Offices with a high standard, best location, 7 years weighted remaining rental period, market rent and secure tenants.
We assume a seven-year weighted remaining lease period, and therefore estimate that longer leases can be traded even lower.
Offices with ordinary standard, located in one of the office clusters outside the city center, 4-5 years weighted remaining rental period, market rent and ordinary companies as tenants.
Normal yield is meant to reflect an average office property. We have defined it to be an office property with 4–5 years left of the lease contract, an OK location in one of the clusters along Ring 3 with a normal, good standard and ordinary companies as tenants. As with the other yield definitions, we assume that the rent levels are at market rent level.
Number of transactions> NOK 50 million
The number of transactions indicates the number of turnovers with a minimum value of NOK 50 million in the Oslo/Akershus area.
Annual transaction volume measured in NOK billion.
The transaction volume indicates the total value of the properties of the turnovers with a minimum value of NOK 50 million. A minimum of 50% of a property must be traded sold in order for us to register the turnover, and we use base our calculations the value of the share that has been sold.
Office space offered in the market and available within 12 months.
The office vacancy rate in Oslo has been declining marginally in the second half of 2022, now showing a moderate vacancy rate of 4.4 per cent for Oslo, Asker and Bærum. This is down from 5.9 per cent in the first half of 2022. The vacancy rate is low in the central areas, which have also fared well previously. We define vacancy rates as office space that is on the market and available over the course of 12 months.
Our latest vacancy count showed that the office vacancy rate fell by 1.5 percentage points in Oslo, Asker and Bærum. The vacancy count for the first half of 2022 showed that the office vacancy rate fell by 100 points from 2021, and the vacancy rate has thus fallen by 2.5 percentage points over the past year. read more
Our semi-annual vacancy count for the second half of 2022 showed a further decrease in office vacancies. For Oslo, Asker and Bærum, the overall vacancy rate is now at 4.4 per cent – a decrease of 1.5 percentage points since January 2022. Vacancy rates in the city centre and in the central business district (CBD) have remained low over time, and many companies are still looking to move to the city centre. Downtown offices are highly sought after, and since there are relatively few new construction projects in the centre of Oslo, we expect moderate to low vacancy rates in the next couple of years as well.
West of Oslo, the vacancy rate is low: 3 per cent in Lysaker and 3 per cent at Fornebu. Asker and Bærum also have a declining vacancy rate, currently 4 per cent, while Skøyen has seen a decline of 1 percentage point to 7 per cent.
The vacancy rate is also low in the clusters east of Oslo for the first time in a long time. Økern/Løren has a 4 per cent vacancy rate (down from 13 per cent), and Helsfyr/Bryn has a 5 per cent vacancy rate (down from 8 per cent). The declining vacancy rate in the east is mainly a result of new builds being filled up. Despite the high level of building activity in the east, relatively few new builds will be added to the market in the next couple of years. The vacancy rate will probably be moderate in the outskirts in the coming years, despite an expected slowdown in the Norwegian economy.
We expect low vacancy rates in Greater Oslo up to 2025, mainly due to a sharp decline in the estimated number of new builds over the next few years.
You can read more details about our latest vacancy count in this article (available in Norwegian only).
Rental prices in Oslo continued to rise in 2022, especially in the city centre. Low vacancy rates and little new construction will have a positive effect for properly owners. In the outskirts, property owners have filled their buildings, and the high construction costs may eventually push up rental prices in the outskirts as well. Higher rental prices are now required to initiate profitable projects.
|AreasSorter||High standardSorter||Good standardSorter||Office vacancySorter|
|Lysaker||2500 - 2900||1900 - 2500||4 %|
|Asker og Bærum||1800 - 2400||1300 - 1800||4 %|
|CBD Vest||4400 - 5700||3400 - 4400||4 %|
|Skøyen||3200 - 4000||2500 - 3200||8 %|
|Fornebu||1800 - 2400||1500 - 1800||9 %|
|Ytre Sentrum||3000 - 4000||2000 - 3000||2 %|
|CBD Øst||4000 - 5000||3200 - 4000||2 %|
|Indre Sentrum||3500 - 4200||2900 - 3500||9 %|
|Helsfyr/Bryn||2000 - 2500||1400 - 2000||8 %|
|Økern/Løren||2000 - 2500||1500 - 2000||3 %|
|Storo/Nydalen||2400 - 2800||1900 - 2400||7 %|
|Office vacancy pr.||%|
Interest rates have risen sharply so far this year, and the Norwegian central bank has signalled that a series of interest rate hikes will be implemented during the autumn. We have observed a mood shift in the market. Investors still want to buy property, but they’re more hesitant and selective than they were. read more
Upward adjustment of yields
This autumn, DNB Næringsmegling upwardly adjusted its yield estimate for prime offices in Oslo from 3.50 to 3.75‒4 per cent. Despite the fact that the yield estimate has been raised markedly since the trough of 3.25 per cent earlier this year, our expectation is that yields will be pushed up further in the period ahead. At today’s levels, the yield gap is gone, and we believe this will be reflected in prices going forward. On the basis of past experience, prime yield in Oslo should have been above 5 per cent given today’s interest rate level, but that said, there are several factors that will contribute to dampening the effect of the interest rate increase. We’re still registering significant interest in the best properties, and we believe some investors will go to great lengths to get the right objects if the opportunity arises. The uncertainty we’re now witnessing may provide opportunities that investors would not otherwise have had. Furthermore, there’s an expectation in the market that rental prices will continue to rise. This is supported by a historically low vacancy rate and a high demand for the best office premises, but also an expectation of high CPI growth in the coming years.
Mood shift among investors
Our recent investor survey of the major investors in Oslo largely supports our view of the market. The survey shows both increased uncertainty among investors, and an expectation that yields will continue to rise. Most investors expect prime yield in Oslo to rise by 25–50 basis points in the coming 12 months, but there are larger variations in responses than usual. A number of the investors say they have both the capital and the will to trade in the time ahead, but that they want to see pricing adapted to the current market situation before investing. Half of the investors still expect to be net buyers in the next 12 months, which despite a decline from previous surveys testifies to a willingness to invest in the right objects. Investors also expect a strong rise in rental prices, particularly for offices in central Oslo. Further, we’re seeing a change in the preferences of investors, with a larger proportion than before looking for development and value-adding objects with a view to achieving returns. This is during a period when many people believe it will be difficult to achieve good returns for pure cash-flow properties. Furthermore, we see that hotels stand out as the segment where investors expect the strongest value development going forward. The segment has not experienced the same yield decline as a number of other segments, while at the same time demand for hotel rooms has increased markedly this year, after two tough years affected by the pandemic.
Good start to the year in the transaction market, but expectations of somewhat lower activity ahead
As of the first half of the year, the activity level was on a par with that of the best years ever, despite the absence of the large portfolio turnovers we saw many examples of in 2021. So far this year, there has been a particularly high level of activity in warehousing/logistics (including industrial property), which has at times been the most traded segment in the country as a whole. There has also been a high level of activity in parts of the trading segment. After the summer, we’ve so far seen a somewhat quieter market, and there have been several examples of transactions that have not been carried out. The uncertainty is perceived as greater than normal, and there’s considerable suspense attached to how the coming months will unfold, both in terms of activity levels and pricing. We expect to see an increased gap between the expectations of buyers and sellers for a period of time, which may result in lower levels of activity during a transition period. In the past, we have tended to see that investors’ risk appetite is reduced when a slowdown is expected in the economy, which often means that investors draw their capital towards Oslo to a greater extent. So far this year, however, we’ve seen a good level of activity in several of the cities outside Oslo, such as Drammen (NOK 6 billion as of mid-September) and Stavanger (NOK 7 billion).
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The transaction volume in the first half of the year was among the highest we have ever recorded, despite the fact that there were no single transactions above NOK 3 billion. After the summer, however, the market has slowed due to distance between buyers and sellers. We believe higher interest rates are pushing up prices and we have adjusted prime yield upwards, albeit without direct references.