Property is always a local business, but this is particularly true in the Nordics, where local knowledge and a presence on the ground are crucial to investment success, panellists agreed at PropertyEU's Nordics Investment Briefing, which was held in London this week.
‘The market is small and relationship-driven and it is essential to have a good reputation and people on the ground,’ said Rikke Lykke, managing director of Patrizia Nordics. ‘A lot happens under the radar: many opportunities are only offered to a select group of people in what are virtually off-market deals. We are a foreign investor, but we are regarded as local.’
Patrizia, a German company, has 35 local staff across the Nordics who speak the local languages, meet people all the time and have their ear to the ground. This strategy has worked, she said: ‘We managed to get deals even when we did not offer the best price because we are well known and we could guarantee transaction security, which is crucial in this market.’
Stephan Bottger, director, transaction international at Corpus Sireo International, agreed: ‘It is difficult to break into the Nordics markets, but if you want to succeed you have to deploy the whole range of strategies, and above all you need to build good relationships and acquire local knowledge.’
Click here for video highlights from the briefing
Good financing opportunities
Good relationships and a presence on the ground can also help in securing financing, which is another positive for the Nordics both in terms of availability and cost.
‘Availability of finance is pretty good in the Nordics,’ said Pontus Sundin, chief representative Nordics at Helaba. ‘Because we are at a late stage of the cycle, the capital markets have become more cautious, and opportunistic investors may have a tougher time than they used to, but the financing environment is still good.’
Banks have become more cautious, said Andrew Smith, partner at Catella: ‘Swedish banks, for example, have learnt from past mistakes are do not want an extra layer of debt, so they are reluctant to have mezzanine finance.’ Traditionally leverage has always been ‘reasonable’ in the Nordics, said Sundin.
‘Capital is literally pouring across the borders, trying to find a home,’ he said. Part of the reason is that the four countries are seen as safe havens in troubled times.
‘The Nordics is even more of a safe haven than people realise, because of the combination of stability, predictability and transparency with a real entrepreneurial spirit and positive trends like urbanisation,’ said Lykke. ‘There is no doubt that the Nordics will continue to be interesting and we will see more investment coming in.’
