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Billions hidden in municipalities’ property portfolios

Staffan Dahlén • 14/10/2020
Values amounting to hundreds of billions SEK are hidden in Swedish municipalities’ property portfolios, according to Cushman & Wakefield's report Välfärdsutmaningen (The Welfare Challenge).
Stockholm 14 October 2020 – Values amounting to hundreds of billions Swedish kronor are hidden in the municipalities' property holdings, according to Cushman & Wakefield's report Välfärdsutmaningen (The Welfare Challenge). The report, which is the only one of its kind, ranks all of Sweden's 290 municipalities and their ability to finance and carry out investments in schools, healthcare and nursing homes. Among the municipalities that are best placed, besides the major cities Stockholm and Gothenburg, are, for example, Luleå, Helsingborg, Nykvarn, Linköping, Västerås and Nacka.

Anders Elvinsson, Head of Valuation & Strategic Advisory, Cushman & Wakefield says; "In addition to the challenges entailed by a growing and aging population, many of Sweden's municipalities have significant and in many cases urgent investment needs in their property portfolio. They would benefit from putting a greater focus on their property portfolio. It is a forgotten treasure. Active work with property ownership alongside a careful analysis of what should be owned and run by themselves,  are key factors to meet the municipalities' financial challenges in the future."

The report maps out and ranks all of Sweden's 290 municipalities and their ability to finance and carry out future investments in schools, healthcare and nursing homes. The ranking is based on official statistics from a number of authorities and industry players. The report is designed together with several of Sweden's leading developers of social infrastructure and people in the municipal sector.

Annie Lilja, Senior Consultant, Strategic Advisory, Cushman & Wakefield says; "Not surprisingly, we can see that a large number of the municipalities that receive high scores in the ranking are found in Sweden's metropolitan counties or constitute one of the larger regional cities. In these places, jobs are  to a larger extent found in the service sector. A high proportion of the population has post-secondary education, a low average age, a high average income and the municipality has lower unemployment.”

Common to the municipalities that have scored high in the ranking is good finances in form of low net costs per inhabitant, low city government? subsidies, large tax revenues and positive population growth. Other factors that have a positive effect on a municipality's position in the ranking are low average age, high proportion with post-secondary education and high average income. The number of inhabitants and population density in the municipality have little impact on how they place in the rankings.

The report shows that many municipalities are facing major financial challenges. Mainly as a result of a weakened economy and additional costs caused by the outbreak of the pandemic, but also as a result of changing demographic conditions.  

There is an increasing need for investments in schools and healthcare and an extensive and urgent need for renovation of both properties and infrastructure in order to maintain a good service to the municipal residents. In order to maintain a healthy balance in the municipal finances, it will become even more important to prioritize investments and find alternative solutions.

Staffan Dahlén, Head of Strategic Advisory, Cushman & Wakefield says; "There are many different ways  capital can be made available from the municipal property portfolio, that can enable necessary investments in schools, healthcare and nursing homes. We can offer Sweden's municipalities property-related advisory services linked to these measures." 

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