The influence of the financial crisis on the investment behaviour of German pension funds regarding the Swedish real-estate market as an investment location

University essay from Lunds universitet/Nationalekonomiska institutionen

Abstract: The financial crisis of 2007-2008 shock the financial markets worldwide and caused major losses for financial institutions and institutional investors. German pension funds need to invest their assets also during times of financial and economic downturns, regardless the uncertainty about the future development of the market situation. Real-estate is considered a safe investment for capital in times of high volatility within financial markets. German pension funds are looking for safe investment environments besides the local German real-estate market which is conglomerated with national and international investors. According to German pension funds, the Swedish real-estate market gained in importance as an investment location since the advance of the financial crisis. The market attracts German pension funds by its stable economic development, political stability and liquidity of the real-estate market. Office and retail properties in the Core segments of Stockholm, Gothenburg and Malmö are of their main interest. At the moment the German pension funds face the problem of a high Korna/Euro exchange rate which makes investments for German investors more expensive. Therefore yield levels decline for German investors and Swedish institutional investors, which follow conservative investment strategies, in most of the cases have a better position on closing property deals. The Swedish market provides an excellent investment environment for German pension funds and with a more favourable exchange ratio of Krona/Euro German investors are more likely to increase their investments in Swedish real-estate.

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