26. November 2012     Print Print 

Swedish property market continues to deliver stable returns

The IPD Sweden Quarterly Listed Property Market Monitor shows that underlying property returns in the listed sector continue to be stable. The total return from the underlying property assets reached 1.6% in the third quarter, which is marginally below last year’s third quarter of 1.9%. Over the past twelve months to September, total returns reached 8.1% with 5.5% income return and 2.5% capital growth, which compares with a total return of 8.8% for the full year 2011.

Since the introduction of IFRS (International Financial Reporting Standards) in 2005, the underlying properties of listed companies have generated an annual average total return of 9.4%. Return variation has been between 0.7% and 16.3%, as measured over the rolling twelve months. The income return has varied from 5.4% to 6.4%, while capital growth demonstrated significantly higher volatility with an annual average of 3.5%. Given that the rate of inflation over the same period has been very low, property assets have not only generated an attractive total return, but also a real capital growth of almost 2% per year.

Capital growth in the third quarter has slowed, reaching a net SEK 0.5 billion. This represents an increase in value of 0.2%. The spread between the companies varies from around -1% to +1% in Q3 alone.

Erik Nyman, IPD Business Development, Norden says, “So far the sector has fared better than in many international markets. Now domestic economic signals have clearly weakened in the autumn, not least the labour market. The sharp increase in the number of redundancies is an example, and it would be surprising if these signals were not gradually reflected in property returns.”