Sweden’s Property Market Revives as Vacancies Stay High

Swedish commercial property investment reached SEK 71.6 billion in the second quarter of 2026, an 85% increase from a year earlier. Large portfolio acquisitions and falling yields on prime assets point to recovering values, but elevated office and logistics vacancies show that investment demand is improving faster than the occupier market.

Swedish property investment rises 85%

The latest MarketBeat reports from Cushman & Wakefield recorded 179 completed transactions worth more than SEK 40 million each. The assets sold covered 3.36 million square metres. Swedish buyers supplied 95% of invested capital, while international investors accounted for only 5%, making the recovery largely dependent on domestic institutions, property companies, funds and private owners.

Multifamily rental housing was the largest sector, generating SEK 17.8 billion and 25% of quarterly activity. Industrial and logistics assets attracted SEK 13 billion, offices SEK 10.4 billion and retail property SEK 7.9 billion. Mixed-use and specialised assets contributed a further SEK 22.6 billion.

The largest transaction was Wihlborgs’ acquisition of a 95-property portfolio from Castellum for SEK 13.3 billion. The assets covered 639,000 square metres. Alecta separately acquired two Stockholm office properties from Castellum for SEK 5.01 billion, equivalent to approximately SEK 139,000 per square metre.

Those two transactions represented more than one-quarter of total quarterly volume. The headline increase therefore reflects both improving liquidity and the exceptional size of several individual deals rather than an evenly distributed recovery across the country.

Prime property values begin to recover

The prime yield for the best offices and newly built rental housing fell to 3.75%. A property yield measures annual rental income relative to an asset’s price. When income is unchanged, a lower yield generally means that buyers are willing to pay more for the same cash flow.

Prime logistics yields in Stockholm and Gothenburg remained at 4.85%, while shopping-centre yields held at 4.45%. Stockholm high-street yields fell to 3.85% and retail-park yields to 5.75%, indicating stronger demand for selected central offices, residential properties and retail formats.

Sweden’s ten-year government bond yielded about 2.7% in May. The premium offered by prime offices was therefore only slightly above one percentage point, leaving a limited buffer if financing costs rise, rents weaken or owners need to fund major building upgrades.

Sweden’s economic recovery remains uneven

Statistics Sweden reported that gross domestic product contracted by 0.2% in the first quarter compared with the previous three months, while increasing by 2% from a year earlier. A preliminary monthly indicator showed a stronger May, when output rose by 0.9% from April and 3.9% year on year.

Consumer inflation slowed to 0.7% in June, while the fixed-interest-rate measure targeted by the central bank stood at 1.3%. Seasonally adjusted unemployment remained high at 8.7% in May. Low inflation and weak labour-market conditions support easier financing, but they also indicate limited demand for additional offices and distribution facilities.

The Riksbank kept its policy rate at 1.75% in June. It described underlying inflation as low and economic activity as weaker than normal, while warning that supply disruptions had raised the risk of renewed price pressure. The probability of a rate increase later in 2026 was higher than in the bank’s March assessment.

The National Institute of Economic Research expects domestic demand to strengthen during the autumn. Its June forecast includes a 25-basis-point rate increase at the end of 2026 and another in 2027, a scenario that would increase costs for property companies with short interest-fixing periods.

Stockholm office rents rise despite 18.5% vacancy

Developers completed 76,800 square metres of office space in Sweden’s three largest metropolitan regions during the first half, 22.4% less than a year earlier. Greater Stockholm received 45,800 square metres and Greater Gothenburg 31,000 square metres.

Greater Stockholm’s vacancy rate remained at 18.5%. The central business district had an 8% vacancy rate, the wider city centre 14% and decentralised districts 23%. Earlier construction had exceeded tenant demand, leaving a considerable volume of available space outside the strongest locations.

Greater Gothenburg’s vacancy rate was 15%, including 17% in its central business district. Greater Malmö rose by one percentage point to 17%, while central Malmö reached 9%. Malmö was the only one of the three markets to record a clear quarterly deterioration.

Prime annual rent in central Stockholm increased to SEK 9,850 per square metre. Gothenburg remained at SEK 4,500 and Malmö at SEK 3,800. Stockholm’s prime yield fell to 3.75%, while Gothenburg and Malmö were unchanged at 4.5% and 4.8%.

The figures point to a divided market. Modern, energy-efficient buildings in central locations can still raise rents, while ageing properties in decentralised districts face intense competition for a limited number of tenants.

Ericsson signed the two largest leases of the quarter in Stockholm, taking a combined 97,700 square metres from Atrium Ljungberg and Castellum. The contracts improve short-term absorption but do not eliminate the broader oversupply outside the city centre.

The office report contains an internal inconsistency. Its narrative and city breakdown show approximately 271,000 square metres under construction: 180,000 in Stockholm, 78,700 in Gothenburg and 12,000 in Malmö. The overall table displays 372,000 square metres, which does not equal the regional total. The city-level data and the figure of about 271,000 square metres therefore provide the more consistent measure.

Logistics property faces rising supply

Sweden added almost 181,000 square metres of logistics and distribution space in the first half. About 107,000 square metres was delivered during the second quarter, 13% more than a year earlier. Gothenburg accounted for 47,000 square metres, Öresund for 9,000 and regional cities for about 51,000.

National logistics vacancy rose to 9.5%. Stockholm reached 12%, Gothenburg 6.5% and regional cities 11%. Öresund moved in the opposite direction, with vacancy falling to 5.5%.

Full-year completions are forecast at approximately 640,000 square metres. About 26% of the development pipeline is speculative, meaning construction began without a pre-committed tenant. Although the speculative share is lower than in previous years, new supply may keep vacancy elevated in Stockholm and smaller regional markets.

Headline rents were unchanged from a year earlier at SEK 1,050 per square metre in Stockholm, SEK 1,000 in Gothenburg, SEK 850 in Öresund and SEK 675 in regional cities. Stable quoted rents alongside rising vacancy may indicate that competition is appearing through rent-free periods, fit-out contributions and other lease incentives.

Retail property records the fastest growth

Retail property investment reached SEK 7.9 billion, 163% more than in the second quarter of 2025. Prime Stockholm rents increased by between 2.2% and 3.6% during the quarter across high-street shops, shopping centres and retail parks.

Working-day-adjusted retail sales in May were 8.3% higher than a year earlier. Durable-goods sales increased by 10.8%, while non-durable goods excluding the state alcohol retailer Systembolaget rose by 5.5%. Consumer confidence nevertheless remained below its normal level, and households were still cautious about major purchases.

The jump in transactions shows that investors expect consumer spending to keep recovering. The risk is that property pricing and rental expectations may rise faster than tenant income, particularly if unemployment remains elevated or monetary policy tightens again.

Rental housing remains the largest sector

Multifamily rental transactions totalled SEK 17.8 billion, down 6.3% from a year earlier but still the highest volume of any property category. High-quality new developments in Greater Stockholm remained the most attractive assets.

Prime yields for new residential properties fell to 3.75% in Stockholm and 4.3% in Gothenburg, while Malmö remained at 4.5%. Regulated annual rents for new construction were approximately SEK 2,950 per square metre in Stockholm, SEK 2,450 in Gothenburg and SEK 2,350 in Malmö.

Construction began on about 4,600 apartments in multifamily buildings across the three largest metropolitan areas in the fourth quarter of 2025, a 63% annual increase. Activity has recovered from the lowest point of the downturn but remains roughly half the level recorded at the end of 2021.

Debt risks have not disappeared

Finansinspektionen said the financial position of commercial property companies had strengthened but continued to describe the sector as vulnerable. Some firms remain highly leveraged, have short interest-fixing periods and face substantial vacancies. Swedish banks also have significant exposure to the industry, creating a route through which falling values or weaker rents could translate into credit losses.

Lower prime yields and stronger transaction activity indicate that the sharpest phase of repricing has passed. A full recovery has not yet arrived: values of the best properties are rising while office and logistics occupier markets still face substantial excess supply.

FAQ: Sweden’s property market in 2026

How much did Swedish property investment increase?

Second-quarter volume reached SEK 71.6 billion, an 85% annual increase. The total included 179 transactions worth more than SEK 40 million each.

Which sector attracted the most capital?

Multifamily rental housing ranked first with SEK 17.8 billion and a 25% share. Industrial and logistics property followed with SEK 13 billion.

What does a falling property yield mean?

A yield measures rental income relative to an asset’s value. When rent remains stable, a lower yield usually indicates a higher property price.

Why is Stockholm’s office market divided?

Vacancy is 8% in the central business district but 23% in decentralised areas. Prime central offices are gaining value, while older properties outside the centre face excess supply.

What is happening in Sweden’s logistics market?

National vacancy has risen to 9.5%, including 12% in Stockholm. About 640,000 square metres of new space could be completed during 2026.

Why did retail property investment rise?

Stronger retail sales and rising prime rents improved investor expectations. Transaction volume increased by 163%, although household confidence remains below normal.

As International Investment experts report, an 85% increase in transaction volume does not yet amount to a complete recovery in Swedish property. Large portfolio acquisitions materially improved the quarterly headline, while yield compression remains concentrated in prime assets. Elevated office and logistics vacancy continues to constrain rental cash flow. Modern housing, central offices and high-quality retail properties appear the most resilient, while owners of ageing, highly leveraged assets remain exposed to refinancing costs and a possible return of higher interest rates.