Temperature taking the real estate industry

In a survey among participants on the Local Market Day in Gothenburg last autumn, a great concern was noted about a potential overheating of the Swedish housing market. According to Tor Borg, chief economist at SBAB, a crisis is usually due to what one cannot foresee, a so-called "black swan". He said, however, that we have supervised the overheated housing market. China is seen as a potential threat to the global financial market, which in turn can have a major impact on the Swedish real estate market. As an example, the five largest banks in the world today are Chinese and there we have very little transparency.

Despite alarms about increased uncertainty in the outside world, from a national perspective, there is still a crying need for more housing, Boverket estimates that 700,000 homes must be built by 2025, something that many representatives in the industry doubt will be achieved. But it is probably the supply issue - more housing - that can solve the overheating of the market. However, construction companies refer to a lack of resources and competence together with a lack of access to buildable land and thus they cannot fully meet demand. On the other hand, reference is made to the reluctance of construction companies to quickly exploit designated building rights, unwillingness to expose themselves to the risk of creating overcapacity in production and a tendency to consciously try to counteract a fall in housing prices, which may be the consequence of increased production.

However, we can see many good examples of collaborations with the aim of achieving an increased production of mainly housing, which in recent years has shown itself among the various players in the market. The urban building apparatus (politicians and officials), housing companies, both public and private, and construction companies have begun to cooperate to a greater extent on the question of how the production process from land to finished housing can be streamlined to meet the need. During the Business Arena in Stockholm in September, the non-profit companies in Stockholm highlighted the initiative Stockholmshusen, which aims to double the construction rate in the next few years through closer cooperation and more efficient processes. Construction companies from both the residential and the local side have also opened their eyes to more effective community planning, where housing, offices, business premises and infrastructure can to a greater extent work together to create an attractive urban environment and long-term sustainable and profitable investments. Something that is achieved through just collaboration between the above mentioned parties.

At Ekan Management, we help the real estate industry with effective project models and new challenging ideas to meet the world's needs and challenges of new construction.

What do you see as opportunities and challenges in today's real estate market based on your reality?