Sweden’s economy has continued to expand in the third quarter of 2009 by a seasonally adjusted +0.2%, however there had been expectations of it rising by +0.6% in the quarter according to Capital Economics.

The economist believes that recent gross domestic product (GDP) data confirmed that Sweden’s economic recovery is fragile and the modest growth suggested little to affirm that the commercial property occupier market downturn is nearing an end, especially as rental values are now falling across all sectors.

The report said: ‘Overall, while it is encouraging that the Swedish economy continued to grow in Q3, the strength of the recovery provides little grounds to call a recovery for its commercial property occupier markets.’

It also noted that at the end of 2008 there was a large fall in GDP which severely impacted office occupier demand and rental values, with office values falling by over -11% since their peak in 2008.

The report stated: ‘The pace at which they are falling has eased, but with a considerable pipeline of speculative office space due to complete in 2010, office rentals will remain under pressure.’

The consumer sector, however, is more positive according to the report as household spending increased for the second successive quarter. Retail sales rose by +1.5% in the year to September 2009, well above the -3% drop in the Euro-Zone as a whole. However, despite this, many occupiers have stopped plans for expansion and so rental values have fallen.