The Swedish real estate sector remains in a sweet spot
Nordic Credit Rating (NCR) believes the strong operating environment Swedish real estate managers are currently experiencing will continue over the next few years. Strong operational performance, including lower vacancies and increasing rents, in combination with higher property values and lower interest costs, have strengthened the creditworthiness for most real estate managers.
"We believe that an increasing number of issuers in the real estate sector are moving towards 'investment grade' assessments, meaning 'bbb-' and higher", says Michael Andersson, Chief Rating Officer at NCR.
Despite strong operating and financial performance throughout the sector, we do however note that there are challenges ahead, both from a macroeconomic perspective, such as rising interest rates, and at issuer level, including continued growth of e-commerce and an increased focus on environmental, social and governance (ESG) factors.
We believe that the issuer's ability to diversify and extend their funding profiles in combination with adapting to changes in demography, new technology and ESG factors (such as energy efficient properties and green funding), will be differentiating factors between issuers and sub-sectors going forward.
Through a series of articles NCR will present its view of the Nordic real estate markets and analyse the key credit risk drivers in the sector through a series of articles going forward. The first article mainly focused on the Swedish real estate market.
If you have any questions, please contact:
Michael Andersson, Chief Rating Officer, +46 732 32 43 22, michael.andersson@nordiccreditrating.com
Mille O. Fjeldstad, Credit Analyst, +47 99 03 89 16, mille.fjeldstad@nordiccreditrating.com
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