NORWAY - The Norwegian property market declined markedly over 2002, according to the Investment Property's Databank's Norwegian Property Index.
The figures showed total returns falling to 6.8% from 11.1% in 2001 and 12.7% in 2000. This is lower than yields in the UK, South Africa and Denmark (9%-10%), but greater than returns from Sweden and Ireland at 2.4% and 2.2% respectively.
The IPD blames the fall on a decline in rental values in the Oslo office market, which accounted for over half of the total capital value of the investment portfolios in the index at the end of 2002.
But despite the weaker trend in rental values, yields appear to have fallen slightly, boosting capital values.
Mark Callender, research director of IPD, said: “Despite strong investor demand there was a considerable fall-off in returns on the Norwegian property market during 2002.
“Much of this is due to the fall in rental values on the dominant Oslo office sector.
“In contrast,and in line with other European markets such as the UK and Sweden, retails and residential continued to perform respectably.”
Sectorwise, 2002 saw a sharp divergence in the performance of the main property sectors. Offices and commercial categories saw total returns fall to 4.9% and 7.2% respectively.
By contrast, retail returns were stable at 12% and residential property yields were up to 14.6%.
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