Swedish Real Estate Market in Q1 2025: Offices and Housing Lead Investment Growth

In the first quarter of 2025, real estate investment volumes in Sweden surged by 56% year-on-year. The main investment segments were offices, residential properties, and logistics facilities. The market is adapting to economic pressure, with rising rental demand and a growing focus on sustainable and logistics-driven assets.

Residential Sector

According to the Sweden Real Estate Market Report Q1 2025 source, Sweden's high unemployment rate (10.4%) and falling consumer purchasing power have fueled a sharp increase in demand for rental housing—especially in Stockholm and Gothenburg. Rental prices continue to climb, prompting developers to focus more on income-generating housing. Yet, affordability remains a key issue, as mortgages are out of reach for many despite efforts to stabilize interest rates.

Cushman & Wakefield reports source that residential real estate attracted SEK 7.3 billion (~€664 million), making up 20% of total investment activity, up 24% from Q1 2024. Yields dropped slightly in Stockholm (4.00%), Gothenburg (4.50%), and Malmö (4.65%). Although housing starts in these cities declined by 42% year-on-year, early signs of recovery are emerging due to falling inflation and construction costs.

Commercial and Logistics Segments

Amid economic uncertainty, companies are seeking short-term leases and flexible office spaces. In Stockholm and other business hubs, lease renegotiations are becoming more common. Meanwhile, the logistics sector continues to grow, driven by e-commerce. A standout deal was Logistea's acquisition of the Automobilen 1 warehouse.

Around 150,000 sq.m of new logistics space was delivered in Q1, 70% of which was pre-leased. However, annual new completions are expected to fall 70% versus 2024. Vacancy rates rose in Stockholm (14%) but declined in Gothenburg (6%) and Öresund (6.5%).

Retail is evolving under digital pressure, with omni-channel strategies reshaping the sector. Supermarkets and discount chains are fueling growth in retail parks, while high-end urban retail remains stable. Retail investments reached SEK 2.3 billion (~€209 million), or 6% of total transaction volume.

Office development grew by 146% in H2 2024 year-on-year—especially in Gothenburg—though Stockholm saw zero completions in Q4 2024, pushing vacancy to 16.5%. Prime CBD rents climbed to SEK 9,650/m² (€885), while yields tightened to 3.95%.

2025 Outlook

PropTech, AI, and blockchain are becoming essential tools in property management. Green construction is gaining traction, supported by government incentives for eco-tech use and expedited planning processes. The Swedish central bank maintained the key rate at 2.25%, trying to balance inflation control with economic growth.

Despite slower GDP growth forecasts—1.8% in 2025 versus 2.1% previously—housing prices are expected to rise moderately, supported by falling rates and stabilized incomes. Inflation is projected to ease to 1.5%, while unemployment is forecast to drop to 8.4%. Budget deficit is expected at 0.8% of GDP, with full recovery not anticipated before 2026.