Sweden leads recovery of Nordic real estate markets

The Nordic real estate markets, especially Sweden, are bouncing back and set for steady growth in 2026 after a period of correction, according to a Deutsche Hypo study.

Deutsche Hypo

Sweden is leading this recovery, offering a low-risk and attractive environment for investors. This is due to a strong economy, lower interest rates, better financing, market transparency, political stability, and a focus on ESG factors.
Quality, location, and ESG are increasingly determining success across all property types. High-quality, modern, and sustainable office spaces in prime locations, particularly in Stockholm, are in high demand with rising rents and low yields. Older or less central properties are struggling.
Sweden's strategic location as a Northern European hub, combined with demand from e-commerce, nearshoring, and defence logistics, ensures a strong outlook for the logistics market. Reduced new construction is also stabilising the market despite some vacancies.
The residential market remains the most stable sector, driven by urbanisation and immigration, leading to high demand and persistent supply shortages, especially in cities. Rents are rising, and prices are gradually recovering after a correction phase of property prices from 2022-2024.
The Nordic countries collectively represent one of Europe's most active real estate markets, with a transaction volume of €36.2 bn in 2025. This places them second only to the UK (€72.9 bn) and ahead of major markets like Germany (€32.8 bn), France (€21.5 bn), and Spain (€18.5 bn).
Beyond 2026, the Nordic real estate markets are expected to remain among Europe's most stable investment destinations. This stability is built on strong economic fundamentals, high market transparency, and sustainable demand. The region's political reliability, gradual economic rebound, and increasingly favourable financing conditions are likely to strengthen its position as a secure and preferred location for institutional real estate investors over the long term.
Ingo Martin, head of Real Estate Finance Origination at Deutsche Hypo – NORD/LB Real Estate Finance, stated: “Sweden currently combines many of the factors that are decisive for long-term-oriented real estate investors: economic stability, high market quality and reliable regulatory frameworks.”