he COVID-19 pandemic has put the world on hold. Around the globe, businesses, meetings and events have been closed, shuttered, postponed and fundamentally changed their way of operating. In many parts of the world, certain types of business (such as bars or entertainment centers) are still not allowed to be open at more than 25 percent capacity (if at all). And now, this fall, we're seeing a resurgence in cases in many places. But Sweden has made the news for taking a different approach. What does it look like from Stockholm?
Read the reflections of Olle Zetterberg, Former CEO of Stockholm Business Region, on the impact of COVID-19 on inward investment and the Stockholm brand from a Swedish perspective.
(Zetterberg will be a panelist in the upcoming UP webinar on Place Branding Nov. 19).
Reflections on the pandemic in Sweden
1. The overall picture is that the Swedish economy, while not immune from the affects of the pandemic, is fairing well, and both government and private funds are making investments in Stockholm businesses.
A report from the research firm Capital Economics published [in July] found that the Swedish economy was the least harmed in Europe, describing it as the "best of a bad bunch."
Though Sweden was not immune to the pandemic's economic impact, it was the only major economy to grow in the first quarter of the year, the report noted.
2. Property investment has continued at an even more rapid pace. There are, of course, differences based on the COVID-19 effects. Retail-related real estate has not been so successful.
According to the Cushman & Wakefield “Property Investor Confidence Index” conducted in late August, Investors show an optimism for the Nordic real estate investment market:
The confidence dip in the beginning of Q2 has turned around and real estate is once again deemed an attractive investment opportunity. However, the expected demand for space is still uncertain for retail and also a bit more for the office segment compared to previous surveys. According to a new report from Invest Sweden, Stockholm is the third largest office hub in Europe for companies on the Forbes Global 2000 list, with many in the ICT sector; a sector that is thriving in the current environment.
3. High Street in Stockholm has been struggling for a couple of years in the CBD and the pandemic has made it worse.
Sweden's gross domestic product took its largest tumble in a single quarter in modern history during the second quarter of this year, despite the country's decision to not shut down its economy.
The nation's GDP fell 8.6% during the three-month period ending in June, according to preliminary figures from Statistics Sweden. Yet, Sweden's economic output declined at a lower rate than that of many other European countries.
4. The residential market has been booming after this year when people work from their homes and need more space and want to move to something more spacey or alternative kick out their older kids to new apartments.
Kristoffer Sandberg, Head of Capital Markets at Cushman & Wakefield in Sweden: “Although most investors are still interested in offices, they are clearly less likely to buy projects or vacancy risk, which until March this year was rather considered a potential for future rental development. We currently see the greatest interest in multi-family, public and logistics properties, where the latter is driven by the strong growth for e-commerce also intensified further now during the pandemic.”
5. The real winner is, of course, logistics, since e-commerce has exploded after the pandemic.
In the early part of the pandemic based on reports from a survey of nearly 1,000 companies and government agencies by Unifaun, suggested that:
- 54% of eCommerce companies have increased or similar orders as expected, with 25% having a noticeable increase vs plan (and a bit higher among the larger customers)
- 16% of B2B companies (no direct ecommerce sales) and 22% of omnichannel companies saw an order decrease of more than 50% compared than expected
- Still, a very large fraction of the respondents indicated that they saw no major impact yet, with 40% in B2B noticeable
6. Investment in startups seems to be even bigger than in 2019 if the trend continues. Fintech is a big share of the startups in Stockholm that have grown from the pandemic when, for example, payment solutions go hand-in-hand with e-commerce.
7. Talent attraction has been a little bit different depending whether its people from the EU, who are, in some cases, looking for a more relaxed COVID-19 policy based on trust rather than control, or from other continents, who are experiencing problems getting here.
Many jobs in Sweden have been directly or indirectly affected by the coronavirus crisis. Nearly 37,000 workers were laid of in March, while many other workers have had their hours cut, need time off sick or have to work from home.
8. The Swedish Institute does annual surveys about the perception of Sweden in the world, but this year they decided to wait because of the rapid changes in the world due to the pandemic. Instead, they are more focused on media coverage.
The studies that SI conducted between 2017 and 2018 demonstrate that the general public in the countries examined have an overall positive image of Sweden. Despite ongoing discussions about Sweden’s declining image abroad, the studies show that the general perception of Sweden in the countries considered has in fact become more positive in recent years.
9. The Stockholm investment agency, Invest Stockholm, is working this year with retention to help companies in Stockholm survive the pandemic. Different financial support has been offered from the government and other national authorities. For hotels and the event industry, it has been a nightmare while others have been doing fine.
AMF, Stockholm, will invest 2 billion Swedish kroner ($211.8 million) in the subordinated equity or debt of private companies in Sweden that are in need of additional capital due to the continuing impact of the coronavirus pandemic.
10. Finally, a short speculation on how the Stockholm brand has been affected. We have not had any lockdowns, but instead a lot of recommendations from the government, which has stated that they trust in citizens use their own common sense. The truth is, however, that Sweden lacks the military and police force necessary to control a lockdown. Taking the softer approach is pragmatic.
David Oxley, senior Europe economist at Capital Economics, said that the sharp contraction of the Swedish economy during the second quarter "confirms that it has not been immune to COVID, despite the government's well-documented light-touch lockdown."
11. According to the rating in the Ipsos Nations Branding Index 2020 from this summer Sweden still holds 9th place just like before. The interest from international media has been big but it is too early to say whether it should end positively for the brand or not. So far there has not been any distinct negativism about the Stockholm brand.
Place Branding Webinar
Hear more from Zetterberg and several other place branding experts from across Europe at the upcoming Place Branding Webinar, Place Branding Question Time: Is Inward Investment Dead?