Norway Real Estate Market Outlook 2025

The Norwegian economy has experienced moderate growth since mid-2022, influenced by successive interest rate increases, spiking inflation, and subdued business demand, which have collectively hindered economic activity. Norway’s GDP grew by 3.2% year-over-year, and 0.9% for the mainland economy in 2024; while inflation continued to cool down to 2.2% in 2024. The Norwegian economy is expected to grow by a meager 0.8% and inflation will cool down further to 1.2% in 2025. The interest rate path may have peaked, But Norges Bank has decided to maintain the interest rate with the first cut is said to come in March 2025.

Investment volume in Norway increased by 45% year-over-year reaching NOK 80 billion in 2024. 2024 was a year with some significant transactions primarily driven by all-equity buyers acquiring prime assets, especially in the office sector. This trend also led to prime yields slightly compressing for office properties, while all other sector prime yields were mostly stable throughout the year. Office was the largest sector with some larger lot sized transactions in early 2024, which took the office sector’s share of total investment to over 40%. Industrial and logistics sector saw another active year in 2024 with 27% of the total investment. Domestic investors were again active in the Norwegian real estate market, closing 80% of the total volume, and the all-equity investors were actively deploying more capital into real estate.

The financing market is beginning to show signs of recovery, which is an important factor for the wider real estate investment recovery. We are at the turning point of the economic cycle, and the sentiment in the investor market is once again becoming optimistic, which is expected to increase activity in the Norwegian real estate market in 2025.