Swedish property sector faces renewed interest-rate pressure, but is better prepared than during the rate hikes of 2022-2023. This is stated in a new report from Swedbank.
The bank expects two more rate hikes to 2.25 percent in February 2027. Higher financing costs are expected to put pressure on property companies’ cash flows and interest coverage ratios.
The office segment remains the weakest, with a vacancy rate of 16 percent in Stockholm. Residential, logistics and social infrastructure properties show greater resilience.
At the same time, the capital markets are functioning well. Property bonds worth more than SEK 140 billion mature in 2027, but refinancing opportunities are deemed good for larger companies.
Swedbank also assesses that credit risks in Swedish banks will remain low despite property exposure accounting for 21 percent of total lending.
