers Inter-Nordic buyers %
meaning a larger number of investors Inter-Nordic buyers
are choosing to make major purchases.
In short, then, increasing amounts of
inter-Nordic and non-Nordic investors
are choosing to stick their fingers in
the Nordic pie, and they want more
of it.
2. Nordic cross-border
transactions (EUR),
2014–2018
NON-NORDIC INVESTOR: An inter-
national investor originating from a
country outside the Nordics.
INTER-NORDIC TRANSACTION:
A transaction made by an investor
originating from one of the Nordic NORWAY FINLAND
countries, in any of the other Nordic
countries apart from their own.
Defining an investor’s country of ori-
4.8 bn
gin is no exact science, but Newsec’s
principle is to define this as the seat/ 5.8 bn
where investment decisions are taken.
ANALYSIS IN THIS ARTICLE is based
on Newsec’s transaction records. SWEDEN
Some unreported or undisclosed data
may not be included in analysis. Data
presented refers to purchases, unless
3.3 bn
DENMARK
stated otherwise.
10NEWSEC PROPERTY OUTLOOK • SPRING 2019 LOVE ACTUALLY ●
»The tendency continues to be for inter-Nordic
investment to rise, with a much higher frequency
of regular transactions, as well as a rising
number of unique investors«
The map (2) shows an aggregate of 3. Origins of investment into the Nordics in 2018
investment into the Nordics over the
past five years. As can be seen, flows
Other EUR 0.9 bn
between the Nordic countries remain
USA EUR 1.0 bn
considerable – in total, inter-Nordic Germany EUR 0.8 bn
Other EUR 0.5 bn UK EUR 1.4 bn
investment has summed to over EUR
27 billion over this time period. If we Sweden
EUR 1.5 bn Non-Nordic
disregard the major structural acquisi- EUR 4.3 bn Domestic
tions conducted by Vonovia in their Inter-Nordic EUR 11.3 bn
FINLAND SWEDEN
purchase of Victoria Park in Sweden, EUR 2.0 bn
and/or Kildare Partners in their Domestic
Other Finland Sweden
purchase of Technopolis in Finland, EUR 3.3 bn
EUR 9.4 bn EUR 15.7 bn
EUR 0.7 bn
then inter-Nordic investment in 2018
USA EUR 0.6 bn Non-Nordic
has overtaken non-Nordic investment. EUR 1.9 bn
Germany EUR 44.1 bn Inter-Nordic Norway
Further, the tendency continues to be EUR 0.6 bn EUR 1.3 bn EUR 0.9 bn
Denmark
for inter-Nordic investment to rise, Other Inter-Nordic Other
EUR 10.4 bn Non-Nordic
with a much higher frequency of EUR 0.7 bn EUR 3.3 bn EUR 2.9 bn EUR 0.4 bn
Norway
regular transactions, as well as a Sweden
EUR 8.6 bn Germany
EUR 2.6 bn EUR 2.0 bn
rising number of unique investors. Domestic
EUR 5.2 bn
Nevertheless, we have also seen a Domestic EUR 7.3 bn Other
distinct rise in capital stemming from DENMARK EUR 0.9 bn
beyond the Nordics, with an increased
number of diverse European, Ameri- Inter-Nordic EUR 0.2 bn
can and Asian investors in particular. Non-Nordic EUR 1.1 bn
Other NORWAY
Moving forward, each Nordic country EUR 0.4 bn Various EUR 0.2 bn
is likely to continue to attract a wide USA EUR 0.7 bn
range of capital, from both within and
beyond the Nordics.
Popularity Contest
In what ways does the nature of our capital has continued to dominate, Moreover, beyond the source
love story differ by country? The with non-Nordic interest stemming countries highlighted above, investors
diagram (3) shows the different primarily from the USA and Germany. from a further 14 countries have made
sources of capital in each of the Meanwhile, in Norway, international purchases in at least one of the Nordic
Nordic countries, with some key interest has been limited relative to or Baltic countries in 2018. Hence, it
sources highlighted. In Sweden, the other Nordic countries, but is clear that the Nordic transaction
German and Norwegian buyers are American capital has still remained market is ever-changing, and that
particularly impactful, both respec- substantial. Looking beyond the the range of interested parties is
tively making up the majority of the Nordics, the Baltic markets have also constantly evolving.
non-Nordic and inter-Nordic flows continued to see substantial inter-
coming into Sweden in 2018. Other national and inter-Nordic interest. A
Nordic countries have not been quite prime example is Swedish property Ulrika Lindmark
as attractive to German investors this company Eastnine’s purchase of the ulrika.lindmark@newsec.se,
year. Finland has instead found more S7 office complex in Vilnius for EUR Alexandra Lövgren
interest from UK and US investors, 128million in February 2019, in the alexandra.lovgren@newsec.se,
while Swedish investors have also largest ever office investment trans- Adam Tyrcha
been a major source of capital coming action in the Baltic states. adam. tyrcha@newsec.se
into the country. In Denmark, Swedish
11● (CO-)WORKING 9 TO 5 – IS THAT THE NEW WAY TO MAKE A LIVING? NEWSEC PROPERTY OUTLOOK • SPRING 2019
(CO-)WORKING 9 TO 5
– IS THAT THE NEW WAY
TO MAKE A LIVING?
The sharing economy continues to take the world by storm, and co-working in particular has undergone striking
growth over the past few years. The Nordics are no exception, having seen a sharp increase in the amount of
available co-working locations in the region. Both local and international co-working operators have chosen to
establish and expand locations in a wide range of Nordic and Baltic cities.
Lost in space 1. Number of co-working locations
The current state of the co-working ’000
70 sqm
market is shown in the graph (1), in
terms of the number of co-working 60
locations. Stockholm is the clear leader
50
in terms of the number of locations
available, with close to 70 unique 40
co-working locations for customers to
choose from. The other capital cities 30
also perform relatively well, while
20
interestingly, co-working hubs are
also being established in cities such 10
as Kaunas and Malmö, which are over-
0
represented in terms of the number s i s s r
ol
m
ge
n
sl
o ga na nk
ö
lin
n
iu ur
g
hu ge
n
ge
of co-working locations relative to h a O Ri u si al
m l ln b r r n
ck nh Ka el M Ta Vi en Aa Be va
o H th a
their population. While the average St pe St
Co Go
size of co-working areas is smaller in
Kaunas and Malmö than in Vilnius and
Gothenburg, the fact that there are 2. Co-working in the Nordic major cities
so many smaller locations available in ’000 sqm Per cent
relatively smaller cities is indicative of 700 3,5
a workforce that values flexibility, and
is likely to be an asset for these cities 600 3,0
in the future. 2,5
500
Indeed, beyond the pure number of 400 2,0
co-working locations, the growth over
300 1,5
time in the amount of available space
has been marked in most Nordic cities, 200 1,0
and the region as a whole. The graph
(2) shows that co-working has seen 100 0,5
strong growth in the Nordic major
0 0,0
cities, going from around 400,000 2017 2018 2019
square meters in 2017, to 550,000 in
■ Co-working office stock (left axis)
2018, a growth rate of 36 per cent. Share of total office stock (right axis)
Though the definition of co-working differs, Newsec defines a co-working location as an area that provides an open working space to be shared
together with other members in some form. Newsec includes co-working locations that offer hot-desking and/or dedicated desks as well as
office hotels that meet this definition in our analysis.
An operator is defined as a company that runs a co-working location. A member is defined as a company or individual that uses a co-working
location.
12NEWSEC PROPERTY OUTLOOK • SPRING 2019 (CO-)WORKING 9 TO 5 – IS THAT THE NEW WAY TO MAKE A LIVING? ●
»Co-working remains one of the fastest
growing office segments and is driving
the office market in many ways«
Selection of major lettings in 2018 and 2019
Operator Operator origin City Location Size of letting (sqm)
Epicenter Sweden Oslo Majorstuen 15,000
WeWork USA Stockholm CBD 13,500
Epicenter Sweden Helsinki Mikonkatu 9,000
Spaces Netherlands Oslo Sentrum 6,100
Convendum Sweden Stockholm Hagastaden 5,500
Spaces Netherlands Malmö Universitetsholmen 3,100
United Spaces Sweden Gothenburg Masthuggskajen 2,500–5,000
UMA Workspace Finland Vilnius Gedimino 2,000
UMA Workspace Finland Copenhagen Indre By 1,950
UMA Workspace Finland Tallinn Maakri 1,780
In 2019, co-working office stock is growth. One of the most high-profile is considerable. In Sweden, one of the
expected to grow further to approxi- the global co-working giant WeWork’s largest property lettings of 2019 thus
mately 680,000 square meters, which decision to rent 13,500 sqm of space far has been Convendum's letting of
constitutes a growth rate of 24 per in the newly developed Urban Escape 5,000 sqm for a co-working location
cent. This means that although the building in central Stockholm. WeWork in Sundbyberg. Beyond this, in 2018
growth rate is expected to slow a little have announced their intention to rent and 2019, many established Nordic
this year, co-working remains one of at least 30,000 sqm in Stockholm co-working companies have grown
the fastest growing office segments alone – and have also set their sights considerably – with e.g. United Spaces
and is driving the office market in on establishing locations in other opening three new locations in
many ways. Indeed, the share of total Swedish major cities and Nordic Sweden, totaling over 18,000 sqm.
office stock is expected to continue capitals. Naturally, inter-Nordic interest has
to increase, too, approaching 2.5 per also flourished, with examples
cent in 2019. Although co-working International interest in the Nordic including Swedish company
stock in the Nordics remains a far cry markets has been more widespread Epicenter establishing major locations
from the stock seen in more devel- than that, though. International in Oslo (15,000 sqm) and Helsinki
oped co-working markets such as co-working companies that have (9,000 sqm) in 2018, while the Finnish
London, where the stock is twice the shown interest in the Nordic co- company Technopolis (UMA) has also
size of the Nordic cities combined working market include the American established a number of new locations
at over 1 million square meters and Cambridge Innovation Center, Israeli across the Nordic and Baltic region.
over 4 per cent of total office stock, Mindspace, British Office Group and Although the primary focus in many
it is clear that the co-working market Austrian Impact Hub. More estab- cities continues to be on establishing
is continuing to grow steadily in the lished players have also expanded, co-working locations in the centre of
Nordics. with e.g. Regus opening new locations the city, as the market has become
in all of the Nordic and Baltic countries more saturated, a number of locations
Growing numbers of major lettings in 2018. have begun to pop up in suburban
A number of major lettings have been office hubs. Further, though co-
made in the past year, helping to fuel Home-grown interest has also been working is primarily centered in major
13● (CO-)WORKING 9 TO 5 – IS THAT THE NEW WAY TO MAKE A LIVING? NEWSEC PROPERTY OUTLOOK • SPRING 2019
»Though traditionally a hub for tech start-ups
and freelancers, co-working is now beginning
to attract a wider range of members«
cities, many smaller cities/towns have 3. Size of member companies In terms of member industries, we
4. Member industries
also attracted co-working actors, see that while IT remains the largest
meaning most cities/towns with a industry at 35 per cent, there is a wide
population over 50,000 across the spread of companies working within
16 % 19 % 25 % 35 %
Nordics and Baltics are now home to a number of different fields, with the
at least one co-working location. “other” field being the second largest
at 25 per cent, attracting members
An evolving market 12 %
from a wide range of fields including
65 %
The significant letting activity makes media, food, fashion, charities, non- 6%
it clear that in a short amount of time, profits, artists and many more. 13 % 9%
co-working has had a substantial Indeed, we generally note a broad
impact on the nature of the office ■ Freelancers/1 person spread in the results, meaning ■ ITthere ■ Marketing
market in the Nordics. A considerable ■ Small companies 2–10 employees is considerable variance both within
■ Finance ■ Design
number of property owners and ■ Larger companies 11+ employees and between co-working locations
■ Consultancy ■ Other
developers have made adjustments to in terms of member industries. This
their strategies in order to account for means that co-working can in many
the growth of co-working. In Sweden, cases truly allow firms from a wide
Size of member companies
property companies such as Klövern, 4. Member industries 5. Age
range of industries to collaborate andof members
Vasakronan, and Profi have developed inspire one another. Further, in terms
their own co-working concepts, of the age of members, we note that
16 % while
19 % Wallenstam have chosen to 25 % 35 % many co-workers are perhaps not as13 % 32 %
purchase a stake in co-working giant young as one might expect. Although
Convendum, and Castellum have the percentage under 30 is sizeable,
purchased United Spaces. at 32 per cent, 55 per cent of members
12 %
are aged between 30 and 50, and 13
65 % 55 %
Further, as co-working continues 6% per cent are aged over 50. In addition,
to evolve, so too does its clientele. 13 % 9% most of our respondents report that
Indeed, the inherent spurring of their co-working locations boast a
creativity and flexibility is increasingly
Freelancers/1 person ■ IT ■ Marketing/PR fairly even gender balance. Hence,
■ % under 30
Small companiesbecoming something that a wider
2–10 employees ■ Finance ■ Design though co-working does continue to
■ % 30–50
Larger companies 11+ employees
range of members appreciate. Though ■ Consultancy ■ Other attract the stereotypical young ■ %male
over 50
traditionally a hub for tech start-ups IT professionals, it is clear that the
and freelancers, co-working is now appeal is continuing to widen. This is
beginning to attract a wider range of contributing to the spurring of compe-
members. The diagrams (3–5), based
Member industries 5. Age of members tition on the office rental market.
on a comprehensive survey conducted
by Newsec in the Nordics and Baltics, Let the right one in
evidence this. The number of free- Beyond this, despite co-working
25 % 35 % 13 % 32 %
lancers and one-man companies in locations in many cases commanding
co-working locations is only 19 per slightly lower rents and slightly more
cent, while small companies dominate rental discounts than comparable
12 % with 65 per cent. Further, an increasing office spaces, many major property
55 %
number
6 % of larger, more established actors are actively choosing to woo
13 % 9%companies such as Microsoft, co-working actors and attract them to
KPMG, Volvo, Electrolux and SEB are their properties. This is partly owing
IT choosing
■ to become members of
Marketing/PR ■ % under 30 to the long leases usually signed by
Finance different
■ Design co-working locations in the ■ % 30–50 co-working actors, coupled with the
Consultancy Nordics.
■ Other ■ % over 50 tenant risk often being concentrated
14NEWSEC PROPERTY OUTLOOK • SPRING 2019 (CO-)WORKING 9 TO 5 – IS THAT THE NEW WAY TO MAKE A LIVING? ●
Photo: Getty Images
to one actor for what is often a large negative, too. In order for co-working hindrance to property values and your
letting. Further, the generally higher to remain an attractive investment for business as a whole. Notwithstanding
utilization rates of common space property owners, it is crucial to under- these risks, co-working’s global expan-
in particular is also seen as highly stand and develop the right type of sion is unlikely to cease any time soon,
attractive to property owners. This long term sustainable business model. not least in the Nordics and Baltics.
combined with the attraction which In this regard, Newsec notes that The world continues to evolve and
the availability of co-working space there are many major differences be- people’s behavior is changing – and to
can have to other tenants, means that tween the actors active in the Nordic succeed in the property industry, it is
if managed correctly, the long-term countries today – as well as structural of paramount importance to stay on
impact on property values can be differences in the co-working model in top of these changes.
positive. the different countries. As the sharing
economy continues to expand, making
Nevertheless, it is important to and keeping business profitable will be Ulrika Lindmark
highlight that there are inherent key – and some co-working companies ulrika.lindmark@newsec.se,
risks in the co-working industry for are unlikely to be able to weather the Alexandra Lövgren
the property owner, too. While storm that a recession may bring. alexandra.lovgren@newsec.se,
concentrating tenant risk to one large Adam Tyrcha
letting is often seen as positive, this It is clear that the continued rise of adam. tyrcha@newsec.se
can quickly transform to something co-working can be both a benefit and a
15● THE SWEDISH PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • SPRING 2019
THE SWEDISH PROPERTY MARKET
2018 STRONGER THAN 2017 – AND 2019 SET
TO BE JUST AS GOOD
The Swedish economy grew a little The Swedish real estate market was prime properties on the market, with
weaker than initially expected in 2018, substantially more active in the the average deal sizes continuing to
with GDP growth of around 2.2 per second half of 2018 than in the first rise as a result. Further, going into
cent. Following a politically turbulent half, and total transaction volume for 2019, Newsec continues to expect a
end to 2018, Sweden now has a the year ended at SEK 154 billion, a large number of structural deals
government in place, but 2019 is ex- little higher than the SEK 151 billion to take place, such as Vonovia’s
pected to be a relatively weaker year, volume seen in 2017. Q3 2018 proved acquisition of Victoria Park, Klövern’s
with a forecast 1.0 per cent growth to be particularly strong, with the acquisition of Agora, or EQT’s bid on
rate. The Swedish Riksbank decided highest transaction volume in any Q3 shares in Stendörren, all of which
to raise the key interest rate from since the financial crisis, while Q4 also occurred in 2018. Moreover, inter
-0.5 per cent to -0.25 per cent at their saw a stellar result being achieved. national interest in the Swedish
meeting in December. The Riksbank 2019 has gotten off to one of the market is expected to remain high,
cited the strong economy and inflation stronger starts in years, and Newsec with wide interest stemming from
stabilizing around the 2 per cent goal forecasts that transaction volume the Nordics, Europe and beyond.
as the underlying reasons motivating in 2019 will be almost as strong as in
the change. However, further increases 2018, meaning the commercial real Contact:
in the key interest rate will likely have estate market will be relatively unhin- Alexandra Lövgren
to wait until 2020, owing to weaker dered by the weaker macroeconomy. alexandra.lovgren@newsec.se
inflation and growth figures being re- Instead, a strong hindrance to larger Adam Tyrcha
ported and projected thus far in 2019. transaction volumes being achieved adam.tyrcha@newsec.se
continues to be the lack of suitable
16NEWSEC PROPERTY OUTLOOK • SPRING 2019 THE SWEDISH PROPERTY MARKET ●
Interesting occurrences on the Swedish property market in 2018:
OFFICES REBOUND – BUT RESIDENTIAL lucrative compared to previous STRONG OFFICE PIPELINE
STRENGTHENS MORE years, with many developers IN THE SUBURBS
Following the office sector’s lowest holding off on committing to new The office sector has continued to
share ever taken in 2017, where projects. Indeed, in 2018, con- grow in many of Stockholm’s prime
the sector only accounted for 17 struction of approximately 53,000 suburbs, including the Solna/
per cent of transaction volume, apartments begun, which is a 16 Arenastaden area in particular.
offices rebounded a little in 2018, per cent decrease compared to For the past few years, the area’s
finishing the year at 22 per cent 2017. However, the newly appointed office stock has experienced
of transaction volume. Though government’s suggestion to allow growth rates exceeding 6 per cent
this is still one of the lowest shares newly produced rental apartments per year, and 2019 looks set to
ever taken by the office market, to be free from rent regulations be a year in which a further 7 per
it does represent a substantial could serve to increase housing cent is added to the stock. The
increase compared to the 2017 production in the long run, with strong growth of the area as an
volume. Nevertheless, residential, more actors potentially choosing office sector hub has led to many
which surpassed offices for the to build rental housing, rather than noteworthy tenants leaving dated
first time in 2017, has continued to cooperative apartments, in future. premises in Stockholm’s inner city
strengthen, going from 26 per cent This could also serve to remedy the and relocating to modern facilities
of transaction volume in 2017 to housing shortage which persists in the suburbs, including a number
34 per cent in 2018. Therefore, it in many areas in the rental market of government agencies, as well as
remains likely that residential will segment. major companies such as Fortum,
continue to account for a larger Academic Work, Telenor, and AGA
share of transaction volume than Gas (owned by Linde).
offices in the future.
GOOD RETAIL IS THRIVING
FOREIGN INVESTORS 34% 27% – BUT MANY BRANDS STRUGGLE
THE STRONGEST IN YEARS Retail accounted for just 13 per
Accounting for 27 per cent of cent of transaction volume in 2018,
transaction volume in 2018, for- one of the lowest volumes in years.
eign investors took their largest FOREIGN INVESTORS Good retail, however, continues
share of transaction volume since Share of total transaction to be in high demand, with many
volume
before the financial crisis. 2018 prime shopping centers and high
saw a rise in investment from street retail in attractive locations
beyond the Nordics, with a number doing well and attracting investors,
of large transactions with German tenants and shoppers. For example,
buyers in particular, as well as a number of upscale and interna-
continued high interest from tional retailers such as Barbour,
inter-Nordic investors. Sweden is Cartier, Chanel, Jimmy Choo, and
expected to continue to attract CONSTRUCTION OF Lululemon have recently opened
buyers from a wide range of NEW APARTMENTS locations in central Stockholm and
countries in 2019. Down 16 per cent from 2017 are thriving. A number of retail
brands are struggling, however,
often owing to ineffective adap-
HOUSING DEVELOPERS STRUGGLE tation to the rise of e-commerce.
Stagnant or falling prices for Major brands that have gone bank-
cooperative apartments and
villas have led to many housing
34% 27%rupt or are in crisis include Best of
Brands, Boomerang, BR Leksaker,
developers struggling to make Gallerix and Marc’O-Polo. A
ends meet, with many new coop- number of other major players,
erative apartments being sold RESIDENTIAL including H&M, IKEA, Indiska, JC,
at a heavily discounted rate, or Strengthens from 26 per cent Kappahl, Lindex, MQ, Odd Molly
remaining unsold. This has led of transaction volume in 2017 and Teknikmagasinet have also
to the production of cooperative closed down many locations or are
apartments being relatively less attempting to rebrand.
17● THE NORWEGIAN PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • SPRING 2019
THE NORWEGIAN PROPERTY MARKET
NEW SEGMENTS AND LOCATIONS
BECOME POPULAR
2018 was another strong year for a decade of high transaction velocity 2019, and Newsec predicts a trans-
the Norwegian economy, with a GDP and record pricing. action volume for the year of around
growth rate of 1.7 per cent. 2019 looks NOK 85 billion. This is primarily a
to be a slightly stronger year in terms It is worth noting that 2018 had a result of the strong development on
of the economy as a whole, with a passive start with rising interest the market in the last few quarters, as
projected growth rate of 2.0 per cent. rates, a lack of funding and pricing well as continued high interest from
The real estate market in 2018 was deviations between buyers and sellers a wide range of domestic and foreign
also strong, with a transaction volume in the market. However, the market investors.
of NOK 87 billion, divided across 296 experienced considerable momentum
transactions, a result in line with towards the summer, which has con- Contact:
2017. Newsec believes 2019 will be no tinued into 2019. There is very little Oyvind Johan Dahl,
different, and will continue to build on suggesting that activity will subside in ojd@newsec.se
Photo: Shutterstock
18NEWSEC PROPERTY OUTLOOK • SPRING 2019 THE NORWEGIAN PROPERTY MARKET ●
»In 2019, core office yields are likely to
remain steady with a slight increase
towards the end of the year«
Interesting occurrences on the Norwegian property market in 2018:
FOREIGN INVESTORS properties. Moreover, interest in the
REMAIN INTERESTED 15% 21%logistics and industrial segment is
There is continued high interest also on the rise, accounting for 21
from international investors who per cent of the market in 2018, the
are looking to invest in Norway. highest in years.
Both old, well-established players, FOREIGN BUYERS
as well as a steady stream of new Share of total
foreign players remain active in the transaction volume INTEREST RATES CONTINUE TO RISE
market. 2018 ended with inter The key interest rate rose from 0.5
national investors accounting for per cent to 0.75 per cent in 2018. In
15 per cent of the total transaction 2019, the interest rate is expected
volume, slightly below the long- to rise further. Meanwhile, margins
term average. Newsec does not on bank loans are also falling. Bank
consider this to be indicative of de- KEY INTEREST RATE financing remains available, but
Rises from 0.5 per cent
creased international interest, but to 0.75 per cent most investors are increasingly
rather a number of coincidences having to get used to an LTV of 60
as well as the willingness of local per cent, rather than 70 per cent.
buyers to value assets higher 15% 21%
than the foreigners. International
investment in Norway is likely to PRIME YIELDS UNDER PRESSURE
increase in 2019, as international Prime yields continue to be under
and particularly Asian capital looks
to invest more in Norway.
LOGISTICS AND upward pressure as financing costs
increase. In 2019, core office yields
INDUSTRIAL are likely to remain steady with a
Share of total transaction
volume slight increase towards the end
INVESTMENT MOVES OUT OF OSLO of the year. Meanwhile, the retail
Interest for properties in secondary segment continues to struggle, and
and tertiary markets has increased, RESIDENTIAL REMAINS POPULAR we expect to witness some yield
and will continue to push values BUT NEW SEGMENTS ON THE RISE expansion. Logistic and industrial
upwards in 2019. Many European There continues to be high demand properties, however, remain
regional funds are beginning to for residential projects. Newsec attractive to investors and will
look to Bergen, Trondheim and notes that areas outside of Oslo likely remain at current levels.
Stavanger, as Oslo becomes more with strong population growth are
expensive and it becomes increas- in demand, including areas such as
ingly difficult to seek out adequate Ski and Ås. These areas are begin-
returns. Both international and ning to appear more stable than the
domestic investors have made a Oslo market. Furthermore, other
number of major purchases in 2018, property types are also enjoying in-
in locations including Sandvika, creased investor interest. Investors
Kristiansand, Bodø, Bergen and are developing an appetite for pub-
Stavanger. lic properties such as pre-schools,
schools, hospitals and other similar
19● THE DANISH PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • SPRING 2019
THE DANISH PROPERTY MARKET
E-COMMERCE BOOSTS INTEREST IN
INDUSTRIAL PROPERTY
The Danish economy continues to
be robust, with a GDP growth rate of
around 1.8 per cent in 2018. The polit-
ical environment in Denmark remains
stable, and although there will be a
general election in June 2019 at the
latest, this is unlikely to have much
lasting impact on the Danish economy
or real estate market. The outlook for
the Danish real estate market 2019 is
positive after the second best invest-
ment year ever in 2018. There is still
high activity on the property invest-
ment market despite a slight decline
from 2017 to 2018. Total volume for
2018 landed at DKK 74 billion – only
exceeded by the prior record year of
DKK 87 billion.
Great interest in property investments
comes from both Danish and foreign
investors. The prime located proper-
ties in the largest cities see particu-
larly high demand, and competition
from primarily German, Swedish and
US investors is massive. Supply is rela-
tively limited in relation to Denmark’s
neighboring countries, and as prices
have also increased over the past few
years, the duration of acquisition pro-
cesses is longer compared to twelve
months ago. Investors continue to see
the Danish market as attractive, as the
total return on investment is expected
to be a few percentage points higher
than the bond market, while also being
less volatile than the stock market.
Contact:
Morten Jensen
morten.jensen@newsec.dk
Photo: Shutterstock
20NEWSEC PROPERTY OUTLOOK • SPRING 2019 THE DANISH PROPERTY MARKET ●
»Online trading and technology have helped
to create high demand for industrial and
logistics properties«
Interesting occurrences on the Danish property market in 2018:
INTERNATIONAL AND DANISH INVESTORS step with the general development
SHARE THE MARKET EQUALLY of tourism and demand for hotel
Foreign investors view the Danish 50 50 55 %accommodation in Copenhagen.
real estate investment market as Lonely Planet awarded Copenhagen
attractive, and the split between the “Best in Travel 2019“ title, which
Danish and international investors INTERNATIONAL VS is likely to bring benefits to both
was fifty-fifty in 2018. It is the stable DANISH INVESTORS hotel and restaurant owners in the
political environment, the continued A fifty-fifty split in 2018 coming year.
economic growth and low interest
rates which especially contribute
to a safer Danish real estate market SECONDARY COMMERCIAL PROPERTIES
compared to other European mar- +178 % ATTRACT DOMESTIC INVESTORS
kets. Although foreign investment For secondary commercial prop-
activity has decreased compared to INDUSTRIAL & LOGISTICS erties, there is also good activity,
2017, the share of the market taken Increase in the share of total especially in cities around Greater
transaction volume 2018
by foreign investors remains one of Copenhagen, like Brønshøj,
the highest in the Nordics. Foreign Glostrup and Karlslunde, where
investors are particularly interested 2018 saw a number of transactions
in large residential portfolios as well in the price range of DKK 40 million
as prime location retail and office 50 50 55 % to DKK 120 million. Danish investor
properties, but also portfolios of interest has also spread beyond
retail and logistics properties. Greater Copenhagen, into East
GREATER COPENHAGEN Jutland. Nevertheless, Copenhagen
Share of the total transaction and Greater Copenhagen still
E-COMMERCE CONTRIBUTES TO volume in 2018 account for approximately 55 per
INCREASING INVESTMENT cent of the transaction market.
INTO INDUSTRIAL PROPERTIES
The share of investment volume the relatively low prices and strong
taken by industrial and logistics infrastructure, investment activity
properties almost doubled from within this segment is high, with a
4.5 per cent in 2017 to 8.0 per cent number of transactions ranging
in 2018. Online trading and tech- between DKK 40 million to DKK 400
nology have helped to create high million conducted in 2018.
demand for these properties among
both investors and users. In addi-
tion, it is expected that yield levels INTEREST FOR HOTELS
will be adjusted downwards and rent CONTINUES TO RISE
levels upwards in the coming years, Hotels continue to experience in-
as prices for these assets are lower creased interest, especially among
compared to Denmark’s German Danish institutional investors.
and Swedish neighbors. Owing to Investor interest in hotels is also in
21● THE FINNISH PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • SPRING 2019
Photo: Shutterstock
22NEWSEC PROPERTY OUTLOOK • SPRING 2019 THE FINNISH PROPERTY MARKET ●
THE FINNISH PROPERTY MARKET
OFFICES AND LOGISTICS THRIVE
IN FINLAND
The Finnish economy started 2019 unlikely to have any immediate impact Investment demand will be focused on
very differently to last year. Excessive on Finland’s economy. offices and the logistics sector in 2019.
expectations and the uncertainty Investors favour offices near city
created by several risks resulted in The turbulence of the stock market in centres and transport hubs as well as
turbulence in stock markets. Exports late 2018 and early 2019 has not been logistics properties with good invest-
and investments have also weakened reflected in the property investment ment criteria. They are also willing to
considerably from Q2 2018. These market. Investment demand remains pay well for the right properties, and
factors have previously been the strong and record transactions took record prices were seen for both these
primary drivers of Finnish growth. As place in late 2018 in Helsinki city cen- sectors in 2018. The sector facing the
a result, growth projections for 2019 tre. The total volume in 2018 amount- most challenges is retail. Retail will
have been significantly lowered, to ed to EUR 9.3 billion. Demand appears continue to undergo major changes in
approximately 1.5 per cent, a decline to be remaining strong this year, not 2019, and finding successful areas and
from the 2.4 per cent growth rate only in the metropolitan area but also properties takes a special sort of care
posted in 2018. Nevertheless, Finland in the Turku and Tampere economic and vision.
is more or less moving towards the regions. Therefore, Newsec’s projec-
long-term average in GDP growth. A tion is that liquidity will remain high, Contact:
parliamentary election is scheduled to resulting in a transaction volume Olli-Pekka Mustonen
be held on the 14th of April 2019, but is of around EUR 7.5 billion in Finland. olli-pekka.mustonen@newsec.fi
Interesting occurrences on the Finnish property market in 2018:
INVESTORS ARE GETTING CREATIVE than expected have caused some transportation will be the ones
The yields for core properties have fears to spread. The European most likely to struggle, as custom-
decreased, but higher risk core plus Central Bank chose not to increase ers look instead to newer, more
properties have also experienced the key interest rate at its latest modern establishments.
yield compression. A number of in- meeting in July, but there have
ternational investors have widened been some indications that they A HALO EFFECT FOR LOGISTICS
their scope beyond the Helsinki may choose to do so sooner than A transforming retail market has a
region, looking instead to other towards the end of 2019, as was halo effect on logistics and prime
major growing cities in Finland. previously expected. yields have decreased significantly,
As a result, transaction volumes while rents in prime areas have
have surged beyond Helsinki, and COMPETITION INTENSIFIES seen steady increases. Indeed, the
properties outside Helsinki have AMONG SHOPPING CENTRES yield levels for prime logistics have
also seen their yields fall. A huge influx of supply on the shop- broken records, and have now
ping centre market will increase begun to reach the same levels
INTEREST RATES ARE A the level of competition between seen in many other Nordic
CAUSE FOR CONCERN shopping centre owners. Supply on countries. Logistic markets are pri-
Concerns about interest rates are the retail market will increase sub- marily benefiting from e-commerce
increasingly becoming more wide- stantially over next few years in the and improving economic condi-
spread. Market participants have Helsinki metropolitan area as new tions. There is surging demand for
more or less recognized the risk of shopping centres are constructed. smaller logistics hubs near city
increasing interest rates and have Increasing competition may result centres, enabling increased deliv-
previously not been overly worried in changes in the vacancy rates eries of online sales to customers.
about this. However, suggestions and rents. Older shopping centres
that the rates may increase faster with poor connections to public
23● THE ESTONIAN PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • SPRING 2019
THE ESTONIAN PROPERTY MARKET
GROWTH ACROSS ALL REAL ESTATE SEGMENTS
Estonia remains one of the fastest ber of competitors and fears of market In 2018, the total transaction volume
growing economies in the European oversaturation, the biggest trend in in Estonia reached EUR 150 million.
Union. In 2018, the country’s GDP the Tallinn retail market is investing Surprisingly, the market consisted
grew at a rate of 3.4 per cent. The into more entertainment and leisure almost entirely of local investors, who
economic growth is reflected in the options to attract customers. Similar primarily purchased office premises
many thriving real estate segments. to the office market, retail rents and located in Tallinn.
Many new office projects are in the vacancy rates have remained stable,
pipeline and are expected to be com- although there is a small risk of
pleted in 2019–2020. Rent prices and vacancy increase and downward Contact:
vacancy rates have remained stable, pressure on rents due to the high Gintaras Tolocka
as demand for modern office premises supply. Yields for prime office prop- g.tolocka@newsec.lt
is high and competition is fierce. erties remain at 6.25 per cent, while Adomas Biveinis
The retail sector also continues to prime retail and industrial remain at a.biveinis@newsec.lt
grow as well. With an increasing num- 6.75 and 7.75 per cent, respectively.
Photo: Shutterstock
24NEWSEC PROPERTY OUTLOOK • SPRING 2019 THE ESTONIAN PROPERTY MARKET ●
»Estonia’s strong growth and technological
advancement continues to be attractive to
international investors«
Interesting occurrences on the Estonian property market in 2018:
FAVOURABLE ECONOMIC CONDITIONS central area of Tallinn, near the
Estonia‘s strong growth and tech- 5% 10 %
harbour passenger terminals. It is
nological advancement continues expected to be completed in 2019.
to be attractive to international The Porto Franco premises include
investors. The country has the a shopping centre, office space
highest FDI inflow as a percentage UNEMPLOYMENT RATE and CityBox hotel. The total GBA
Lowest in the region
of GDP out of the three Baltic coun- of the project is going to be around
tries; this remains at around 5 per 150,000 sqm. The value of the pro-
cent. The unemployment rate is also ject is more than EUR 150 million.
the lowest in the region, at around 5
per cent. Problems that the country
may face in the future are similar to GROWING TALLINN HOTEL MARKET
those of its neighboring countries, In Tallinn, increasing tourist flows
as increasing wages and cost of 150,000 SQM attract international hotel brands
Total GBA of the
debt could affect investment activity Porto Franco project
and developers. Recently, the
as well as yield compression. French hotel chain AccorHotels
Group announced that it is going to
invest over EUR 12 million into build-
AN INNOVATIVE SHOPPING CENTRE OPENS ing a new hotel in the Tallinn city
The T1 shopping centre was opened 10 % centre. The hotel, with 190 guest
towards the end of 2018, adding ap- rooms, will be located at Juhkentali
proximately 55,000 sqm of GLA to OFFICE STOCK st 22. Construction work is currently
Tallinn‘s retail stock. The four-floor will increase by 10 per cent in progress. The hotel is going to
in the coming years
building is located at the edge of open in spring 2019, and will be
Lasnamäe, the largest city district operated under the AccorHotels Ibis
in Tallinn. Existing retail players are brand. It is forecast that the number
choosing to innovate owing to in- Tallinn. In the CBD, the “Skyon” of hotels in the coming years will
creasing competition on the Tallinn 26 floor high-rise office building continue to grow, as Tallinn remains
retail market. This includes adding construction will begin in the first the main hub in the country.
cinemas, bowling alleys, fitness quarter of 2019. This class A build-
centres, kids’ centres and a larger ing will be constructed according to
variety of restaurants, among other the LEED Gold standard, with a GLA
things. of 8,200 sqm. In total, it is expected
that in the coming years, the office
stock will increase by more than 10
CHANGING CITY SKYSCAPE per cent.
Two office buildings were complet-
ed in Tallinn in the second half of
2018. The larger of the two was a NEW DEVELOPMENT BY THE HARBOUR
new addition to the Technopolis The multifunctional complex Porto
Ülemiste complex, with a GLA of Franco is currently under construc-
16,500 sqm, in the outskirts of tion. The building is situated in the
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