Oil region’s slump ‘will turn around’

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While housing prices are literally going through the roof in most areas of Norway, those hit hard by the oil industry slowdown have seen prices fall. Homes have been changing hands for millions of kroner below appraisal, but some key investors are confident the market will eventually bounce back.

It may be twilight time in Stavanger now, but there are predictions the oil and real estate markets will bounce back. PHOTO: Stavanger Forum

It may be twilight time in Stavanger now, but there are predictions the oil and real estate markets will bounce back. PHOTO: Stavanger Forum

Local newspaper Rogalands Avis recently offered an overview of selling prices and what buyers actually paid in various deals this summer. One villa at Olav Nilssons Gate 52 in Stavanger’s fashionable Eiganes district, for example, had been put up for sale for NOK 13 million (USD 1.6 million) in January of last year. After languishing on the market for a year-and-a-half, it ended up selling this summer for NOK 8.8 million, 30 percent less than its initial market appraisal.

The deal was not unusual. Another house on the same street was listed at NOK 15 million, but sold for NOK 11.87 million. Another home with an asking price of NOK 15 million ended up selling for NOK 12 million.

“One of the biggest challenges in the market now, and in this neighbourhood in particular, is that in many cases there is a wide gap between sellers’ expectations and what the market is actually willing to pay,” real estate broker Sjur Andre Svihus of Eiendomsmegler1 in Eiganes, told Rogalands Avis.

He said that some desperate sellers are setting prices higher than what the brokers recommend. Prices have fallen dramatically in some areas after years of a red-hot market, “and it takes time to communicate this to sellers,” Svihus said.

There was some good news this week, however, when the national real estate brokers’ association released figures showing that Stavanger prices rose for the first time on a month-to-month basis in August, up 1.2 percent over July. Prices elsewhere in Norway are soaring, with Oslo up more than 16 percent.

Thousands of oil industry players roamed the stands at last week ONS gathering, looking for new deals or new jobs. PHOTO: ONS/Elisabeth Tønnessen

Thousands of oil industry players roamed the stands at last week ONS gathering, looking for new deals or new jobs. PHOTO: ONS/Elisabeth Tønnessen

As thousands of people poured into Stavanger last week for the ONS (Offshore Northern Seas) conference, they were visiting a city that’s sobered up considerably in the past two years. Many residents are feeling the pain of unemployment and the difficulty of finding new jobs. Far fewer champagne corks were popping than in earlier years, menus at conference events were much less fancy and there was lots of networking going on, as quite a few former oil industry workers showed up in the hopes of meeting old contacts and tips on new jobs.

Some laid-off oil workers are finding new opportunities in the fishing industry, drawing on their offshore experience to branch into another maritime area. Newspaper Dagens Næringsliv (DN) reported how laid-off oil industry workers contributed to record attendance at last month’s major fishing industry conference in Trondheim.

Meanwhile a Porsche dealer in Western Norway has still managed to sell new Porsche models to the tune of NOK 33 million, DN reported, and used Porsches for NOK 76 million. “The sale of Porsche models and results for 2015 exceeded our expectations,” Audun Hasti of EGD Holding, which runs Porsche Center Bergen, told DN.

Bjørn Maaseide, a former sand volleyball star from Sandnes outside Stavanger, has become an avid real estate investor and is convinced the sagging market in Stavanger will revive. He’s been investing now, while prices are relatively low, and has become one of the largest private players in Stavanger’s commercial real estate market.

“We have a lot of real estate in Stavanger and Sandnes,” he told DN. “It’s doing very well compared to what you might think.” He said owners need to be willing to lease out smaller amounts of space. “That’s a consequence of the oil crash,” he said. “I find having several smaller tenants is less risky than having a few large ones.

“We build and own ourselves. We have a bank of lots at Forus. We have good tenants we build for. Stavanger has a high level of innovation. Stavanger will come back.”

newsinenglish.no/Nina Berglund