2020 has been a year of new challenges and uncertainty due to the Covid-19 pandemic. Despite these turbulent times, the Norwegian real estate market has remained relatively stable and strong.
According to the last known reports and statistics, we see a total transaction value that has surpassed NOK 51 billion in 2020, compared to NOK 100 billion in 2019. The project finance facilitators remain more active than ever. Buyers have no difficulty accessing capital and the key policy rate remains at zero percentage points for the time being.
We still see a modest fall in office rents. In the second quarter this year the average office rental price for Oslo fell by 4 % and there is uncertainty regarding the development for the next 12 to 18 months. While there was general demand for properties leased out to the state or public entities already before the pandemic crisis, such properties have now with its predictable and safe cash flow become a very attractive segment in Norway for real estate investors.
The rates for un-leased office space in Oslo and surrounding areas increased by about 1% from January 2020 to the third quarter of the year. Although we see a small decline in the demand for office space, we also see an increased interest in flexible workspaces and different concepts of co-working solutions. The last quarter of 2020, after new national and local restrictions were applied, the trend we saw at the start of the pandemic has continued.
The market forecasts are predicting a lower demand in terms of office square meters than previously with regard to new office leases. Home offices and the growing need for flexibility have in turn led to an increasing interest in properties in the regional cities. If the increase in home-office based work is a lasting trend post and in what scale, remains to be seen. Like most other business sectors we eager to see the result of the ongoing vaccination process, especially regarding its effect on peoples working habits.
We experience high activity and a great demand for SVW’s services in commercial real estate, transaction and project finance. In November we welcomed our new senior associate, Steffen Myrseth, to our team. He has extensive experience in regulatory and property law- matters and represents a positive contribution to our team in these hectic times.
This article is part of a series of articles where the different practice groups in SVW will summarize the most important regulatory happenings in Norway in 2020.