The housing market in Drammen

Most people are aware that house prices are rising in Oslo. For us as a residential developer, we must think a little differently. We have just opened an office in Drammen – why have we done that? asks Head of Communications at Bonum, Nikolaos Farmakis.

"There's a saying: 'cobbler, stick to your last'. You should preferably stick to what you're good at. It's Oslo we've been good at previously, or still are. It's here we've created the market, it's here we've created our growth. But over time we've also built up a very good network beyond Oslo as well. We've received many good leads, particularly from the Drammen region. And we're fortunate enough to be able to use much of the knowledge we've acquired here – property is transferable – whilst at the same time being humble about the fact that Drammen is a different city, it's a different way of doing things, there are different decision makers, different people to talk to. We're fortunate to have brought in two people who have local expertise, have a local network, live in Lier municipality, who sit there daily and feel the pulse of the market, and we believe that Drammen is a very good place to be going forward," answers Head of Investments at Bonum, Daniel Støen.

"Why are we so focused on Drammen? What's so special about Drammen?" comments Nikolaos.

"Drammen is close to Oslo. Several people commute there, and we know that market quite well. But I'd like to highlight three main points which I believe are important for why Drammen is exciting going forward. You have urban development and demographics, you have market development, and then you have the future in Drammen. Take urban development and demographics: in the 1990s, there were some who tried to launch Drammen as Norway's Venice. It didn't work. Nobody believed in it. Back then Drammen was quite grey, had little identity and was a place you drove past. Then the politicians took action. In 2005, they launched the reputation project 'Elvebyen' (The River City). They quantified how many homes were to come, where they would be located, what type of business, how many workplaces, green spaces, they started an advertising campaign which has run on TV2 nationwide, just to increase publicity for Drammen. They started new events, for example, a World Cup sprint in the city centre in cross-country skiing. Such things increased interest in Drammen. You can also see it in the population growth in the city. From the turn of the millennium it was 25%, compared with 17% in Buskerud and 16% in the country generally. It's not just that Drammen has become greener and nicer, it's also something about the prices."

"Which is point number two, market development. In 2016, prices in Oslo rose considerably, as you know, over 20%. Second place on the list was Drammen, 16.5%. Now it's the case that we know from other asset classes that high volatility is high risk. So the question is, can one justify the high growth in Drammen with fundamental conditions? We believe that one can. Average prices in Drammen are still below the national average. The average is 40,000 per square metre, whilst the national average is 41,000. In Oslo it's 72,000, so that's much higher. In May, prices in Drammen rose by half a percentage point, whilst in Oslo they fell, as you know, by 1.4%. Turnover speed in the country is fastest in Drammen. When you list a property in Drammen, it takes 13 days on average from when it's listed until it's sold. In Oslo, the time is 17, whilst nationally it's 31. I've been in Drammen recently, and you can see that a lot is happening there. There are tower cranes all around, many Oslo operators have entered the city and have really had their eyes opened to Drammen. At the same time, there's a large backlog, there are several areas that need refreshing."

"That brings us then to point three, the future in Drammen. Drammen municipality has quantified that by 2040, they need 10,000 new homes and 11,000 new workplaces. Lier municipality, which is the neighbouring municipality, has figures of 4,000 new homes and 5,000 new workplaces. They have joined together to create 'Fjordbyen' (The Fjord City) Drammen. When you drive towards Oslo from Vestfold over Drammen Bridge, the entire area to the right towards the sea, that whole area is to be transformed. A new hospital is coming, a new railway station, new homes, business and workplaces. We believe that this, together with all the other positive development in Drammen, makes this a very exciting place to be going forward," elaborates Daniel.

"I've also been in Drammen a lot, and what I find fun is taking my children with me, and we go to huge playgrounds, we cross strange bridges and then we go to the fantastic library. So I'm wondering, what has Drammen managed to achieve that other cities haven't managed to achieve?" asks Nikolaos.

"I believe they've achieved a holistic plan. An urban plan. It's not just the municipality having a simple municipal plan. Here the whole city is to get an identity. That was the problem previously. The residents didn't have an identity in Drammen. Now they're more proud to live there, it's green, things are happening, there are, as you say, playgrounds and bridges, it's those special things that create a holistic cityscape," answers Daniel Støen.

"And then naturally the question becomes, what's it like for us as a residential developer to build in Drammen? What requirements are placed on us?" asks Nikolaos.

"As I said, we can use much of the knowledge we've acquired in Oslo. We know the market and know who we should talk to. And we also have local lads down there who know the market there. But again, we must make things fly there too. We believe that the market in Drammen is mature for the type of projects we build. It's no longer just black plush in Drammen. We see that good markets sell out. The market absorbs good units," explains Daniel.

"Well then, see you at a viewing in Drammen," concludes Nikolaos.