The business property market in 2016 in brief

The market for business property in Norway reached a peak in 2015, with record sales volumes. In 2016, the volumes decreased a good deal, but the level of activity was still high. 2016 turned out to be yet a good year in terms of the sales of business property, with the second highest registered volumes ever.

Wiersholm's real estate team also felt the effect of the continued high level of activity and have throughout 2016 lent their expertise in more than 90 property transactions, representing a total property value of more than NOK 30 billion. These transactions have spanned the entire range of business properties in Norway, from development plots and projects, to warehouse and logistics properties, industrial and manufacturing plants, public purpose buildings and office and trading premises. In all of the transactions, the assistance of our team of experienced lawyers has allowed our clients and their contractual partners to take part, safe in the knowledge that all legal matters have been attended to and that commercial aspects specific to their line of business have been taken into account.

Selected transactions

Among the transactions where Wiersholm has assisted is the sale of all remaining subsidiaries from NLI Eiendomsinvest AS to Round Hill Capital, a transaction involving logistics and industrial properties in Norway, Sweden and Denmark and which was valued at in excess of NOK 1.6 billion. Wiersholm acted as legal adviser to the seller in this transaction.

We were also involved in the sale by Telenor Eiendom Holding AS of its shares in the holding company of Kongens gate 21 to Tristan Capital, Vedal and Malling. The selling price, which has been discussed in the media, was more than NOK 525 million, and the buyer intends to renovate the property for very nearly a corresponding amount.

Wiersholm also assisted major market operator Værste AS in its restructuring and sale of the public sector rehabilitation centres in Fredrikstad, with a total property value of more than NOK 1 billion.

Market trends in the year just ended

One noticeable development in 2016 was a slight decrease in the share of foreign buyers as compared to 2015. A possible reason for this could be the continued rise in the prices in the Norwegian market; not necessarily as a result of an increase in rental prices, but because the yield requirement continued to drop throughout 2016. Rental prices have not been part of the same trend. Prices in the Norwegian market (and in particular in the central business district of Oslo) is perceived by many as too high, and especially foreign buyers quickly seek out alternative markets they would rather be exposed to. We have also noted that an increasing number of market operators run into difficulties when trying to obtain financing for property purchases on terms they deem to be attractive.

Prospects for 2017

Some operators report having noted at the beginning of 2017 a considerable mismatch between the number of business properties for sale on the one hand and available investment capital on the other.

Uncertainty in terms of the interest rates in the coming year is another factor adding to the difficulty of predicting the developments for 2017. The combination of these factors could potentially result in an increase in the number of forward projects. This certainly is a trend experienced by our lawyers so far this year. This, coupled with several recently passed as well as expected legal amendments (amendments to the Companies Act, a new Condominium Act etc), plus an increased and continued focus on tax and VAT matters will serve as the backdrop for property transactions in 2017. Wiersholm's real estate team look forward to an exciting new year, which for Wiersholm's part has come off to a promising start, our team being already involved in a significant number of transactions.

We will continue to keep our clients and business associates abreast of the developments in the business property market through newsletters and seminars.

Please contact: