Colliers Nordic Real Estate H1 2014

www.colliers.com
Nordic Real Estate Review
H1 2014

Nordic overview
%
Denmark Sweden Norway Finland EU (28 countries)
-10
-8
-6
-4
-2
0
2
4
6
8
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
80
100
120
140
160
180
200
220
Index (Index EU =100)
Denmark Sweden Norway Finland
Economic growth
GDP per capita
Unemployment
Source: Eurostat
2013 and 2014 figures are estimates.
Source: Eurostat
Source: Eurostat
0
2
4
6
8
10
12
%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Denmark Sweden Norway Finland EU (28 countries)
p. 2 | Colliers International
Nordic Real Estate Review | H1 2014
ECONOMY
Denmark, Finland, Norway and Sweden are generally perceived as safe economies, and all four
countries have been top-rated among the leading major credit rating agencies such as Standard &
Poor’s and Fitch and Moody’s.
The GDP growth rates in Denmark, Norway and Sweden are expected to be modest, but positive
for 2013, whereas in Finland the growth rate for 2013 is estimated to be just below zero. The
modest growth is expected to continue in 2014 and 2015, a bit higher for Sweden and Norway than
for Denmark and Finland. Especially for Denmark and Finland, the GDP is very dependent on exports
and consequently on the economic activity in especially the EU, but also in other parts of the world.
All four countries are wealthy with GDP per capita well above the EU average. Norway is outstanding
with a GDP per capita of approx. index 190, while the other Nordic countries are between 115-125,
with Finland somewhat lower than Sweden and Denmark.
The four countries have welfare systems with large public sectors, including public nurseries,
kindergartens, educational institutions and health care systems. The financing of these systems
requires quite high tax levels compared to most other EU countries. Also public spending to social
transfers is high.
Except for Norway, unemployment has increased substantially in all countries since the global
financial crisis in 2008, but in Denmark, which has experienced the steepest increase, the level is
decreasing again. Still, all four countries have unemployment levels well below the EU level.
While the Danish krone is pegged to the euro, both the Swedish krona and the Norwegian krone
are floating. The Swedish krona and the Norwegian krone have gained in strength, both compared
to the US dollar and the euro since 2008, but during 2013 the Norwegian krone has weakened
considerably. It is, however, forecasted that the Norwegian krone will strengthen again in 2014.
Finland has used the euro since 2002.
The interest rates – exemplified by 10-year government bonds – have decreased substantially since
2008 in all four countries. Also before that, the interest rates fell, but there was a minor increase
in 2005-2007. However, in the last year the interest rate for 10-year government bonds has
increased, while the short-term interest rates are still low.
THE PROPERTY MARKET
The Nordic countries are popular among international investors, because the economies and property
markets are stable.
In all four countries investors are facing challenges when it comes to financing. The access to
financing seems to be most limited in Denmark, where a lot of the small and medium-sized banks
are stopped by a rule of maximum 25 % exposure to the property sector. On the other hand, Denmark
has a special mortgage system which gives access to quite cheap financing, implying a historically
high yield gap, as long as the buyer has access to financing. Access to mortgage funding requires
an investor with a very sound financial position.
The total amount of transactions have decreased slightly in Sweden, Norway and Denmark in 2013,
while it has increased in Finland, which had a very active second half of 2013. The institutional
investors dominate in all countries, and they focus on prime properties. It is, however, expected

Source: Eurostat
Exchange rates against Euro for
Danish Krone, Swedish Krona and
Norwegian Krone
6
7
8
9
10
11
12
Danish kr. Swedish kr. Norwegian kr.
Exchange rate (against euro)
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Prime Yield for logistics
%
4
2009 2010 2011 2012 2013
5
6
7
8
9
Copenhagen Stockholm Oslo Helsinki
Source: Colliers International
Prime Yield for office
%
4
2009 2010 2011 2012 2013
5
6
7
8
9
Prime Yield for retail
%
4
2010 2011 2012 2013
5
6
7
8
9
Source: Eurostat and Norges Bank
Interest rates
10-year government bonds
0
1
2
3
4
5
6
%
2003 2004 2005 2006 2007 2008 2009 2010 20132011
Denmark Sweden Norway Finland
Colliers International | p. 3
that secondary assets will be in more demand, as the supply of prime assets is limited and investors
are becoming less risk averse.
The residential sector in the Nordic countries is very popular among investors, with the one
exception that the Norwegian investors hold their breath, while the owner-occupied market has
experienced decreasing prices for the first time since 2008. This gives rise to uncertainty in the
minds of the investors who have been very keen on this sector since 2010. In Denmark the housing
prices decreased quite a lot as early as 2008, while in Sweden and Finland only minor adjustments
of the prices have taken place.
Sweden continues to be the most transparent market, which is often first choice for cross-border
investors, but the number of foreign investors in the other Nordic countries is increasing. Norway
is still dominated by local investors, mainly due to the abundance of liquidity from oil, but increasing
activity from foreign investors is expected, as the interest from foreign investors has increased.
The prime yields have hardly been changed during the latter six months. The only exception is
Oslo, where the prime yield for office and retail has decreased slightly.
In a longer time perspective, the prime yields for all sectors have decreased since 2009 in all the
Nordic capitals. Exceptions are Copenhagen, where most yields have been stable, and Oslo which
has seen increases in the yield for prime retail, but as described above, this yield is now decreasing
again.

Denmark
Capital Copenhagen
Population (2013) 5.60m
Number of employees (Q3 2013) 2.64m
Denmark
Economy
It is expected that the growth in 2013 will be only approx. 0.5 %. Most of the economic analyses
suggest a growth of approx. 1.5 % a year in 2014 and 2015. The years since the financial crisis
have been characterised by very moderate growth rather than high growth, which we have seen
after some of the previous economic recessions.
A major reason for the growth being so relatively modest is that the growth in private consumption
has been rather limited despite tax cuts, low inflation and higher consumer confidence.
Inflation has been at a record low level in 2013, partly due to low wage pressures, tax cuts and a
decline in prices of energy. At a level of 0.8 %, these price increases are the lowest since 1953. It
is expected that inflation will rise again in 2014.
The housing market shows very modest growth, which is distributed very unevenly geographically
with increases in the prices of owner-occupied apartments in the large cities and a decline or
stagnation of the house prices in many parts of Denmark. The labour market is improving with an
increase in employment and a drop in the seasonally adjusted gross unemployment. Exports are
healthy, which has helped drive the economic growth that we, in spite of everything, have seen
since 2008.
Investment
There is strong investor demand for residential rental properties. The segment is popular, among
others, due to low vacancy rates, expected low risk, ready financing, etc. Demand is strongest in
the large cities, where the population is growing faster than in Denmark as a whole. It is also in
these areas it is easiest to obtain financing.
The investor group demanding residential properties is very heterogeneous. The foreign investors
and the Danish institutional investors typically buy large properties, portfolios and projects mostly
in the large cities. Small property companies and private investors also buy residential properties,
but it is often small properties in a wide variety of Danish cities.
Retail properties, for example in high streets, are very popular among investors. There have been
a number of transactions in central Copenhagen within the latter year. The investors are also
demanding office properties and logistics properties on prime locations, but the supply is limited,
which limits the number of transactions.
Investment demand for convenience stores providing good and stable yields is still strong.
In general, all processes in the transaction market are still very long and can drag on and possibly
fall apart late in the process, for example due to difficulties in obtaining financing.
Office
The office vacancy rate has increased to 10.2 % nationally, after having been between 9 and 10 %
the last two years.
The small office premises are let out slightly faster than the large premises. The large companies
still seem to wait for safer times, before they decide to find new premises. However, the number
of large vacant premises has increased in Copenhagen and the northern part of Zealand, which
may reflect that some companies now start the relocation process and consequently offer their
former premises for sale or to let.
It is still a tenant’s market in the sense that the landlords must be prepared to negotiate with the
tenants on all terms, including fitting up, “trappeleje” (step change – during the term of a tenancy
Source: Eurostat
Examples of recent transactions
> Q4 2013: Two Danish pension funds, ATP
Ejendomme and Pensions Danmark, acquired the
property of approx. 58,000 sqm, housing the
well-renowned Danish department store Magasin.
Q4 2013: Finansiel Stabilitet sold a portfolio of
seven properties to Swedish Niam for DKK 850m.
Finansiel Stabilitet was established in October
2008 as part of an agreement between the
Danish State and the Danish banking sector on a
scheme to secure financial stability.
Q4 2013: NREP acquired retail properties for
approx. DKK 800m, including the shopping
centres Holte Midtpunkt and Frihedens
Butikscenter in the outskirts of Copenhagen from
Dades and the shopping centre Veri Centret in
Aarhus from a Danish public housing body.
Q4 2013; Jeudan sold three properties in central
Copenhagen for DKK 288m to Standard Life
Investment.
Please note that the yield in the transactions may differ
from the yields stated in the market barometer, since the
characteristics of the properties may differ from the standard.

Market barometer
Office
City Market
rent*
Yield Vacancy
rate
Copenhagen 241 5.25 % 10.1 %
Aarhus 174 5.50 % 13.0 %
Odense 127 6.00 % 10.6 %
Aalborg 134 5.75 % 6.3 %
Vejle 141 6.25 % 10.9 %
Esbjerg 147 6.25 % 6.2 %
* Euro per sqm a year
Source: Colliers International and Oline-ED Statistikken
increases by specific amounts may be agreed, becoming effective on specific dates), rent-free
periods, etc. However, the basic rent is usually maintained at a fairly stable level – possibly because
the landlords are increasingly aware of and realistic about what rent levels that are actually realistic.
Retail
The retail vacancy rate was 6.4 % as at 1 January 2014, which corresponds to the average of the
last one and a half years. Many factors are at play in the retail industry these years – the limited
consumer spending, the booming e-commerce market, the momentum of the strong retail chains,
etc.
Consumer confidence has shown great promise in the autumn, but did, however, decline to 2.9 in
December. The indicator is still positive, but not as high as in the months before. Retail sales are
relatively stable with small fluctuations.
The clear distinction between the primary and the secondary markets continues. In the primary
markets, there is good demand from the big chains, almost no vacancies and in some areas rising
market rents and more assignments. This applies, for example, to the best locations in Copenhagen
such as Strøget (pedestrian shopping area). On the other hand, on the secondary locations the
vacancy rate is high, and the market rent is under pressure. This provides excellent opportunities
for entrepreneurs to set up businesses relatively cheaply.
Industrial and logistics
The industrial and logistics vacancy rate was 4.0 % as at 1 January. The vacancy rate in this segment
has been relatively stable since mid-2010.
Many of the vacant properties are outdated, including of a limited size and not in a good and
substantial repair and condition. There is some demand for such properties, for example from skilled
craftsmen or small manufacturing entities. If a company can use an old property located in a
peripheral area, then it is possible to acquire such property quite cheaply. A number of investors
also buy such properties – in particular the large properties – at relatively high yields.
Commercial properties located in peri-urban areas – especially in large cities – can sometimes be
converted into other uses such as housing or offices. This is not a new option, but it is very relevant
due to the relatively high vacancy rates and the population growth in the large cities.
The difference between the market rent of newly built and existing properties is substantial. The
new properties can be customised to the needs of the individual business, and the operating costs
can be minimised.
In general, the market for industrial space remains the tenant’s market. The market rent is in some
areas under pressure – and elsewhere, the tenants can negotiate a number of favourable terms.
Market barometer
Retail
City Market
rent*
Yield Vacancy
rate
Copenhagen 3,083 4.25 % 2.9 %
Aarhus 737 4.50 % 6.1 %
Odense 737 5.25 % 5.5 %
Aalborg 603 5.50 % 9.7 %
Vejle 442 5.50 % 6.0 %
Esbjerg 415 5.50 % 5.8 %
Market barometer
INDUSTRIAL AND LOGISTICS
City Market
rent*
Yield Vacancy
rate
Copenhagen 54 7.50 % 6.0 %
Aarhus 47 7.50 % 5.1 %
Odense 37 8.50 % 4.4 %
Aalborg 40 7.75 % 2.3 %
Vejle 40 7.50 % 4.7 %
Esbjerg 40 7.75 % 4.2 %
EUR/DKK 7.46
Exchange rate, January 2014

Norway
Capital Oslo
Population 5.05m
Source: Eurostat
Q4 2013: Ava Eiendom acquired the 26,500 sqm
office development «Stasjonskvartalene» in Asker
for NOK 466m from Aberdeen.
Q4 2013: Rema Eiendom sold the 17,000 sqm
Elgseter gate 55-57 in Trondheim to KLP for
NOK 452m.
Q1 2014: Nordea sold the office development
Hoffsveien 70 b-c at Skøyen for approx. NOK
400m to a syndicate.
Q1 2014: Bouwfonds acquired the parking facility
at Bankplassen in a sale and leaseback deal with
Q-Park for approx. NOK 210m.
Norway
Economy
The Norwegian economy is currently quite sluggish compared to recent years, and a broad consensus
suggests year-on-year GDP growth of 2 % in 2014. For one, the residential market is currently
showing weakness for the first time in 5 years. Forecasts on the further development in this segment
vary substantially, and following the progress here will be interesting in 2014. On the other hand,
oil production increased for the first time in 15 years in 2013, a trend that is expected to continue
in 2014, as the Norwegian Sovereign Wealth Fund (NOK 5,060bn at present) continues to grow.
As the economy is currently experiencing difficulties keeping up with the growth of recent years,
it is likely that this will allow the Government to adapt a policy of fiscal easing in 2014 and to spend
more money from the Wealth Fund, which might contribute to increased economic growth and
activity going forward. The NOK has weakened considerably compared to other key currencies in
2013 and appears to be undervalued. This has, however, caused an upturn in the Norwegian export
sector, excluding petroleum. It is forecasted that the NOK will strengthen compared to other key
currencies in 2014, even though the experts struggle to identify the reason for the faltering NOK
as of late.
Investment
The Norwegian transaction volume decreased somewhat in 2013 compared to 2012, as the transaction
total went down from NOK 52bn to NOK 40bn. The number of transactions conducted in excess
of NOK 50m was quite similar to the previous year, but we did not see the same level of especially
large portfolio transactions in 2013. The largest transaction was once again found in the retail
sector, as Storebrand chose to sell 7 shopping centres, 3 to Thon Eiendom and 4 to Sector Holding,
respectively. The current outlook for the transaction year 2014 is quite similar to what we experienced
in 2013. Financial institutions gradually became more approachable in 2013, and the general feeling
is that banks are considerably more willing to provide finance going into 2014 compared to 2013.
At present, our forecast is that the transaction volume this year will be NOK 43bn, a slight increase
on 2013, largely based on a more investment friendly environment in the transaction market.
Furthermore, it should be noted that the interest in Norway among foreign investors is increasing,
and we are expecting increased activity from these investors in the Norwegian market.
Office
The office market is currently performing quite well with increasing rental prices in most sectors
as well as decreasing vacancy rates in several areas and the Greater Oslo area as a whole. The
current vacancy rate from our most recent vacancy survey of October 2013 showed an office
vacancy rate in the Greater Oslo area of 6.70 %, which is a decrease of more than 0.2 % compared
to the previous survey. The pipeline of new office development includes very few scheduled
completions both in terms of actual completions and in terms of available square meters. The
outlook for 2014 is that there will be roughly 70,000 sqm new development to hit the market, which
is approx. a quarter of the level seen in 2012 and a third of what we had in 2013. This is a contributing
factor to a continued rise in office rents and a decline in vacancy rates this year. Employment is
forecasted to remain at a high level, while the unemployment rate is still at a marginal level of 3.3 %,
which is among the very lowest in Europe. The prime yield estimate is currently 5.2 %.
Retail
The retail market in Norway has performed quite well during the last couple of years with increasing
rents and minimal vacancy in key areas such as the major shopping centres and high streets,
including Karl Johans gate. Prime premises in this street are currently let at prices up to NOK
20,000 per sqm and are also by far the most expensive in Norway. Adjacent streets such as Øvre
and Nedre Slottsgate and Akersgata may achieve rent prices of approx. NOK 11-13,000 per sqm.
The prime yield estimate is currently 5.5 %.

Although we have experienced a lower growth rate in the Norwegian economy compared to the
previous years, Norway is still experiencing a higher growth rate compared to most countries in
Europe, which makes it an attractive country to establish retail units. In the past year brands such
as Marc by Marc Jacobs, Gucci, Hamley’s, Starbucks and Bottega Veneta have established themselves
in Norway. However, we are currently noticing consolidation among retailers and a lower rate of
establishment. We believe that several changes have already started in the market here in 2014
and that there will be an increase in vacant retail units from the second quarter of 2014.
The transaction market in the industrial sector has been sluggish at best for the last couple of years
with a lack of willing finance providers and also a scarcity of solid projects most frequently discussed
as the prime factors behind this development. However, with the easier terms of financial backers
and some interesting developments in the pipeline, we believe that this will change in 2014.
We see that there are similarities between the transaction and letting markets in the industrial
sector, as the latter market also has a fairly low activity, especially as for large lettings. We have
seen some activity in Fugleåsen (Q4 2013) in the municipality of Ski outside of Oslo, among others,
with Tollpost Glove signing a 15-year lease agreement of 12,500 sqm. Colliers is aware of specific
interest from several players in this area as well as adjacent areas which might materialise rather
quickly going forward.
Groruddalen in the eastern part of Oslo is still achieving the highest rent in areas such as Alnabru
and Furuseth. Prime rent in the industrial sector is NOK 1,150 per sqm, and the prime yield for
industrial property is currently 6.5 %.
City Market
rent*
Yield Vacancy
rate
Oslo 2,383 5.50 % 5.0 %
Market barometer
Retail
City Market
rent*
Yield Vacancy
rate
Oslo 477 5.2 % 6.7 %
Market barometer
Office
City Market
rent*
Yield Vacancy
rate
Oslo 143 6.50 % 10.0 %
Market barometer
EUR/NOK 8.39
Exchange rate, january 2014

Sweden
Economy
According to most forecasts, Sweden will have a GDP growth of 2.4 % in 2014 and 2.9 % in 2015.
This can be compared to forecasts for the Eurozone with a growth of 0.9 % in 2014 and 1.2 % in
2015. The unemployment rate will remain low in Sweden (7.5 %) compared to the Eurozone (12.1%)
or the EU (10.9 %). The election in September 2014 may have an impact on decisions affecting the
economy.
Swedish companies will, according to stock market specialists, show good profits in their 2013
annual reports. This positive view spurred the stock market to reach an all-time high in mid-January
2014.
After a long period of hesitation, the Swedish National Bank decided in December 2013 to cut the
repo rate to 0.75 %. This implies that the 3-month STIBOR rate quotes below 1 %. As lenders´
margins have continued to ease, major property companies can revise their budgets for short-term
loans down to 2-3 % and expected loan-to-values up to 60-70%.
One of few uncertainties of foreign investors as to investments in Sweden is the exchange rate.
The SEK/EUR has over the past 12 months oscillated between 8.34 and 8.95, which can be compared
to an average of 9.4 in 2000-2010. However, as long as GDP growth in the Eurozone continues to
lag behind Swedish figures, the SEK will remain strong.
Investment
In 2013, the total transaction volume amounted to approx. SEK 97bn compared to just over SEK
105bn in 2012. Despite a slight decrease in 2013, investor interest is high, and the access to financing
is good. The decrease is mainly due to the lack of investment vehicles in the market.
Like previous years, Stockholm accounted for just over 40 % of the transaction volume in 2013,
while Gothenburg, the second largest city, only accounted for approx. 11 %. University cities have
become more attractive and accounted for almost 20 % of the total transaction volume compared
to 14 % in 2012.
The investments have been more evenly distributed between the different segments in 2013
compared to the two previous years, when offices alone accounted for over 40 %. The residential
segment was the most prominent segment in 2013 with nearly 30 %, followed by the office segment
with 27 %. The industrial and logistics segment accounted for 15 % and the retail segment for 14 %.
In university cities, the residential segment accounted for more than 50 % of the investments, making
the university cities the dominant residential market, while the majority of the office transactions
took place in Stockholm.
Foreign investors only invested SEK 10bn in the Swedish property market in 2013, mainly in the
Stockholm region, which is a 50 % decrease compared to 2012. This is not due to a lack of interest,
but rather the strong Swedish krona, which has made it difficult for foreign investors to compete
with domestic investors, as well as a lack of core office products.
Core properties in good locations will continue to attract investors in 2014. However, transactions
with properties in secondary locations and properties with a high risk profile will also increase. This
is mainly due to a reduced gap between the sellers’ and the buyers’ price expectations combined with
improved financing. Furthermore, investors are more optimistic and are willing to take higher risks.
sweden
Capital Stockholm
Population 9.56m
Source: Eurostat
Q3 2013: Kungsleden acquired GE Capital Real
Estate’s portfolio of 84 properties for SEK 5.5bn
(net yield of 6.5-7.0 %).
Q4 2013: Starwood Capital Group acquired seven
retail centres from KF Fastigheter for SEK 3.9bn
(net yield of 5.75-6.25 %).
Q1 2014: Trygg-Hansa’s headquarters in
Stockholm was sold to Areim for SEK 2-2.3bn.
Colliers was the sale adviser.
Q1 2014: Carlyle and Klövern signed a LoI to
acquire the Carlyles Globen City portfolio for SEK
3.5bn.

City Market
rent*
Yield Vacancy
rate
Stockholm 532 4.75 % 4.0 %
Gothenburg 328 5.25 % 3.0 %
Malmö 294 5.75 % 7.0 %
Market barometer
Office
Office
The office market will remain stable in the metropolitan regions as far as rent levels are concerned.
Vacancy rates will remain low in central parts of the cities with high demand for modern office
space. Although large tenants in the central parts of Stockholm, such as Swedbank and Nordea,
are about to relocate, the rent levels have and will most likely remain unaffected. Many property
owners consider this to be an opportunity to modernise and refurbish their buildings, while some
choose to convert their offices into other uses such as hotels.
Outside the congestion tax zone in Stockholm, there is a large supply of office space, both existing
vacancies and newly constructed premises. Communication continues to play a significant role for
the property owner’s ability to fill up vacancies, and we expect that the extension of the new light
rail will enhance the attractiveness of the affected areas, i.e. parts of Bromma and Solna. Furthermore,
development areas are becoming increasingly popular.
We estimate the prime rent at approx. SEK 4,800 per sqm a year in Stockholm CBD and approx.
2,900 SEK per sqm a year in Gothenburg CBD. Rents may differ within CBD depending on sub-
locations, the property and the effectiveness of the premises.
Retail
A stable economic climate in combination with optimism defines the outlook for the Swedish retail
market in 2014. Consumers’ confidence in the economy is optimistic, and the forecast for 2014 and
2015 is an increase in consumption and GDP growth, which will have an impact on the consumption
in all segments and especially durable goods. The stock of retail space continues to increase, and
international brands look upon Sweden as an interesting market with investment and development
opportunities.
The importance of location continues to grow, shifting the focus of demand to small premises on
prime locations. The e-commerce continues to take market shares and expand into new segments.
When adapting to the new climate, retailers are forced to see the e-commerce as a supplement to
their existing business, slowly turning the shops into showrooms. Prime locations continue to have
low vacancies and stable rental values, while the attractiveness of retail boxes in remote locations
drop both from the consumers’ and retailers’ perspective.
The take-up for build-to-suit projects for 2012 and 2013 was the highest measured in sqm ever
(741,450 sqm), divided on 34 logistics buildings. All of them exceed 10,000 sqm and fulfil the
technical requirements requested by the end-user market. 35 % of this stock was built by the end
users, and the other 65 % was leased on long leases, built by developers. However, the overall
take-up is fairly stable over time. 63 logistics properties were erected in 2009-2013 compared to
57 properties in 2004-2008.
Still, there is a lack of supply of modern logistics premises, mainly due to the fact that almost no
projects are built on speculative basis. The domestic developer Bockasjö has erected a property
of a total of 20,000 sqm in Stockholm on a speculative basis, and in 2014 the international well-
known Prologis will commence a project in Gothenburg, consisting of 15,000 sqm, which also will
be built on speculative basis. The current mismatch between supply and demand for modern space
makes the rents higher for existing buildings close to large cities. The reason is that tenants are
willing to pay for short leases and quick access, which only can be obtained in existing, often old,
buildings.
In 2013, the investors within the logistics market were quite active, which made turnover pass SEK
7bn, with Stockholm and Gothenburg as the largest sub-markets.
City Market
rent*
Yield Vacancy
rate
Stockholm 1,755 5.00 % 2.0 %
Gothenburg 849 5.00 % 3.0 %
Malmö 679 5.75 % 5.0 %
Market barometer
Retail
City Market
rent*
Yield Vacancy
rate
Stockholm 63 6.50 % 1.0 %
Gothenburg 63 6.50 % 1.0 %
Malmö 61 6.50 % 1.0 %
Market barometer
EUR/SEK 8.83
Exchange rate, January 2014

Finland
Economy
Finnish GDP declined in the first half of 2013 and returned to a moderate growth path in the latter
half of the year. Still, Finnish GDP declined by 1.0 % in 2013 (forecast). The modest growth will
continue in 2014 and 2015, indicating annual GDP growth of 0.6 % and 1.7 %, respectively.
The Finnish exports will start to increase in 2014, as the global investments are forecasted to start
growing. The increase is forecasted to accelerate in 2015. The same pattern applies to domestic
industrial investments. However, private consumption will not start growing until 2015 due to
consumer uncertainty and an unstable employment market.
The unemployment rate is currently approx. 8 % and is forecasted to remain unchanged in 2014.
The potential growth of unemployment due to sluggish GDP growth will be offset by a decreasing
labour force. The accelerating growth in the economy in 2015 is forecasted to decrease the
unemployment figures by approx. 0.5 %.
Finland’s national debt will continue to rise, and no turnaround in debt-to-GDP ratio is expected
before 2016. The national debt will rise to 64.2 % of GDP by 2015. Inflation was approx. 2.2 % in
2013 and will decrease during the next two years, being approx. 1.5 % in 2014 and 2015.
Investment
The second half of 2013 was very active within property transactions in Finland. The total transaction
volume for 2013 was EUR 2.4bn, showing a fair growth on the 2012 figure of EUR 2.0bn. The
transactions are focused on prime properties in the Helsinki metropolitan area (HMA), which has
been the case since the 2008 credit crunch. The price gap between buyers and sellers still prevails
as for secondary assets. A few transactions of distressed assets were recorded in 2013.
The transaction volume increased significantly in the residential and health care segments, where
several residential apartment and health care/nursing home property portfolios were transacted.
The office segment remained the most traded asset class, while the proportion of logistics property
transactions continued to decrease.
The most active parties in the investment market are Finnish pension funds and foreign funds,
especially German and Swedish property funds. Two new foreign investors, Hemsö and Redito,
entered the Finnish market in 2013. The foreign investors completed approx. 30 % of the transactions.
The most active foreign investor was Union Investment Real Estate.
Office
The amount of vacant office space in the HMA has continued to increase in 2013. The current
vacancy rate is approx. 11.50 %. There are currently over 1 million sqm vacant space in the HMA.
Still, the office development has been active in the past years. In 2012, some 150,000 sqm new
offices were completed. The pace, however, has slowed down, and in 2013 and 2014 less than
100,000 sqm new space will be completed annually.
The office market is highly diverged, as some prime office areas are attracting tenants with good
rent levels, while some secondary areas are suffering from high vacancies. In some cases, especially
in Helsinki inner city area, vacant office spaces are being converted into hotel and residential use.
The rent level in Helsinki CBD has been rising steadily in the last 3 years, currently being EUR 31
per sqm a month. However, notably higher rents are being paid for tailor-made premises in CBD
and the new Töölönlahti office area adjacent to the CBD. Other prime office areas have been able
to maintain their rent levels, but downward pressure exists in many sub-markets.
The yield level in Helsinki CBD has remained at 5.25 %, and no significant changes are expected.
finland
Capital Helsinki
Population (2012) 5.43m
Source: Eurostat
Q4 2013: Allianz Real Estate acquired 50 % of
the 35,000 sqm Kamppi shopping centre from
Cornerstone Real Estate Advisers. The
acquisition price was not disclosed.
Q4 2013: Technopolis Plc acquired Falcon
Business Park in Espoo from Aberdeen Property
Nordic Fund 1. The transaction price for the
26,000 sqm business park was EUR 77.5m,
reflecting an initial yield of 7.4 %.
Q4 2013: UPM Kymmene and Union Investment
Real Estate completed a sale and leaseback
transaction for UPM’s 12,400 sqm new
headquarters in Helsinki. The transaction value
was EUR 74m.
Q4 2013: HOK-Elanto and Redito completed a
sale and leaseback transaction for 4 retail
properties in the Helsinki area, comprising
approx. 40,000 sqm premises. The transaction
price was not disclosed.

City Market
rent*
Yield Vacancy
rate
Helsinki 372 5.25 % 11.5 %
Tampere 192 6.75 % 7.5 %
Turku 192 7.00 % 7.5 %
Oulu 180 7.00 % 5.5 %
Market barometer
Office
Retail
Despite the vague economic outlook, consumer confidence
started to pick up in the latter half of 2013. However, the
figures are still low compared to the long-term average,
and due to increased unemployment and tax increases the
real disposable income of households will not increase
until 2015. Some retailers performed slightly better in the
fourth quarter of 2013 compared to the fourth quarter of
2012, but, in general, the retail sales have been decreasing
a little compared to 2012.
In 2013, two major shopping centre development projects
were completed in the HMA, as the 46,500 sqm “Kaari”
was opened and the refurbishment of “City-Center” in the
CBD was completed. However, the constant lack of prime
high-street premises prevails, as the demand for such
premises is strong. New international retail brands are
entering the market and looking for such premises, including
international brands such as Starbucks and Burger King
who established their first branches in Finland in 2013.
The development of rent levels diverges greatly
geographically. In Helsinki, the rent levels have been fairly
stable, decreasing marginally. In the other major cities
the rent levels have declined to some extent, while the
small cities have seen a significant decline.
Prime yield for retail premises is currently approx. 5.25 %.
The logistics property market in the HMA has been fairly
stable in the past years. Only some 10,000 sqm new
logistics space was completed in 2013, and virtually none
is under construction in the HMA. No speculative projects
are started – all new properties are built directly to end
users. The vacancy rate has remained at 5 %. Changes
in the market might be seen in the future, since there are
major development plans in surrounding municipalities
of the HMA. There is an ongoing 200,000 sqm development
project in Sipoo, of which 75,000 sqm are estimated to
be completed in 2016. Moreover, another 200,000 sqm
are planned to be developed in Kerava, although the
timetable of the construction remains open.
Rent level has remained stable. The end-user demand
focuses on good quality and modern premises with
sufficient floor-to-ceiling height and loading docks.
Investment demand is focused on modern and modifiable
properties within HMA, preferably along ring road 3 and
in the airport area. There is also increasing emphasis on
the lease maturity, as some investors are seeking up to
20-year lease commitments. The yield level for such
properties has remained at 7.5 % in the Helsinki area.
City Market
rent*
Yield Vacancy
rate
Helsinki 1,860 5.25 % 3.0 %
Tampere 900 6.75 % 3.5 %
Turku 900 6.50 % 3.5 %
Oulu 960 7.00 % 2.0 %
Market barometer
Retail
City Market
rent*
Yield Vacancy
rate
Helsinki 120 7.50 % 5.0 %
Tampere 96 8.50 % 3.0 %
Turku 108 8.75 % 5.0 %
Oulu 96 9.00 % 2.0 %
Market barometer
The information contained herein has been
obtained from sources deemed reliable.
While every reasonable effort has been
made to ensure its accuracy, we cannot
guarantee it. No responsibility is assumed
for any inaccuracies. Readers are
encouraged to consult their professional
advisers prior to acting on any of the
material contained in this report.
Denmark
Codanhus, Gl. Kongevej 60
DK-1850 Frederiksberg C
TEL +45 70 23 00 20
www.colliers.dk
Jeppe Schønfeld
CEO · Partner
TEL +45 40 26 34 27
Email jsc@colliers.dk
Norway
Hegdehaugsveien 31
N-0352 Oslo
TEL +47 22 06 62 80
www.colliers.no
Thor Bjørdal
CEO · Partner
TEL +47 40 20 17 00
Email thor@colliers.no
Sweden
Ringvägen 100
S-118 60 Stockholm
TEL +46 8 - 402 36 70
www.colliers.se
Dan Törnsten
Managing Director · Partner
TEL +46 708 -55 75 50
Email dan.tornsten@colliers.com
Finland
Porkkalankatu 20 A
FI-00180 Helsinki
TEL +358 9 8567 7600
www.colliers.fi
Petri Mella
Managing Director
TEL +358 50 539 9170
Email petri.mella@colliers.fi
researcher
Anne Kaag Andersen
Head of Research, PhD
TEL + 45 58 58 38 54
Email aka@colliers.dk

Colliers Nordic Real Estate H1 2014

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