Interest rates are still at the low end, and bank margins seem to have levelled. Simultaneously, macro economists report that the economic slowdown following a reduced activity in the oil sector has reached a turning point and estimate a significant increase in Norwegian GDP growth in the years to come. Together with its key clients, Wiersholm continuously monitor the market factors determining commercial real estate pricing, and look forward to the second half of 2017, already having a substantial number of transactions in the pipeline over the next months.
As an example of transactions being concluded over the last six months, CBRE Global Investor’s acquisition of the companies owning Karl Johans gate 12 and Kirkegata 32 in Oslo from Partners Group (estimated EV NOK 1.0 billion) is worth mentioning. The asset comprised two mixed-use properties containing high street retail, a city centre hotel and offices. Wiersholm advised the purchaser.
Also, the companies owning Strandveien 4-8 and 10 at Lysaker just outside Oslo city centre were sold by Ferd Eiendom (family business) to Oslo Areal AS (estimated EV NOK 0.92 billion). The main tenant is Lundin Norway, a vital part of the Swedish independent oil and gas company Lundin Petroleum. Wiersholm advised the vendor.
As reported at year end 2016, the commercial real estate transaction market was slightly unbalanced, as the number of available projects was low compared to the amount of equity seeking suitable investment opportunities. However, there has been a decent level of transaction activity so far in 2017, and so we expect this situation to change, and trends do show a more balanced market at the moment.
With interest rates still being low and margins stable and with the expectation of increased rental price levels in the years ahead, we expect both Norwegian and foreign investors to find the market for commercial real estate – especially in respect of properties in desirable locations – to be an attractive one.
Wiersholm’s commercial real estate team is looking forward to another exciting six months.