With a booming economy and a steady rise in property in the Norwegian capital should you consider an investment in the city of Oslo?
The city of Oslo is home to almost 600,000 and is the capital of one of the richest countries on earth. Unlike countries such as Sweden – where housing is almost entirely dominated by cooperatives and government housing – or Denmark where it is very difficult to buy property as a foreigner, Norway offers no restrictions on the purchase of property by foreigners.
Oslo has some of the most expensive property in the world and property values have quadrupled over the last twenty years.
This has been driven by a combination of cheap credit, a growing economy and rising wages, in addition to an influx of both Norwegian and foreign immigrants to the city.
Indeed the city is said to be the fastest-growing in Europe, with intense capital spending combining with the proliferation of luxury housing, which is mainly located in regions such as Frogner.
On the other hand other areas of Oslo such as Gronland are not well-regarded, and may represent a bargain at current prices if a period of gentrification similar to that seen in cities such as New York and London takes place, where once crime-ridden neighbourhoods became extremely wealthy.
Before considering whether you want to risk capital in a more dangerous area or stick to a well-established suburb you should consider the taxes that you may face as a foreigner in the real estate market.
Capital gains tax is a painful 27 per cent, while inheritance tax should not be a problem as it was removed at the beginning of 2014. Similarly rental income is taxed at this rate, which could put a knock into any profits made from tenants.
There is also a ‘wealth tax’ in Norway which may be up to one per cent of your assets. However I am not certain if this is required to be paid if you own a commercial or residential property in Oslo but are not resident in Norway.
For those seeking to purchase a property in Oslo a good financial adviser who can provide a more detailed knowledge of the tax codes and your potential liabilities would be a good bet.
We think however that despite some of the more onerous taxes on offer that Oslo may prove to be one of the property hotspots of the coming decade given Norway’s strong economy, solid property laws and a wide range of tenants varying from professionals to skilled labourers.