The Nordics: A Surprising Leader in Global Real Estate Liquidity
Over our 21-year history the Nordics have become considerably more core to European real estate portfolios; it is fair to say that the Nordics are now widely considered an essential part of a well-diversified European strategy.
One of the few objections we still encounter is the perception that the Nordics suffer from poor liquidity. As we will see below, the facts show that the Nordics are very liquid in an international context. In fact, measured as a ratio of transaction volumes to the size of the economies, the Nordic market is one of the most liquid markets globally.
The Nordic real estate market is among the most liquid globally.
Courtesy of JLL Research we have below included total transaction volumes for several countries and regions over time. To compare across countries, we have also included the ratio of transaction volumes to size of the economies (GDP) for the respective country or region. For 2023, the Nordics (0.95%) come in a little lower than the US (1.11%) and UK (1.20%), but higher than France (0.86%), Switzerland (0.76%), Spain (0.72%), Germany (0.67%), the Netherlands (0.65%), and Italy (0.26%). Looking further abroad, the Nordics (0.95%) come in on par with South Korea (0.95%) but higher than Australia (0.87%), Japan (0.58%) and China (0.15%).
Italy (0.26%) and China (0.15%) stand out for their low liquidity.
In 2023, the Nordics (0.95%) were considerably more liquid than Germany (0.67%), Spain (0.72%), and France (0.86%).
As you will see from the graph, the Nordics did come in lower than the US and UK in 2023, but seen over a longer period of the time, the results are more mixed; the Nordics had the highest liquidity of the three in 3 out the last 10 years. And the only time that the Nordics were the lowest of the three any time in the last 10 years was in 2023.
Over the past 10 years, the Nordics have enjoyed liquidity similar to that of the US and UK.
In a future edition of the Nordic Insight, we will look closer as to why liquidity is high for the Nordic countries, but worth mentioning right now are the low transaction costs associated with the transfer of real estate in the region. If structured properly, the amount of the transfer tax and capital gains tax payable in the Nordics is low in a European context. We are convinced that this increases the volume of trades.
To be continued...
