Is buying a property in Södermalm a good investment?

Last updated on December 29, 2023

Yes, the analysis of Stockholm's property market is included in our pack

If you've enjoyed the trendy bars and cultural scene of Södermalm, you might have considered making it your next destination for a property investment in Stockholm.

Is it a good idea though? What's the current state of the real estate market in that area? Are property values appreciating or depreciating? Are investors seeing returns on their real estate investments? How's the demand for rentals?

We'll answer all these questions for you! When building and updating our property pack for Sweden, our team has been researching and surveying this area. In fact, there is significant customer interest in investing there. Therefore, we believe it would be beneficial to include some information about it in our property pack.

Why do property buyers like investing in Södermalm?

Södermalm, a district in Stockholm has become a magnet for property buyers, and it's not hard to see why.

Its allure lies in a blend of unique attributes that set it apart from other real estate markets, not just in Stockholm but beyond.

Diving into what makes Södermalm stand out, the area is steeped in a rich cultural tapestry. It's known for its bohemian vibe, artistic flair, and a lively street life that echoes the spirit of the community.

The district is adorned with a variety of boutiques, cafes, and galleries, making it a vibrant place to live. This cultural richness is a stark contrast to more traditional or residential-focused areas in Stockholm.

The rise in Södermalm's popularity can be traced back to the early 2000s. It transformed from a predominantly working-class neighborhood to a trendy hotspot, attracting a wave of young professionals and creatives. This shift was fueled by the district's evolving cultural scene and urban regeneration projects.

Its popularity doesn't seem to be a fleeting trend. The sustained demand for properties here is backed by the continual influx of people drawn to its unique lifestyle, indicating that the hype around Södermalm is here to stay.

Speaking of the people it attracts, Södermalm is particularly appealing to a diverse crowd. From young professionals and artists to families looking for a dynamic urban environment, the district offers something for everyone. Its reputation as a creative hub makes it especially attractive to those in artistic and cultural fields.

However, Södermalm isn't without its drawbacks. The popularity of the area has led to a significant increase in property prices, making it less accessible for buyers on a tight budget.

Also, the bustling nature of the district might not appeal to those seeking a quieter, more suburban lifestyle. The balance between urban vibrancy and peaceful living is a delicate one, and Södermalm leans more towards the former.

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Why is Södermalm a nice place to live?

Södermalm has a unique charm that makes it a great place to live.

Its lifestyle and culture are among the most appealing aspects. Known for its bohemian and artistic atmosphere, Södermalm is bustling with creativity, evident in its diverse range of cafes, boutiques, and galleries. This artistic flair provides a vibrant, lively environment that's quite distinct from other areas.

The expat community in Södermalm is thriving, thanks to the area's inclusive and welcoming vibe. Expats often find it easy to integrate, given the district's cosmopolitan nature and the prevalence of English speakers. It's not uncommon to find cultural events or meet-ups tailored to the expat community, fostering a sense of belonging.

Living in Södermalm does come with a cost. Due to its popularity and central location, the cost of living here can be higher compared to other parts of Stockholm.

Housing prices, in particular, are on the higher side, reflecting the demand for properties in this area. Many find the cultural richness and vibrant lifestyle worth the expense.

Safety in Södermalm is generally good, as in most of Stockholm. The district is considered safe, with well-lit streets and a visible police presence. Residents often feel comfortable walking around at night.

In terms of amenities and facilities, Södermalm is well-equipped. There are numerous schools, such as Södermalmsskolan and Vittra Södermalm, catering to different educational needs.

Healthcare facilities like Södersjukhuset Hospital ensure residents have access to medical care. For shopping and leisure, there are plenty of options, including Ringen Centrum and the popular SoFo district, known for its unique shops and restaurants.

The quality of infrastructure in Södermalm is high. Roads are well-maintained, and utilities function reliably. Internet connectivity is excellent, a standard feature in tech-savvy Sweden. This combination of infrastructure and services makes everyday life both convenient and comfortable.

Accessibility is one of Södermalm's strong points. It's well-connected to other parts of Stockholm, making commuting and traveling across the city straightforward. Major transport hubs like Stockholm Central Station and Stockholm Bromma Airport are easily reachable.

Public transportation options are plentiful, with an extensive network of buses, the Stockholm metro (Tunnelbana), and ferries, particularly useful for crossing over to other islands or parts of the city.

How much does it cost to buy real estate in Södermalm?

If you need a detailed and updated analysis of the prices, rents and yields, you can get our full guide about real estate investment in Sweden.

When it comes to buying property in Södermalm, several factors come into play, including the types of properties available, market demand, and pricing trends.

In Södermalm, the residential properties primarily consist of apartments. These range from compact studio flats to spacious multi-bedroom apartments. Houses and luxury villas are less common in this urban and densely populated area.

The high demand for apartments, especially those with views of the city or water, reflects the urban lifestyle that many residents seek in Södermalm. This preference is influenced by the district's vibrant cultural scene and proximity to central Stockholm.

The real estate market in Södermalm is a mix of new developments and resale properties. While there are new residential projects, a significant portion of the market consists of older, well-maintained buildings with historical significance. These older properties often attract buyers due to their unique character and central locations.

The price range for properties in Södermalm varies, but it's generally on the higher side due to the area's popularity. Prices per square meter can range significantly.

For example, smaller apartments might have a higher price per square meter compared to larger ones. It's also important to note that properties with unique features, such as a terrace or water view, command a premium.

Over recent years, property values in Södermalm have seen a steady increase. This trend is driven by the area's ongoing popularity, limited supply of new properties, and the general attractiveness of Stockholm's real estate market.

However, it's important to consider that real estate markets can fluctuate based on wider economic conditions.

Looking ahead, there may be developments or city planning changes that could affect property values in Södermalm. For instance, improvements in infrastructure or the addition of new public amenities could make the area even more desirable.

On the other hand, changes that affect the character or density of the neighborhood could have a different impact.

Predicting the real estate market's direction in Södermalm in the coming years isn't straightforward, as it's subject to various external factors like economic trends, interest rates, and even global events.

However, given its status as a sought-after area in Stockholm, it's likely that demand will remain strong.

Several factors indicate a potential increase in property values in Södermalm. These include the district's enduring popularity, the limited availability of new properties, and the general trend of urbanization where city centers become increasingly desirable.

Additionally, Södermalm's unique cultural and historical appeal continues to attract a diverse range of buyers, suggesting that its real estate market will remain vibrant.

Where is the best area to buy a property in Södermalm?

Finding the best area to buy a property in Södermalm can be quite subjective, as it largely depends on what you're looking for in a neighborhood.

Södermalm, often affectionately called "Söder" by locals, is diverse in its offerings, with different parts of the district presenting unique atmospheres, property types, and price ranges.

Firstly, the northern part of Södermalm, closer to the city center, is known for its vibrant, bustling atmosphere. This area is filled with trendy cafes, shops, and a lively nightlife. Properties here are often historic with charming architectural details, but they can also be pricier due to their central location and historical value.

In contrast, the southern parts of Södermalm tend to be more residential and calm. Here, you might find more spacious apartments, and occasionally, small houses.

The atmosphere is more relaxed, and the pace of life is slower, making it a good choice for families or those who prefer a quieter environment. The prices here can be more moderate compared to the north.

An up-and-coming area within Södermalm is the district around Hornstull. Once overlooked, Hornstull has undergone significant development in recent years and has become increasingly popular. It offers a good mix of urban living and nature, with nearby parks and waterfront areas.

The property prices in Hornstull are currently on the rise, but it still offers value compared to more established areas.

When considering where to buy a property in Södermalm, areas like Mariatorget and SoFo (South of Folkungagatan) are also worth exploring.

Mariatorget is known for its beautiful square, trendy atmosphere, and historical buildings, while SoFo is famous for its creative and bohemian vibe, with numerous boutiques, bars, and restaurants. Both areas are highly desirable, but as a result, property prices can be quite high.

On the contrary, certain parts of Södermalm might be less advisable for property buyers, depending on their preferences. For instance, areas closer to the major roads can be noisier and less charming.

Also, some parts might lack the same level of amenities and local charm found in other areas of Södermalm.

Ultimately, the best area to buy a property in Södermalm depends on your personal preferences, lifestyle, and budget.

Whether you're drawn to the bustling urban atmosphere of the north, the tranquil residential vibe of the south, the trendy emerging areas like Hornstull, or the cultural hotspots like Mariatorget and SoFo, Södermalm offers a diverse range of options to suit different tastes and needs.

Here is a summary table to help you visualize better. If you need more detailed data and information, please check our property pack for Sweden.

Area	Atmosphere	Property Types	Price Trends
Northern Södermalm	Vibrant and bustling, close to city center	Historic apartments	Higher due to location and historical value
Southern Södermalm	Residential, relaxed, quieter	Spacious apartments, occasional houses	Moderate, more affordable than the north
Hornstull	Up-and-coming, mix of urban and nature	Variety of apartments	Rising, but still offers value
Mariatorget	Trendy, historical, vibrant square	Historical buildings, apartments	High, desirable location
SoFo (South of Folkungagatan)	Creative, bohemian, cultural hotspot	Boutique apartments	High, popular area

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Is there a strong rental demand in Södermalm?

Södermalm is indeed experiencing a strong rental demand, a trend influenced by its vibrant lifestyle, diverse culture, and attractive location.

The nature of this demand, however, varies between short-term and long-term rentals, each catering to different demographics and preferences.

For short-term rentals, the demand is primarily fueled by tourists and business travelers attracted to Södermalm's lively urban atmosphere, rich cultural scene, and proximity to Stockholm's city center.

Short-term tenants typically look for furnished apartments or studio flats that offer convenience and a sense of local living. These properties are especially sought after in areas like SoFo (South of Folkungagatan) and around Mariatorget, known for their bustling streets, eclectic shops, and a plethora of dining options.

On the other hand, long-term rentals cater more to professionals, expats, and families who are drawn to Södermalm for its unique blend of urban living and community feel.

The profiles of these tenants vary; professionals and expats often seek modern, well-equipped apartments close to public transport and local amenities, while families might prioritize larger apartments or those close to parks and schools.

Areas such as the quieter southern parts of Södermalm or near Hornstull, with its mix of urban and natural landscapes, are popular for long-term rentals.

Amenities can significantly influence rental demand. Features like high-speed internet, modern appliances, balconies or outdoor space, and proximity to public transport can greatly reduce vacancy rates.

These amenities align with the lifestyle expectations of Södermalm's typical renters, who value both the convenience and quality of living.

Regarding potential returns on investment, Södermalm's rental market can be quite lucrative, although the exact figures vary depending on the property type and location.

Generally, properties in high-demand areas or those offering sought-after amenities can command higher rents, leading to potentially attractive yields for investors. It's important to note, however, that market conditions and regulations can affect these returns.

Currently, smaller apartments, especially those well-connected to the city center or in trendy areas like SoFo, are seeing increasing demand. These properties can offer better yields due to their popularity among both short-term and long-term renters.

The trend is leaning towards properties that provide a balance of comfort, convenience, and access to the vibrant lifestyle that Södermalm is known for.

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Is it easy to buy a property as foreigner in Södermalm?

Before we answer the question, please know that we have an article dedicated to the experience of buying real estate as a foreigner in Sweden.

Buying property in Södermalm, Stockholm as a foreigner is relatively straightforward, thanks to Sweden's open and welcoming approach to property ownership.

There are no specific regulations or restrictions that apply solely to foreign buyers, which makes the process quite accessible.

In terms of the purchasing process, it's similar to what you would find in many European countries. It typically starts with property hunting, either online or through a real estate agent.

Once you find a property you're interested in, you would usually make an offer through your agent. In Sweden, it's common for properties to be sold through a bidding process, which can be competitive, especially in popular areas like Södermalm.

After your offer is accepted, the process moves to signing a purchase agreement and paying a deposit, usually around 10% of the purchase price. The final step involves transferring the remaining amount and registering the property in your name.

However, there are some risks and pitfalls associated with property investment in Södermalm. The property market in Stockholm can be highly competitive, with high demand and limited supply in popular areas.

This can lead to bidding wars and inflated prices. Additionally, as a foreigner, navigating the legal and financial aspects of buying property in Sweden can be challenging without proper guidance.

One unique aspect to be aware of in Sweden is the concept of 'bostadsrätt' (housing cooperative). Many apartments in Stockholm are sold as bostadsrätt, where you're technically buying the right to use the apartment rather than the property itself.

Understanding the nuances of bostadsrätt, such as monthly fees and the cooperative's financial health, is crucial.

Working with a local real estate agent or lawyer is highly recommended. They can provide invaluable assistance in navigating the local property market, understanding legal requirements, and ensuring that all necessary steps are taken correctly. They can also help in understanding and adhering to the rules of housing cooperatives, where applicable.

As for exit strategies, property investors in Södermalm typically consider either selling the property outright or renting it out. The rental market in Stockholm is robust, so renting out can be a viable long-term investment strategy.

However, if you're planning to sell, it's important to keep an eye on market trends and time your sale to maximize returns.