When Newsec started to produce a valuation index in the beginning of 2008, the real estate values were at an all-time high. In the summer of 2009, Norwegian properties had lost between 15 and 20 percent of their value as an average. The volatile office markets in Oslo and Stavanger suffered the most, while shopping centers in general and offices in Bergen and Trondheim held their value best. Logistic properties also did OK.  Since then the property values has risen steadily between 5 and 10 percent and has by this third quarter regained approximately a third of the loss.

An average decent office building in Oslo has currently a value of
24 000 NOK/sqm while the average value of office in the other main cities Bergen, Stavanger and Trondheim are about 16 000 NOK/sqm. At Newsec, we are currently working on the year-end valuations. There is activity on the transaction market, and prime properties are in high demand. The spread between prime yield and 10-year swap is also high in both nominal and real measures, giving good margins for the investors. Our Quality Board has therefore reduced the prime valuation yield to 5.75 percent from 6.0 percent and indicated that the best properties should get a 25 points yield decrease. Other factors aside, this will boost values with approximately 4 percent. The Newsec valuation index will therefore continue its climb upwards this quarter, and our prognosis for next year is also positive.

Investors who bought properties a year ago can look back on a healthy capital growth in addition to the income returns from the leases. The average total return for 2010 may therefore end up in the area around 12 percent.