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Commercial real estate markets deteriorate as interest rates rise

“We think that the bulk of the decline in values is behind us, as the surge in property yields is slowing and is expected to soon stabilise as interest rates reach their peak, but our forecast is still for office values to fall another 5% by year-end,” says James McMorrow, an economist at Capital Economics.

“Swedish asset sales are likely to accelerate in the coming quarters, which will weigh on values,” says Mr McMorrow. “The other consequence is that investment volumes, which have declined extremely sharply in Sweden over the past few quarters, are likely to fall further this year and remain subdued in 2024.”

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