Commercial Real Estate - Iceland | Statista Market Forecast

The Commercial Real Estate market market in Iceland is expected to reach a value of US$28.83bn in 2024.
This projection indicates a steady growth rate of 1.52% annually from 2024 to 2029, resulting in a market volume of US$31.09bn by 2029.
It is worth noting that the United States will generate the highest value in the global Real Estate market, with an estimated worth of US$25.3tn in 2024.
Despite its small size and population, Iceland has seen a significant increase in demand for commercial real estate, driven by a thriving tourism industry and growing foreign investments.

Definition:

Commercial real estate can be defined as properties that are used for business purposes, such as office buildings, retail spaces, warehouses, and industrial properties.

Additional information:

The commercial real estate market contains the value of commercial properties as a key performance indicator. This is the worth of all office buildings, retail spaces warehouses, and industrial properties for the timeline of our data coverage.

Office buildings
Retail spaces
Warehouses
Industrial properties

Residential real estate
Publicly owned buildings used by the local government
Buildings used for public health care services

The Commercial Real Estate market in Iceland has been experiencing significant growth in recent years, driven by a combination of customer preferences, market trends, local special circumstances, and underlying macroeconomic factors. Customer preferences in the Commercial Real Estate market in Iceland have shifted towards modern, efficient, and sustainable properties. Businesses are increasingly seeking office spaces that offer open layouts, flexible workspaces, and advanced technology infrastructure to support their operations. Additionally, there is a growing demand for retail spaces that provide unique experiences and cater to the preferences of the younger generation. These customer preferences have influenced the development of new commercial properties in Iceland, with developers focusing on creating innovative and environmentally-friendly spaces. Trends in the market indicate a growing interest from foreign investors in the Commercial Real Estate sector in Iceland. The country's stable economy, attractive investment opportunities, and favorable business environment have made it an appealing destination for international investors. This influx of foreign capital has contributed to the development of new commercial projects and the expansion of existing ones. Furthermore, there has been a rise in the popularity of mixed-use developments, which combine commercial, residential, and leisure spaces in a single property. These developments cater to the growing demand for integrated and convenient urban environments. Local special circumstances, such as Iceland's unique geographical location and natural resources, have also played a role in the development of the Commercial Real Estate market. The country's abundant renewable energy sources, including geothermal and hydroelectric power, have made it an attractive location for data centers and other energy-intensive industries. This has led to an increase in the construction of commercial properties to accommodate these businesses. Additionally, Iceland's growing tourism industry has created a demand for hospitality properties, such as hotels and vacation rentals, to cater to the influx of visitors. Underlying macroeconomic factors have further contributed to the growth of the Commercial Real Estate market in Iceland. The country's strong economic performance, low unemployment rate, and stable political environment have instilled confidence in investors and businesses. This has stimulated demand for commercial properties, as companies seek to expand their operations and take advantage of favorable market conditions. Additionally, low interest rates and accessible financing options have made it easier for developers and investors to fund new projects, further fueling the growth of the market. In conclusion, the Commercial Real Estate market in Iceland is experiencing significant growth due to customer preferences for modern and sustainable properties, trends such as foreign investment and mixed-use developments, local special circumstances including Iceland's natural resources and tourism industry, and underlying macroeconomic factors such as a strong economy and low interest rates. These factors are driving the development of new commercial properties and shaping the future of the market in Iceland.

Data coverage:

Figures are based on value of commercial real estate.

Modeling approach / Market size:

Market sizes are determined by a bottom-up approach. As a basis for evaluating this market, we use national statistical offices. Next, we use relevant key market indicators and data from country-specific associations such as share of industry, manufacturing, and services of the GPD, price level index, GDP. This data helps us to estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the market, for example, exponential trend smoothing.

Additional Notes:

The market is updated twice per year in case market dynamics change. The impacts of the Russia-Ukraine war are considered at a country-specific level.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

After a challenging period during the coronavirus pandemic, the European commercial real estate sector now faces additional pressures, including inflation, record-high interest rates, and sluggish economic growth. In 2022, these challenges were evident through contracting investment volumes in the two largest markets—the United Kingdom and Germany. Although the shifting economic landscape has impacted all commercial real estate subsectors, industrial and logistics—a property type that demonstrated incredible resilience during the pandemic—continues to be the most popular investment class. The performance of the sector is closely tied to the state of the economy, explaining why cities with flourishing capital markets garner the most interest from investors. In 2023, investors identified London, Paris, and Madrid as the three most attractive markets.

Growing demand for industrial and logistic real estate is prominent in Europe, driven by the increase in online retail sales rather than in-store. All the Nordic countries saw steady growth in their e-commerce sales during the past fifteen years and more, and the growth is expected to continue. Investments in the industrial and logistic real estate industry have generally been at a higher level during the last few years. The highest investment value among European countries in the first half of 2021 was in the United Kingdom, while Sweden topped the list among the Nordic countries, and was fifth in terms of industrial and logistics investment in real estate in Europe that year.