State of the Market 2019 H1

  • The Norwegian economic growth for 2018 was just below 2% and is predicted to be between 2.0% and 2.7% for the coming two years. The oil and gas industry currently leads the economy in growth and new hiring.
  • The Norwegian 10-year interest rates are at about the same level as one year ago, and expectations for further rate hikes have cooled somewhat.
  • The growth in Oslo CBD office rents for 2018 was close to 10% overall. With more supply competition in the fringe office clusters, rents have not changed much outside the CBD, except for Nydalen.
  • Oslo Office vacancy is still declining and will probably be below 5.0% by the end of 2019. The CBD vacancy is now at 3.3% after solid leasing activity throughout 2018.
  • The volume of new office buildings in Oslo will be close to 180,000 in 2020 after a moderate volume of 100,000 for this year. Conversion and demolition of older buildings is expected to recede somewhat.
  • Bergen, Trondheim and Stavanger still experience good leasing markets and slowly rising rents in the CBD. Stable rents and higher vacancy are common in the fringe areas. The local transaction markets have been solid in 2018.
  • The volume in the Norwegian transaction market ended at close to 90 bNOK for 2018, very similar to 2017 but containing a larger number of deals above 1bNOK. The activity is still high, fuelled by borth national and international investors. Norwegian closed-ended funds form the largest group of buyers, measured by volume.
  • Oslo Office prime yield is steady at 3.75%, and fringe yields are also unchanged. We now expect yields to stay at this level throughout the year.
  • The Norwegian retail market is currently seen as uncertain, with many unit shops seeing reduced revenue. The upwards movement in Oslo prime high-street rents seen in the beginning of the year have not been repeated in the general market, and there has been very few new leases signed.
  • The Norwegian hotel market has seen stability and some growth throughout 2018, with a stable RevPAR despite an increase in rooms of close to 3%.
  • The market for Norwegian logistics property is still solid, with stable rents and interest from many national investors. Yields have, as in most other segments, been stable in 2018.
  • The Norwegian residential market had a solid 2018, with stable prices and increased turnover, but the sale of new homes and the construction starts have gone down from 2017.