[STOCKHOLM] Britain's vote to leave the EU may have cooled its property market. But elsewhere in Europe, things are heating up fast.
In Sweden, where interest rates are negative, politics are stable and economic growth is brisk, a quick look at publicly traded real estate companies shows demand is soaring.
Much of that is thanks to "a very positive Brexit effect," Mikael Söderlundh, a Stockholm-based partner and head of research at Pangea Property Partners, told Bloomberg.
Property shares in the largest Nordic economy are up about 35 percent over the last 12 months, which beats real estate shares across the rest of the region, according to Pangea's estimates.
Part of the dynamic is linked to the crisis response of central banks following Brexit, which means there's now an expectation of "ultra-low interest rates in the foreseeable future," Mr Söderlundh said. That's supporting the leveraged property market and is boosting real estate returns compared with gains on fixed-income investments, he said.
Some of the best-performing stocks are Victoria Park AB, which develops and manages properties in southern Sweden. It's up almost 60 per cent this year. The company said on Wednesday it's targeting average annual growth of at least 12 per cent in its property management result and at least 15 per cent in net asset value, over time, helping drive its shares up as much as 3.5 per cent.
Platzer Fastigheter Holding AB, a commercial property developer and owner, has soared about 47 per cent. Sagax AB, which focuses on light industrial buildings, has gained more than 30 per cent, and Castellum AB, a real estate investment firm, is up more than 20 per cent.
Another Swedish real estate firm, D Carnegie & Co AB, in which Blackstone Group LP has built a stake, is up about 60 per cent this year. Construction companies are also doing well, with Skanska AB gaining almost 20 per cent. By comparison, Sweden's 10-year government bond returned about 12 per cent this year.
There was "a strong run for property shares" in Sweden after the Brexit referendum, Mr Söderlundh said. Transactions in the Swedish property market are also heading for a record in 2016, with volumes so far about 30 per cent above their level at this time last year, according to Pangea.
Meanwhile, Britain's housing market is under pressure, with the luxury end in particular taking a hit since Brexit. The number of owners cutting prices for prime homes in the capital jumped 75 per cent in the 10 weeks following the June 23 vote compared with the same period a year earlier, according to data compiled by researcher Lonres. And predictions for London's commercial property also look grim.
But the trend in Sweden also predates Brexit. The country's abnormally high growth rates by European standards - annual GDP was 3.4 per cent in the second quarter - is also buoying the property market, Mr Söderlundh said.
The Swedish central bank, which has had negative interest rates since February last year, has repeatedly warned that the country's property market may be overheated. In a parliamentary hearing on Tuesday, Governor Stefan Ingves repeated the Riksbank's pledge to do more if needed, while warning that Brexit has added to the uncertainty to which policy makers must respond.