4 January, 2016

Nordic real estate equities outperform in 2015

Nordic real estate equities outperform in 2015.
Powered by strong demand for real estate and low interest rates, Nordic real estate equities had a very strong year in 2015, both in terms of performance and IPO activity.
The Nordic real estate index PREX Nordic gained 18 percent in 2015. This compares to 11 percent for European real estate equities (GPR 250 Property Shares Index Europe) and 0 percent for global real estate equities (GPRS 250 Property Shares Index Global). PREX Nordic has shown substantial gains four years in a row.

Nordic real estate equities have also outperformed the overall Nordic equity market (VINX 30 Nordic equity index), which is up 12 percent in 2015.

PREX is a group of Nordic real estate indices measuring country wise as well as sector wise performance. The index family is published by Pangea Property Partners, a corporate finance and advisory firm focusing on the Nordic property sector. The firm has offices in Stockholm, Oslo and London.

“2015 is another strong year for Nordic real estate equities. Since the beginning of 2000, the real estate sector has increased by almost 12 percent per annum, making it the best long-term performing sector on the Nordic equity market,” said Mikael Söderlundh, Head of Research and Partner at Pangea Property Partners.

Real estate equities performed particularly well in Sweden, which is also the largest market in the Nordics, accounting for 78 percent of the region’s listed real estate market capitalization. PREX Sweden is up 23 percent for 2015, compared to a decline of 1 percent for the general Swedish equity market (OMXS30 index).
PREX Denmark also performed well, with an increase of 41 percent, while PREX Norway and PREX Finland finished just above par.

Sector-wise, real estate equities with diversified property portfolios (PREX Mixed) have outperformed in 2015, increasing by 31 percent. Real estate equities with focus on retail property (PREX Retail) are found at the bottom increasing 5 percent.
As a result of increasing share prices, Nordic real estate equities are now trading well above their net asset values, creating a favourable climate for property related IPOs.
In 2015, two new niche property companies (Pandox, hotels, and D Carnegie & Co, residential) and one developer (Oscar Properties) have been listed on the Nasdaq OMX Nordic main list. Pandox was the biggest Nordic IPO of the year regardless of sector.

A couple of companies have also done large equity issues over the year. Altogether, the main market now includes 31 real estate equities with a combined market capitalization of €39 billion, which is €10 billion higher than year- end 2014. In addition, a dozen new real estate equities have been listed on the alternative list Nasdaq OMX First North.
“The rush for Nordic real estate equities reflects a strong underlying investor demand in general for Nordic real estate. The Nordic transaction markets reached record volumes of €40 billion in 2015, fueled by increasing international interest,” said Bård Bjølgerud, CEO and Partner at Pangea Property Partners.

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