The Norwegian economy is fairing very well during these turbulent times. Key economic indicators are strong going forward, consumer confidence is returning and investment activity is increasing. From a historical point of view the EUR/NOK cross is stronger than average and close to its highest point historically, but given the indicators there are few signals of weakening. Main points to consider in this context are the following:
- Growth in 2011-2014 is expected to be >3.0% per annum, considerably higher than within most other currency zones
- Consumer spending is on the rise again helped by low interest rates, increased wealth, positive income prospects and decreased utility costs
- Real unemployment is virtually non-existent and labour market is expanding
- Investment is increasing, especially in the oil sector (Norway discovered its biggest oil reserve to date this summer) with ripple effects across the economy
- Inflation still expected to be lower than the Norwegian Central Bank’s target of 2.5% in the coming years
Given these prospects, foreign direct investment into Norway is still very limited and far below the levels of their neighbouring countries of Sweden and Denmark. This can in some way be explained by the limited need for foreign investments as Norway is very self-sustainable when it comes to fulfilling investment needs. This last point has probably something to do with the fact that they are extremely well off themselves, as their own investments in foreign real estate in London, Paris and elsewhere clearly demonstrates. Another obvious reason is that, unlike its neighbours, Norway sits outside the EU, and is likely to do so for a long while.
On top of what is stated above, it’s worth mentioning that the legal framework is good, transaction cost relatively low, banking is available and all infrastructure for investments in order.
Norway has therefore all the characteristics for international investors to be looking seriously into real estate investments in the market, especially in Oslo, that itself has the strongest prospects in my opinion! So, why not look at it more closely?
– Gudmundur Arnason / Reviva Capital