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What is the general climate of real estate investment in your jurisdiction?
Sweden offers a good climate for real estate investments with its transparent market and few barriers for investors looking to enter the market. Historically, price levels have increased steadily over the last 10 years and there are few vacancies within office and residential properties (office rents in Stockholm increased by 13% during 2017). During quarter four of 2017 and quarter one of 2018, prices in the housing market have decelerated (and dropped in some areas) – this has affected the appetite for investment in residential properties and residential development projects.
Who are the most common investors in real estate?
The most active investors comprise well-established real estate companies, together with pension funds (both private and buffer funds within the Swedish pension system). Foreign investors are active – in 2017, 36% of the transaction volume constituted cross-border transactions, as well as small and medium-sized private investors, which have been increasingly active in recent years.
Are there any restrictions on foreign investment in real estate?
No, there are no general restrictions on foreign investment in real estate.
What structures are typically used to invest in real estate and what are the advantages and disadvantages of each (including tax implications)?
Real estate transactions in Sweden are usually carried out as share transactions. This is to avoid stamp duty and so that corporate sellers can avoid tax on capital gains on the sale of shares, as a gain on a direct sale of real estate is subject to corporate tax. In 2017, a proposal for new legislation was presented, with the aim of making share and property transfers tax neutral. It is unclear when, if at all, the legislation will be passed, but presumably not before 2019.
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