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The Great Wall of Money has been tracking newly raised capital moving across global real estate markets since the onset of the financial crisis in 2009. In this Nordic edition, we focus on capital targeting the Nordics and consider implications for the region. The report relies on same sources and approach adopted in the main report.
This cycle continues to see an extraordinary level of capital targeting real estate. The pace of growth appears to have moderated globally but the Nordics are holding up with yet a high Wall of Money available for the region.
While core real estate strategies remain attractive in the Nordic region, demand outstrips supply. This has driven yields lower and challenges investors to achieve their desired returns. Unable to source core assets, investors are increasingly targeting secondary locations or assets, letting risk, development risk and/or redevelopment projects that create core assets in top markets. The ‘build-to-core’ strategy is expected to achieve higher returns than direct core investments with moderate risk levels.
We expect 2017 to be marked by ongoing competition to place capital and source attractive opportunities.