The Swedish city of Malmo has undergone something of a transformation in recent years. Its once-thriving shipping industry fell into ruin following the oil crisis of the 1970s, which led to population flight and mass unemployment.
However, since 2000, Malmo has reinvented itself as a city of knowledge, start-ups, services and sustainabile technology. Kockums shipyard, which formerly employed 6000 people, has been replaced by 250 companies employing 8000.
Now Sweden’s fastest changing and third largest city, Malmo also claims the third largest share of the country’s real estate market, with roughly 10% of Sweden’s transaction volume based on the past three years.
Malmo’s transition began in 2000 with the founding of Malmo University – located, unusually, within the city’s central business district – and the construction of the Oresund Bridge, which connects the city to the Danish capital of Copenhagen, 29 kilometres to the west.
Bringing Malmo within a 20-minute drive of Copenhagen’s 4 million inhabitants and international airport, the largest in the Nordic region, the bridge turned Malmo into Sweden’s gateway to Europe, thereby attracting companies such as Ikea and IBM and the Nordic regional head offices of other multinationals. Unsurprisingly, the city’s unemployment and vacancy rates have plummeted in line with its ongoing economic boom.
Malmo now has Sweden’s highest rate of inbound immigration and ethnic diversity, proportionate to its small population of 341,000, with a total 181 different nationalities represented. Its inhabitants often commute to Copenhagen for work, and vice versa. Malmo is also the youngest city in Sweden, with more than half its population under the age of 35, not least because the cost of living is much lower than Stockholm’s.
The youthfulness of Malmo is also boosted by five major universities located close by. The city’s main clusters are in greentech, gaming, media and medicine. Director of city planning Christer Larsson says Malmo has the most vibrant and dense start-up and tech scene in Sweden proportionate to its size.
Real estate opportunities
As with every big city in Sweden, Malmo has a shortage of rental homes and a huge demand for them, partly due to a nationwide shortage of affordable houses on sale. Consequently, international investors such as Starwood Capital and Vonovia have recently made bids on Malmo-based real estate company Victoria Park or on ready-developed rental properties.
Mr Larsson says he has seen international investors taking advantage of Malmo’s run-down areas, which can be refurbished into high-value rentals. Another opportunity is to buy co-ops – economic associations – which is generally how Swedes buy an apartment. In Malmo, many co-ops are going into debt and then being sold and transformed in the rental market.
Similarly, a growing number of ‘public houses’ (apartments let by the government) are on sale because municipalities are not able to maintain and manage them, which has attracted several international pension funds.
With such a fast-growing economy, there is great demand in Malmo for office space. Unlike Stockholm, the city has plenty of centrally located land available for development, according to Anders Jarl, president of Wihlborgs, the real estate company that has overseen most of Malmo’s redevelopment. For example, a large mixed-use office district is being built close to the central station.
Other initiatives include the Malmoring, which is reviving the old railway that encircles Malmo. “The railway was a social barrier. We are creating new stations which will be nodes for integration. Around them, we’ll establish new enterprises, housing and cultural spaces,” says Mr Larsson.
Malmo aims to power itself entirely through renewable energy by 2030. “We’ve put a lot of effort into creating a sustainable city and we work closely with the private sector when developing new areas,” says mayor Katrin Jammeh. “We recently released SKr1.3bn [$147m] of green bonds available for private investors to buy."
The city’s Western Harbour district, entirely powered by renewable energy, has received international attention and is now being used as a model for the rest of Malmo. This is why one of Sweden’s largest developers, Skanska, “is really focusing on sustainable properties in Malmo”, according to the company’s regional director Camilla Wieslander.
However, Wihlborgs’ Mr Jarl maintains that the best option for foreign investors is the stock market. “I think it’s difficult to develop as a foreigner, without local expertise, and buy yourself a position in the market,” he says. Potential developers might seek the help of footballer Zlatan Ibrahimovic, who recently lent his support to a project in his home district of Rustenburg.