Standard Life Investment plans to buy Stockholm offices

11th Feb 2013 11:45

Standard Life Investments intends to buy commercial real estate in Stockholm, saying Sweden's market is among the best in Europe, reports said Monday.Real estate investment director Mark Meiklejon said the company, which manages of €205bn of assets, may spend a further €100m to double its holdings in Sweden, according to Bloomberg.The group will buy offices rather than retail as consumer spending declines, he added."For international companies wanting to locate to the Scandinavian region, Stockholm is probably the top pick," he said."It's a very transparent market; it's liquid and pretty large; there is fiscal independence and a strong banking system."Sweden evaded the property slump that hit Ireland, Spain and Denmark after the failure of Lehman Brothers Holdings Inc. in 2008. Meiklejon said Standard Life anticipates average annual returns before acquisition costs of 7.0% to 9.0% on the city's commercial real estate in the long-term taking it "toward the top end of our return expectations in Europe over the next three to five years". The news come in the wake of concern the home prices are unstable in Sweden with the country's National Housing Board saying that the market is experiencing a bubble. Home prices could drop by as much as 10% in the next 18 to 24 months, according to Jens Hallen, Director for Financial Institutions at Fitch Ratings.Sweden's economy is also at risk as Europe's debt crisis hits a number of companies including Ericsson AB and truck maker Volvo AB which slashed thousands of jobs. Standard Life's European Property Growth Fund targets a total return of 10% annually over a five-year period and owns real estate in Paris, Madrid, Barcelona, Lisbon, Prague and Stockholm. RD