Foreign Direct Investments on the Swedish Real Estate Market : Fundamentals Impact on Foreign Transaction Volume
Abstract: 2016 was a year of record with a total amount of over 201 billion SEK invested in the Swedish real estate market, spread over more than 535 transactions (counting transactions of 40 million SEK and above). The Swedish real estate market is sometimes referred to as a safe haven among international investors when it comes to foreign direct investments. Some characteristics that makes Swedish real estate a valuable asset among foreign investors are said to be the market transparency, low interest rate environment, and increasing rents, to mention a few. This report uses a quantitative analysis method in order to discern what fundamental economic factors that affects foreign investor’s behavior of when to invest in Swedish real estate. The Swedish property firm, Newsec, has provided transaction data in order to accomplish this study. From the quantitative analysis, it has been found that the fundamental factors that have the most impact on foreign transaction volume are the capitalization rate, inflation rate, world market volatility, Swedish stock market and domestic transaction volume. Furthermore, exchange rates and the repo rate do not seem to have a significant impact on the foreign transaction volume, according to the study.
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