Investors' capital allocation into office and residential markets in ...

higher in the area of the Western Harbour. However, prime rental levels are SEK 200–
300/sq.m., which is higher than the rental level of market rents. The increase of rents is
expected during 2008. As for Malmö and Gothenburg construction has increased due to
the large infrastructural projects (Newsec Nordic Report, 2008).
5.2 Residential market overview
The production of new apartments and single family houses has been increasing during
last 10–13 years, totalling 31,000 sq.m. in 2005 (where 61 per cent apartments and 39 per
cent single family houses). In 2006 there was an expected increase of about 10 per cent,
according to the National Board of Housing, Building and Planning. There are four large
construction companies dominating in the Swedish Residential Construction market. The
companies are quoted on stock exchange and active all over the country. Together with
other construction companies these four dominating ones strive for better quality.
“Quality assurance programs permeate practically all parts of residential construction,
thus reducing the hazard of defects and damage” (Bostads Garanti Fösäkring AB).
There has been a dramatic increase in house price in the major metropolitan areas in
Sweden such as Stockholm (15.6 per cent), Gothenburg (8.9 per cent) and Malmö
(9.2 per cent). The situation in construction sector was quite good and new dwellings
have been delivered to the market. There are more than 70 per cent of small households
reside in multi-dwelling houses (see below Table 5.2).
Table 5.2 Development in Gothenburg area
Property type Project/
Location
Residential
Residential
Mutliple
locations
Norra
Älvstranden
Residential Gårda
Norra
Residential Älvstranden
Size,
´000
sqm
1,500
Expected
completion
units 2006-2010
600
units 2006-2015
750
units 2007- 2012
2,000
units 2009- 2015
Residential Frölunda 20 2010- 2011
(Newsec Nordic report 2008)
In 2006 the volume of 29,832 new dwellings was completed. In general, residential
market in the major metropolitan areas comprises 16 per cent of households living in
owner-occupied apartments in multi-dwelling buildings, 7 per cent living in owneroccupied
or rental dwellings in one or two-dwelling buildings and only about 2 per cent
sublet rental apartments (Global Property Guide).
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