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Property Crisis Hits Sweden's Pension System: Commercial Landlords and State Funds Suffer Financial Losses

Written by: Erik Dahlsson
Photo by: Edvin Johansson at Unsplash

Last update: 20 juli 2023

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Sweden's pension system is facing a problem with properties, which is causing trouble for commercial landlords and state-owned pension funds like Forsta AP-fonden (AP1).

AP1 experienced a 7% decrease in the value of its property investments during the first half of the year. This happened because the value of real estate assets went down, along with losses in private equity funds and fixed income securities.

The CEO of AP1, Kristin Magnusson Bernard, said that the problem occurred because there weren't many property transactions happening, especially in the Nordic region. This led to lower property values. In comparison, the UK market, where property values were quickly reduced, seemed to stabilize faster.

Alecta AB, another pension fund in Sweden, also had a 1% loss in the first half of the year because of its investments in real estate assets. The real estate sector in Sweden has been affected by the rising costs of getting funds, as many companies relied on cheap bonds to grow quickly.

Source: Bloomberg


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