Yields Expansion Stabilising
Trophy assets in major cities can achieve yields as sharp as 3.0-4.0%, while transactions outside capital markets typically trade in the 7.0–8.0% range. Supported by robust market performance and positive growth outlooks, the Nordics continue to stand out as a secure yet compelling destination for hotel investment capital.
The recent yield expansion across the Nordic capitals has largely stabilised, with 2024 having seen 15–50 bps increases across the capitals. Supported by improving market performance and successful refinancing activity, a gradual compression of yields is anticipated. Nevertheless, select distressed sales are still expected, as certain assets and owners continue to face refinancing challenges. Banks have become increasingly reluctant to grant extensive maturity extensions or forbearance agreements - an issue that persists even as interest rates have moved closer to more comfortable levels.
The Nordics continue to punch above their weight in the European hotel investment landscape. Despite being relatively small markets in terms of population, Sweden and Denmark accounted for 6% and 5% of total European hotel transactions in H1 2025. This robust investment activity reflects the region’s reputation for transparency, liquidity, and operational resilience.
Investors are increasingly attracted to the Nordic hotel market for its stability, and institutional maturity. Prime yields in the Scandinavia remain among the lowest in Europe -ranging from approximately 4.80% in Copenhagen to 5.25% in Oslo - reflecting the region’s strong fundamentals and limited risk profile.
Strong market performance support yield tightening, but not everyone is out of the woods yet
Selection of Nordic Transactions
2024 – 2025 September
Is the Nordic Lease Model Under Pressure
The Nordic hotel market has long stood as a stronghold of fixed leases with limited variable upside, characterised by steady yields and dominated by established domestic operators and pension funds. Historically, both investors and lenders have valued the region’s low-volatility structure - one built on predictable cash flows and minimal operational exposure. Yet the dynamics are shifting, and change is emerging from several directions.
The pandemic served as a wake-up call for many investors, revealing that even long standing leases are not entirely bulletproof. Some agreements contained no cap on CPI linked indexation, leading to sharp rent escalations as inflation surged.
In several cases, operators have since struggled to meet their lease obligations despite healthy trading performance, resulting in a decline in lease cover ratios. This, in turn, has compressed investor confidence and widened the perceived risk premium, causing a softening in yields for lease-backed assets.
While financing is not currently seen as the primary challenge in European real estate markets - despite the tightening effects of Basel III/IV - the persistent yield gap between buyers and sellers remains a concern. This gap is expected to endure, particularly for assets that have not yet been repositioned or upgraded to achieve sufficiently high ESG Nordic Prime Yields ratings, a key requirement as core and core plus investors gradually re-enter the transaction market.
The Nordics attract lenders, investors, and operators alike - from core city centre assets to high-yield luxury resorts.
The Rise of Flexible Agreements and New Market Entrants
At the same time, international investors are becoming increasingly active across the Nordics, bringing with them a more flexible investment philosophy shaped by continental European and UK practices. Accustomed to management agreements elsewhere, these investors are more willing to embrace operational exposure where they see genuine value creation potential.
Parallel to this, global operators - many of whom traditionally prefer management contracts - are adjusting their approach by introducing innovative hybrid structures or well-calibrated leases to secure entry into this evolving region. The first wave of this transformation is expected to take root in prime city assets and luxury resort developments, where brand strength, market transparency, and trading resilience support a management-led structure.
Over time, as comfort levels increase and performance benchmarks are established, the trend is likely to extend to other segments, accelerating the adoption of management and hybrid agreements across the Nordic markets. This evolution marks a structural rebalancing of risk and reward between investors and operators, aligning the Nordics more closely with broader European and U.S. investment norms.
Capital Flowing North: Financing Innovation and Opportunity
Crucially, the ongoing transformation in deal structures is supported by a parallel shift in the financing landscape. Private equity funds and pan-European commercial banks are moving northwards alongside investors, attracted by improving liquidity and market fundamentals. These capital providers are structuring transactions through traditional CMBS and mezzanine financing, as well as through pure equity vehicles.
In such cases, loan-to-cost ratios are now reaching 75–80% - a level that is considered quite aggressive in the conservative Nordic lender market only a few years ago. The return of structured debt and hybrid capital is providing investors with enhanced leverage options, supporting more dynamic transaction and development activity even in a pricing environment marked by uncertainty. Across Europe, leisure travel has fully recovered and now exceeds 2019 levels, driven by strong consumer demand for experiences and higher spending per trip.
For investors, this new landscape offers both opportunity and complexity. Management agreements and hybrid structures can unlock significant upside but require a deeper operational understanding and an active asset management approach. Those capable of combining financial discipline with an appreciation of brand strategy, market cycles, and the distinct features of the Nordic investment environment will be well positioned to capture the next phase of value creation in this evolving hotel market.
Nordic Investment Outlook
The outlook for the Nordic hotel investment market is increasingly optimistic, underpinned by growing investor confidence and structural shifts in deal-making. Investors are showing willingness to acquire the right hotels and take calculated operational risks, moving beyond the region’s traditional preference for fixed leases. While Nordic pension funds have yet to divest in large volumes, selective sales and recapitalisations are expected to create entry opportunities for private equity, family offices and cross-border institutional investors.
With hotels proving inflation-resilient globally, the Nordics are attracting buyers from outside the region, drawn by transparent governance, sound political landscape, and strong domestic economical fundamentals. Business travel, however, remains subdued as corporates remain cautious on budgets and the culture of remote work reshapes the nature of meetings and events. This divergence is influencing investment strategy: while capital cities such as Copenhagen, Stockholm and Oslo, continue to perform strongly, investors are increasingly focusing on leisure-led assets and mixed-use developments with lifestyle, F&B, and wellness components that cater to shifting demand.
At the same time, structural tourism trends favour the region’s long-term appeal. The “coolcation” movement and sustained global interest in Lapland, Lofoten and other nature based destinations continue to fuel international demand, supporting both occupancy and rate growth.
As capital from Europe, the Middle East, and Asia flows north, the Nordic market is set to become more diverse and sophisticated, characterised by a wider range of ownership structures, management models, and investor types. With robust fundamentals, ESG leadership, and rising global visibility, the Nordics are positioned to emerge as one of Europe’s most compelling and resilient hotel investment destinations in the years ahead
Positive Growth in Majority of the Cities
RevPAR performance across the Nordics remains generally strong, with clear regional distinctions. Lapland continues to perform exceptionally well, driven by robust winter tourism and increasing international demand. However, a significant portion of overnight stays are absorbed by Airbnb and short-term rentals, as hotel capacity struggles to meet seasonal peaks.
In contrast, Helsinki’s market remains subdued, impacted by the Russia–Ukraine war, reduced air connectivity to Asia due to restricted airspace, and a surge of new supply introduced just before the pandemic, which continues to weigh on performance.
In Sweden, the market shows continued resilience, supported by strong domestic purchasing power and sustained local demand, with Stockholm and Malmö maintaining upward momentum.
Gothenburg is gradually recovering following a period of heavy new supply absorption.
Meanwhile, Copenhagen continues to outperform, pushing already high room rates even higher, solidifying its position as one of Europe’s most attractive and liquid hotel markets.
