Today, interest rates are rising and inflation is high, factors that also characterized the real estate crisis in the 90s. At that time, no one moved into the newly built properties. The real estate companies fell – and the banks, which lent money to the real estate companies, fell with them.
Christer Gardell, founder of Cevian Capital, sees some similarities with previous crises and today's situation.
"We see that real estate companies' borrowing costs are higher than returns. It's very serious," he told Ekonomibyrån.
Gardell likens many real estate companies to Silicon Valley Bank, which collapsed in March. Just like the American bank, many of the Swedish real estate companies have built up a balance sheet that is very sensitive to interest rate hikes.
"The share value is being eroded and there is not much left, which is reasonable in today's situation," says Christer Gardell.
Is painful
Rutger Arnhult is the incoming CEO of the real estate company Corem. Over the past year, the company's share price has dropped roughly 60 percent.
"Of course it's painful. Companies want to grow, which real estate companies cannot do in the same way today, he tells Ekonomibyrån.
It is a fact that rising interest rates affect real estate companies – depending on how the interest rate environment changes, the situation may improve or deteriorate. But we can expect tensions in the near future, says Gabriell Mellqvist, financial journalist at Dagens Industri.
"We probably haven't seen the last of reluctant sales and bankruptcies of real estate companies," he says.
Don't miss Ekonomibyrån's latest episode Real Estate Crisis on g on SVT Play.