Oslo

Key figures

Q1 2021

Prime yields fell throughout 2020, but not as much as interest rates. A strong development on the demand side is leading us to believe that interest rates can rise somewhat without affecting prime yields.

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Offices with a high standard, best location, 7 years weighted remaining rental period, market rent and secure tenants.

Prime Yield

3.25
0

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.

Secondary yield

5.20
0

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

Transactions in 2021

(Accumulated)
94

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.

Transaction volume

(B NOK)
36

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.

Vacancy

(per cent)
6.9
0

Office vacancy in Oslo is 7,1 %.

Office rental market

Q1 2021

Our most recent vacancy count showed that the vacancy rate rose slightly to 7.1 per cent in Oslo, Asker and Bærum during the first half of 2021 , primarily driven by an increase in the number of new builds, while coronavirus restrictions led to more people working from home. read more

Our semi-annual vacancy count for the first half of 2021 showed a marginal increase in office vacancies. For Oslo, Asker and Bærum, the vacancy rate is now at a moderate 7.1 per cent – an increase of 0.2 percentage points since August 2020. Vacancy rates in the city centre and the central business district (CBD) remain low, 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 city centre, we expect moderate to low vacancy rates in the next couple of years as well.

West of Oslo, the vacancy level is relatively high, with 12 per cent at Lysaker and 8 per cent at Fornebu. Asker and Bærum have had a stable vacancy rate of 6 per cent, while Skøyen has seen an increase of 4 percentage points to 10 per cent.

In the clusters in the eastern part of Oslo, we are also seeing relatively high vacancy rates, with Økern/Løren at 16 per cent and Helsfyr/Bryn at 12 per cent. The high vacancy rate at Økern/Løren is mainly due to Økern Portal and Parallell building complexes, which account for most of the available office space. The eastern parts of Oslo have the highest level of construction activity, and vacancy rates are likely to remain relatively high in the next few years.

We expect a slight rise in vacancies in Greater Oslo during the course of 2021, due to an increase in the number of new builds, and, not least, challenging times for many tenants in the short term. New construction projects are currently being put on hold, especially speculative building projects.  We are therefore expecting a very low volume of new builds in 2022, which we believe will lead to vacancy rates falling again.

Rental prices in Oslo continued to rise in 2020, especially in the city centre. Low vacancy rates, particularly in the city centre, will have a positive effect for property owners, whereas there is a limit to how much rental prices can be reduced in the bordering areas, where competition has been fierce for a long time.

 

 

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AreasA - Å High standardHigh - Low Good standardHigh - Low Office vacancyHigh - Low
Lysaker 1900 - 2450 1500 - 1900 8 %
Asker og Bærum 1700 - 2050 1200 - 1700 6 %
CBD Vest 3700 - 5000 3000 - 3700 4 %
Skøyen 2800 - 3400 2200 - 2800 11 %
Fornebu 1500 - 1850 1300 - 1500 7 %
Ytre Sentrum 2200 - 3000 1800 - 2200 3 %
CBD Øst 3400 - 4200 - 3 %
Indre Sentrum 3200 - 4000 2600 - 3200 10 %
Helsfyr/Bryn 1850 - 2300 1400 - 1850 11 %
Økern/Løren 1800 - 2300 1400 - 1800 17 %
Storo/Nydalen 2100 - 2650 1700 - 2100 8 %

Rental prices
Top rent
High standard -
Good standard -
Office vacancy pr. %
Construction ()

Transaction market

Q1 2021

The outbreak of the coronavirus pandemic and the subsequent restrictions did not cause a slowdown in the commercial property market in 2020. On the contrary, we recorded the second highest transaction volume ever, totalling NOK 117 billion. We believe prime yields will remain stable even with interest rates rising somewhat, due to a strong demand for properties. At the same time, we expect prime yields to bottom out and then gradually increase with higher inflation and rising interest rates. read more

In 2020, investors showed that they had both the willingness and the capital to buy more commercial property, in a year of dramatic upheavals and considerable uncertainty. Purchasing preferences changed somewhat after the onset of the coronavirus pandemic and subsequent shutdowns, as an increasing number of investors started looking for low-risk properties. This was expected to contribute to sharper pricing of the best-positioned properties, but prime yields fell less than interest rates during the course of last year. We believe we will see greater price differentiation between prime and secondary locations in the time ahead. Investors continue to report that good cash flows from offices, community buildings and logistics facilities in central locations mean that these segments are sought-after, and that several of them have recently gained a stronger position relative to certain other segments. Investors are being more cautious about investments in hotels and parts of the retail industry, which have been hit harder by the COVID-19 pandemic.

After a marked decline, long-term interest rates are once again rising. The office rental market has fared well, helped by Government support packages. We have not observed a marked rise in vacancies in the four largest cities in Norway, and rental prices have remained stable or shown a slight increase. There is some uncertainty as to whether there will be a wave of bankruptcies when the Government support packages are cut back, and whether the increasing use of home office solutions will put a damper on demand. We believe a soft landing is the most likely scenario, and that the market will be positively affected by a rapid recovery of the Norwegian economy.

We also believe that we will continue to see significant excess demand for the best office properties, and that the current yield levels will be maintained despite interest rates rising somewhat in the short term. Rising interest rates are likely to lead to some increase in yields in the slightly longer term.

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