Downtown apartment sales slower than expected

There are indications that apartments in downtown Reykjavík are selling more slowly than investors had hoped, Morgunblaðið reports. At least 500 apartments in the area are either for sale or about to be listed for an estimated list price of ISK 25-30 billion (USD 186 million, EUR 161 million). An investor, who chose to remain anonymous, told the newspaper that the supply of downtown apartments appeared to have increased in too short a time.

“We’re moving too fast toward urban compaction,” the investor stated. “It’s better to move slowly toward urban compaction in such a small market. Urban compaction is a good thing, but neither the city nor house builders had in mind to construct buildings that would remain empty … It is likely that part of this housing will be used for something other than apartments, for example hotels. Those could always be converted into apartments, once the attitude toward living downtown has evolved.”

Elvar Orri Hreinsson, specialist at Íslandsbanki bank, states there are indications that slower sales of new downtown apartments could ‘’point to a saturation in the market for more expensive properties, too high pricing or a combination of those two aforementioned factors.” He notes that in general, apartments are selling faster than before, suggesting that people are opting to buy property outside the downtown area. Many new apartments downtown are on the smaller side, intended for first-time home buyers.

Sturla Geirsson, from Rauðsvík construction company, stresses the importance of looking at the market long-term. “The real estate market always moves in waves. Those pass quickly. Demand varies from season to season. In the end, everything will be sold. We’re not concerned about it.”