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Swedish property returns in the listed sector remained healthy in the second quarter of 2013.

According to the IPD Sweden Quarterly Listed Property Market Monitor, total returns from underlying property assets reached 1.8% in Q2, and averaged 7.0% for last 12 months to June, compared to the 2.1% delivered in Q2 last year, and 8.4% for the corresponding 12 months period.

Sweden direct property performed well in Q2 against other asset classes. Equities, property equities and bonds (MSCI/JP Morgan 7-10 year) delivered negative returns in the range of -1/2%. However, for the past 12 months the higher risk asset classes, such as equities and property equities, have been the top performers, returning 18% and 20% respectively.

The commercial property return of 7.0% to June was driven by income returns of 5.4% and capital appreciation of 1.6%.

Since the introduction of IFRS in 2005, annualised income returns for the sector has been fairly steady, shifting by a mere 100 basis points, and still currently hovering at a historic low, with the long term average 5.7% since 2005.

Annualised capital values have been considerably more volatile, with a spread of almost 15 percentage points since 2007, from a high of 10% per annum in Q3 07, to a low of -5% in Q1 09. The historical average, since 2005, was 3.3%, which was still double the rate of inflation (1.6%).

Erik Nyman, Vice President & head of Nordic business development, IPD said, 'Value appreciation has come down a notch but total returns remain attractive alongside the stability the sector offers. Though bond yields have been significantly higher recently, real estate continues to offer an appealing spread, and the income returns offered should continue to attract capital.'

The IPD Sweden Quarterly Listed Property Market Monitor is based on public information from 15 listed property companies on NASDAQ OMX Stockholm. They all conduct quarterly property valuations and hold properties valued at SEK 279 billion, which amounts to slightly more than 25% of the total Swedish commercial investor market. The sector held SEK 120 billion of property assets at the start of 2005 and has since more than doubled in size. Eleven companies have been listed since the introduction of IFRS.

The companies included in the monitor are Atrium Ljungberg, Balder, Castellum, Corem, Diös, Fabege, FastPartner, Heba, Hufvudstaden, Klövern, Kungsleden, Sagax, Tribona, Wallenstam and Wihlborgs. Historically delisted property companies are also included.