Two Norwegian investors are warning against a downturn in Norwegian commercial real estate that might spread to other sectors.

In an interview with Norwegian business newspaper, Dagens Næringsliv, Ole Petter Kjerkreit and Peter Hermanrud express fears that the market for commercial real estate in Norway is facing a slump similar to the one appearing to hit Sweden.

According to Kjerkreit, the market for syndicated real estate – meaning real estate where a group of investors are sharing ownership of the property – faces the biggest risks. He notes that some investors have recently lost a lot of money in this part of the market.

The two investors consider interest rates to be the key to how the commercial real estate market will develop. Kjerkreit predicts that more investments will turn sour – and warns that a slump in the commercial real estate market could spread to other sectors.

“The real estate market is an important part of the Nordic credit market, and if the losses are significant, this could, to some extent, affect general credit markups here in the Nordic region. If this happens, it could also affect other sectors than property,” he adds.