Published on and written by Cyril Jarnias
The Swedish real estate market is recovering from a historic correction and entering a phase that is much more interesting for investors. Prices fell in 2022‑2023, interest rates are starting to come down, rents continue to rise faster than inflation, and the housing shortage remains structural in major cities and university towns. In this context, certain neighborhoods and metropolitan areas offer a particularly attractive risk/return profile.
This article identifies the most promising places to invest in Sweden by analyzing recent prices, rental yields, infrastructure projects, and demographic trends. It helps you target the best opportunities based on your goal: rental income, capital appreciation, or a balance of both.
A National Market in Recovery, But Highly Varied
After almost two years of decline, prices are starting to rise again nationwide. The national housing price index increased by 1.61% year-on-year in the third quarter of 2024 and by 2.86% in the first quarter of 2025. Adjusted for inflation, prices are showing growth again, around 1.95% year-on-year, their best real performance since early 2022.
Sales are also picking up: more than 52,000 transactions in 2024, an increase of over 13%, and nearly 15% growth again in the first quarter of 2025. Forecasts now project annual price growth of between 2% and 5% for 2025‑2026, with this trend expected to continue beyond.
The average price increase in Sweden masks strong disparities. The Northern regions (Upper Norrland, Central Norrland) and major university towns are experiencing growth above the national average. Conversely, the Stockholm market is more volatile, characterized by a stretched price-to-income ratio and strict regulation of the rental segment.
The macroeconomic framework favors a return of investors: the central bank (Riksbank) lowered its key interest rate to 2.25% by mid‑2025, after a peak of 4% in 2023. Average mortgage rates are around 3.1%, with projections between 2.6% and 2.8% by 2026. At the same time, economic growth is picking up modestly (about 1% in 2024 with more expected in 2025‑2026), while the Swedish krona, weakened against the euro, makes Swedish assets more affordable for foreign investors.
The structural housing shortage in major metropolitan areas, combined with national gross rental yields around 5.56%, makes Sweden a relatively stable and transparent market for rental investment, even though rental regulations remain very protective for tenants.
Where to Find the Best Yields in Sweden?
Before delving into specific neighborhoods, it’s useful to compare the profile of major Swedish cities and key university towns in terms of prices and yields. The data below provides a snapshot of the situation.
Comparison of Major Cities and University Towns
| City | Average Price €/m² | Average Gross Rental Yield | Average 1-Bed Rent (SEK/month) |
|---|---|---|---|
| Stockholm | 9,744 | 4.23% | 12,000 |
| Gothenburg | 5,446 | 4.96% | 10,000 |
| Malmö | 2,500 | 6.02% | 9,000 |
| Uppsala | 4,446 | 7.04% | 8,500 |
| Lund | 4,446 | > 6.5% | 7,500 |
Two distinct market families are clearly identifiable:
Rental yields can exceed 7% in more affordable Swedish cities like Malmö, Uppsala, and Lund.
In addition to this geography, there are booming regions, particularly in the industrial North (Upper and Central Norrland), where price growth exceeds 10% per year, driven by remote work, green industrial relocation, and the relative scarcity of supply.
Stockholm: Securing Value, Targeting Scarcity
As the political and economic capital, Stockholm concentrates a significant share of the country’s skilled jobs. More than half of the positions are theoretically compatible with remote work, and 70% of the payroll comes from potentially “remote” occupations. Despite the rise of hybrid work, housing demand remains extremely strong.
Gross yields here are lower than elsewhere, around 4.2% on average (4.21% in the city center, 5.34% in the suburbs), but long-term attractiveness, chronic shortage, and low bubble risk (according to the 2024 UBS index) make it an interesting defensive market for those targeting capital appreciation and secure rental income.
A Spectacular Rental Shortage
The pressure on the rental market is such that more than 775,000 people are on waiting lists for housing in the Stockholm region, representing about 35% of the population in the area. The average waiting time exceeds 9 years, and climbs to 20 years or more for the most central locations. In practice, rental apartments become available only sporadically and are immediately absorbed.
This is the average monthly rent for a new regulated rental in Greater Stockholm.
This tension offers a rare safety net for the investor: rental vacancies are generally limited to a few weeks, albeit at the price of strong regulatory constraints (rent control, significant tenant rights, slow eviction procedures).
Central Districts: Prestige, Liquidity, but Compressed Yield
Södermalm, Vasastan, Kungsholmen, Östermalm, and Norrmalm constitute the highly sought-after heart of the capital. Prices here frequently exceed 9,000 to 10,000 €/m², with city-center studios achieving gross yields of 5.7% in the best cases, but more often between 3% and 4.5% for larger units.
These sectors suit investors primarily aiming for wealth preservation and resale liquidity. Demand for smaller units is structurally strong here, driven by singles, expatriates, and highly mobile young professionals. To limit yield compression, it’s better to target:
– Small units (studios, 1-bedroom) in well-managed buildings.
– Buildings well-connected to transport (metro, tram, bus) with a good local energy performance rating and reasonable homeowner association fees (monthly fees often range between 3,000 and 6,000 SEK).
Intermediate and Emerging Neighborhoods: Hägersten‑Liljeholmen, Sundbyberg, Årsta, Hammarby Sjöstad, Solna
It’s in these areas that you can find today the best compromise between price, yield, and appreciation potential.
The Hägersten-Liljeholmen district, southwest of Stockholm, illustrates positive real estate dynamics. It combines excellent accessibility via metro and tram with ambitious urban renewal projects, like RE: Liljeholmen. This appeal translates into high gross rental yields, often exceeding 4.5% and reaching up to 5.5% for small units.
Sundbyberg, to the northwest, is one of the most dynamic municipalities in the country. Once peripheral, it is now connected to the center within minutes by train or metro. Urbanization projects, like a complex of 227 new rental apartments in Ursvik, support both building quality and market depth. Prices have seen strong appreciation in recent years, and the room for growth remains significant given the rental tension across the entire region.
Årsta and the major Årstafältet project, south of the center, constitute another area of interest. Around 7,000 new homes are to be built there with a mixed-use neighborhood logic (residential, commercial, green spaces). Prices are even more affordable than in the central islands, with catch-up potential as infrastructure consolidates.
An old industrial site transformed into a sustainable neighborhood, Hammarby Sjöstad attracts an affluent clientele of young professionals and expatriates due to its environmental commitment: tram and ferry network, extensive bike lanes, parks, exemplary waste management, and energy-efficient buildings. Despite high prices, the neighborhood benefits from strong rental demand and solid long-term quality perception.
Solna, linking business areas and residential neighborhoods, benefits from significant investments (like a real estate project over 300 million SEK at Tygeln 1) and profits from the presence of major corporate headquarters and sports infrastructure (Friends Arena). It’s a relevant choice for strategies mixing long-term rental and potential furnished rentals for employees on assignment.
Finally, affluent municipalities like Täby or Lidingö target high-end clientele. In Täby, the average price of a house exceeds 8.6 million SEK, while Lidingö concentrates highly sought-after luxury villas. Gross yields are lower here, but land value remains very defensive.
Stockholm in Numbers for the Investor
| Indicator | Approximate Value |
|---|---|
| Avg. Apartment Price (center) | ~ 9,744 €/m² |
| Avg. House Price (RIKS1 Stockholm) | 6.99 M SEK |
| Avg. Gross Rental Yield | 4.23% (center lower, periphery higher) |
| Avg. 1-bed Rent (center) | ~ 12,000 SEK/month |
| Rent Increase 2024 | +5.9% in Greater Stockholm |
| Price Index Increase Q1 2025 | +4.75% (Stockholm County) |
| Avg. Waiting Time Rental Housing | > 9 years (up to 20 years in center) |
For an investor, Stockholm is primarily a market of real estate “blue chips”: expensive, very liquid, low-risk in the long term, but not generous in net yield once fees, taxes (30% on net rental income) and the constraints of rental regulation are factored in.
Gothenburg: Balanced Yield and Urban Project Boom
The country’s second-largest city, Gothenburg is a textbook case for the medium-term investor. As both Scandinavia’s major port, a key industrial and technology cluster, and a significant university city, it combines economic growth, demographic dynamism, and an enormous volume of urban and infrastructure projects.
Between 2016 and 2035, nearly 100 billion euros are to be invested in real estate and infrastructure in the region. The Älvstaden development plan on the banks of the Göta River alone foresees 25,000 new homes and 50,000 jobs, for a buildable area of 5 million m² and a budget of about 30 billion euros.
A Growing, Yet Still Affordable Market
Average apartment prices in Gothenburg are around 5,446 €/m², nearly half that of Stockholm. Houses sell for an average of 5.1 million SEK. Recent adjustments were moderate, and prices are progressing at an annual rate of 3 to 4%, as shown by the 4% price increase in the first quarter of 2025 in Greater Gothenburg.
On the rental side, the level remains high – about 7,808 SEK on average per month – with an increase of 6% in 2024. The average gross rental yield is around 4.96%, but variations are significant depending on the size and location of the property. Studios and small 2-bedroom units in the hyper-center can exceed 6% to 7% gross yield, as illustrated by the following data:
| Apartment Type (center) | Average Cost (€) | Monthly Rent (€) | Estimated Gross Yield |
|---|---|---|---|
| Studio | 168,000 | 1,080 | ~ 7.7% |
| 1-bedroom | 217,500 | 1,140 | ~ 6.3% |
| 2-bedroom | 310,400 | 1,680 | ~ 6.5% |
The Most Promising Neighborhoods in Gothenburg
Several districts stand out for residential rental investment:
A highly sought-after historic neighborhood, Linnéstaden combines character buildings, a dense offering of cafés and restaurants, and central accessibility. It particularly attracts creative professionals and young executives. Property prices are relatively high for Gothenburg, but the rental occupancy rate is excellent.
Johanneberg, close to the Chalmers University of Technology, attracts researchers, PhD students, and international students. Demand for studios and 1-bedroom units is very constant, making it a prime target for steady yields via long-term furnished rentals.
Majorna, west of the center, long a popular area, is gradually gentrifying. Most housing is in tenant-owner associations (bostadsrätt), allowing investors to buy apartments in well-managed associations, often at still reasonable prices relative to the potential for rent increases.
Örgryte, a quiet and affluent residential neighborhood, is home to large houses and apartments with gardens. It’s a sector typically oriented towards families and long-term wealth holding rather than maximum yield. For an investor seeking stability and a solvent clientele (executives, medical professionals, engineers), it’s a coherent area.
This island north of Gothenburg is a major hub of urban renewal, with strong rental demand and attractive yields in some sectors.
Hisingen is at the center of the urban transformation with numerous development projects, particularly on former industrial wastelands.
Rental demand is rising sharply, driven in particular by employees in the automotive and logistics sectors.
Some neighborhoods, like Västra Frölunda, offer very attractive returns on investment, with rents having increased by up to 55% after rehabilitation.
On the outskirts, Askim and Torslanda cluster single-family homes and townhouses (äganderätt) highly sought after by families. They are more suited to a strategy of long-term capital gains than to seeking maximum gross rental yield.
An Economic Context Driving Demand
The Gothenburg region is a major research and innovation hub: one-third of Sweden’s private R&D spending is allocated there, universities host nearly 65,000 students, and major employers like Volvo Cars, SKF, AstraZeneca, or Ericsson maintain a high level of employment. Between 2015 and 2035, the regional population is expected to grow by about 250,000 inhabitants, and 120,000 new jobs are anticipated.
This trajectory requires building about 6,000 new homes per year until 2035 just to keep up with demand, even though the market already suffers from a supply deficit. Multiple transport projects (Västlänken railway tunnel, central station expansion, West Swedish Package) enhance accessibility, which should continue to support prices in well-connected neighborhoods.
Malmö: The Best Price/Yield Ratio Among Major Cities
Malmö is arguably the most interesting market for those seeking an attractive yield without giving up on a dynamic city. The country’s third-largest metropolitan area, connected to Copenhagen by the Öresund Bridge, it combines still low prices, sustained rent growth, and strong demand, particularly from a young and international population.
Average apartment prices are around 2,500 €/m², much lower than Stockholm and Gothenburg, while gross yields exceed 6% on average, with some areas nearing or surpassing 6.5%. The house price index there grew by about 5.3% year-on-year in the first quarter of 2025, confirming a more vigorous rebound than in the capital.
In 2024, rents increased by 7.9% on average in Greater Malmö, reaching about 8,667 SEK per month, with non-center 1-bedrooms renting for around 7,400 SEK and non-center 3-bedrooms near 12,900 SEK.
Key Neighborhoods: Västra Hamnen and Malmö City Center
Västra Hamnen, a former port site, illustrates the city’s transformation: it’s now a very modern waterfront neighborhood, with contemporary architecture, well-designed public spaces, and a strong focus on sustainability. Rental yields there are particularly attractive, between 4.4% and 7.3% depending on apartment size, with demand sustained by both locals and expatriates working in Copenhagen or in Skåne’s tech hubs.
Malmö’s city center (City Center, Slottsstaden, Lågagatan) concentrates the bulk of the rental supply. Studios and 1-bedrooms there offer gross yields of about 6.8% and 6.7% respectively (late 2025 data), with average acquisition prices well below those of other major Scandinavian cities.
Limhamn and Bunkeflostrand, to the southwest, combine proximity to the sea, a family-friendly setting, and good accessibility. Hyllie, a rapidly expanding hub near the station to Copenhagen, attracts businesses, shopping centers, and new housing, and is favorable ground for new or recent developments.
A Deep and Diverse Rental Market
Malmö benefits from a particularly broad rental demand: students (several higher education institutions), young professionals, families, but also cross-border commuters working in Denmark. The average net income after tax is about 32,000 SEK per month, allowing absorption of rents near 9,000 SEK for a 1-bedroom.
The short-term rental market in Malmö counts more than 600 to 700 active listings, generating average monthly revenues of 1,000 to 1,200 dollars.
For an investor, the combination of rapidly rising rents (+7.9% in 2024), still low prices, and gross yields nearing or exceeding 6% makes Malmö a strategic choice for a “cash‑flow” oriented strategy, with the added potential for revaluation linked to the growing metropolitan integration of the Öresund region.
Uppsala: Yield Champion Thanks to Students
Uppsala, located just north of Stockholm, currently offers the best average rental yields in the country among major cities: about 7.04%, with peaks beyond 8% for some 2- and 3-bedrooms. This performance stems from a particular profile: a major university city, both close to the capital and with a dynamic job market, yet with still reasonable purchase prices.
Apartments trade around 4,446 €/m² (3-4 million SEK). Rents are constantly rising due to strong student demand that supply cannot meet. Uppsala is on the national student union’s (SFS) ‘red list’ for housing shortages, alongside cities like Lund, Malmö, and Stockholm.
Structurally Excess Rental Demand
The historic University of Uppsala attracts students from across Sweden and abroad, ensuring almost full occupancy of available housing each semester. Studios and 1-bedrooms are particularly sought after and offer the best yields. According to 2025 data, a 1-bedroom can generate a gross yield over 7%, a 2-bedroom around 7.1%, while studios remain solid at over 5%.
Uppsala’s geographical position reinforces this appeal: located a short distance from Stockholm, the municipality benefits from both its own base of skilled jobs and commuter flows to the capital, especially as prices there become prohibitive for some workers. Part-time remote work amplifies this phenomenon, allowing some Stockholm employees to settle further away while keeping their jobs.
A Market Geared Towards “Rental Investor”
For an investor, Uppsala ticks several boxes:
– Among the highest gross yields (7% on average).
– Low rental vacancy thanks to the student base and commuters.
– More affordable entry price than Stockholm, with a good m²/price/rent ratio.
– Demographic and economic growth supported by the university and research activities.
The most relevant strategy is to target small apartments close to campuses, bus lines, and the center, favoring well-managed buildings, even though the constraints of the Swedish system (regulation, tenant rights, 30% tax on net rental income) must be integrated into the business plan.
Lund: A Second Major University Hub with High Profitability
Lund, another major university city in southern Sweden, shows a profile very similar to Uppsala’s. Average prices per m² are comparable (about 4,446 €/m²), 1-bedroom rents around 7,500 SEK per month, and rental yields regularly exceed 6.5%, sometimes over 7% depending on the configuration.
The university hosts over 47,000 students, about a quarter of whom are international, creating considerable pressure on the housing market. Lund also features on the SFS’s “red list” regarding the shortage of student housing.
Price growth for real estate in 2023, supported by demand and the development of a science cluster.
Investing in Lund, particularly in small housing units close to campuses and transport, thus allows combining:
– High gross yield (often > 6.5%).
– Resilient demand linked to higher education and research.
– Potential for price appreciation linked to local economic development.
Other Cities and Neighborhoods to Watch
Beyond the quartet Stockholm‑Gothenburg‑Malmö‑Uppsala‑Lund, several cities and neighborhoods present very interesting profiles, often less publicized.
Medium-Sized Cities: Greater Malmö, Örebro, Västerås, Linköping, Norrköping…
Regional and secondary cities offer average gross yields between 5.5% and 6.5%. In cities like Örebro, Västerås, or Linköping, prices per m² remain much more affordable than in Stockholm or Gothenburg (often around 2,400 to 2,500 €/m²), while rents, driven by a dynamic regional job market and sometimes by the presence of universities, allow targeting net yields of 3 to 4% after fees and taxes.
Some areas are in full urban repositioning:
Examples of Swedish cities transforming former industrial or port areas into new living neighborhoods.
Transformation of former industrial wastelands into housing and cultural facilities, with a target of 2,000 new apartments by 2030.
Development of the old port with major residential programs, representing about 9 billion SEK in investments.
Renewal of the waterfront with the creation of new residential complexes.
These markets are more sensitive to rental vacancy risks than major metropolises or university towns, but they offer attractive entry points for investors willing to analyze local dynamics (employment, transport, demography) closely.
Northern Regions: Upper Norrland and Central Norrland
The northern regions, particularly Upper Norrland (RIKS8) and Central Norrland (RIKS7), are among the country’s strongest in terms of price growth: +12.6% year-on-year in the third quarter of 2024 for Upper Norrland, and up to +12.17% in the first quarter of 2025 for Central Norrland.
This acceleration is due to several factors:
Key factors influencing the demographic and economic evolution of the region.
Development of decarbonized steel production, battery factories, and renewable energy projects, attracting new activities.
Incentive for workers to leave major centers for more spacious and affordable housing in attractive natural environments.
Limited supply, sometimes insufficient in the face of the arrival of skilled workers, engineers, and remote workers.
In these territories, prices remain much lower than in the South, allowing for targeting gross yields of 5% to 7% while betting on strong capital appreciation, at least as long as the major industrial projects (and associated infrastructure) materialize. The trade-off: potentially higher volatility and strong dependence on a few major economic players.
What to Prioritize: City Center, Suburbs, or Rural Areas?
A constant emerges from yield data by property type: small-sized apartments, particularly studios and 1-bedrooms, deliver the best yields everywhere in Sweden, especially in major cities and university towns. The observed average yields are as follows:
| Property Type | Gross Yield Range |
|---|---|
| 1‑2 room Apartments | 5.5% – 7.5% |
| 3+ room Apartments | 4.5% – 6.5% |
| Single-Family Houses | 4.0% – 6.0% |
| Dedicated Student Housing | 6.0% – 8.5% |
Location then plays a determining role:
In city centers of major metropolises, high prices compress yields, but demand is solid with little vacancy risk. Well-connected intermediate neighborhoods offer a good balance between price, rent, and growth potential. In university towns, prioritize small units near campuses and transport to target students and recent graduates. In rural areas or small towns, gross yields can be high (5% to 7%), but demand is cyclical and dependent on local employment and tourism.
The remote work trend plays an increasing role. A significant share of workers with remote-workable jobs (36% of the workforce works at least partially remotely) are now settling further from centers, in attractive medium-sized or rural municipalities. Surveys show that nearly one-third of people who left Stockholm County for another county cite remote work as a key factor, combined with the search for more affordable housing and better access to nature.
For a long-term investor, it is wise to monitor the real estate markets in the suburban rings of major cities as well as certain medium-sized towns benefiting from very good connectivity, notably by rail. These areas indeed concentrate new and growing demand from households adopting a hybrid lifestyle, combining remote work and occasional trips to urban centers.
Regulatory Framework, Taxation, and Net Profitability
Sweden stands out for a very protective environment for tenants, with strict rent regulation, great security of tenure, and lengthy eviction procedures. For an investor, this means it is essential to properly integrate the following rules:
The Swedish rental system distinguishes pure rental housing (hyresrätt), whose ‘reasonable’ rents are negotiated locally, from sublets of cooperative or private housing, governed by a more flexible law. Rent increases are regulated and can be challenged in court, which can order refunds for up to two years. Leases are very protective: notice periods are strict (often three months) and evictions for non-payment require a formal procedure.
From a tax perspective, the main elements to consider are:
Rate of the flat tax on net rental income in Sweden, after deduction of expenses and an annual allowance.
Once all these elements are taken into account, net yields for a credit-financed rental investment are generally between 2% and 4%, depending on the city, financing structure, and management. Unleveraged investors can achieve net yields of 3% to 4% after tax, which remains attractive in a country where government bonds yield around 2.5% to 3%.
How to Choose Your Neighborhood Based on Your Strategy?
In summary, the best neighborhoods to invest in Sweden depend on the investor’s priority.
For maximum security and capital preservation, it makes sense to prioritize central districts of major metropolises: Södermalm, Kungsholmen, Vasastan, Östermalm, and Norrmalm in Stockholm; Linnéstaden and Örgryte in Gothenburg; Malmö city center and Västra Hamnen, or the most sought-after areas of Uppsala and Lund. One accepts a more modest gross yield in exchange for exceptional liquidity and a very limited vacancy risk.
To optimize rental yield, the most obvious targets are: reduce expenses, increase rent, improve property quality, choose the right location, and diversify income sources.
Focus on promising market segments for investors, targeting dynamic rental demand.
Hägersten‑Liljeholmen, Sundbyberg, Majorna, Hisingen, Hyllie, Limhamn. These intermediate neighborhoods offer an excellent balance between accessibility and quality of life.
Uppsala and Lund at the forefront, followed by Umeå, Luleå, and Linköping. Demand is strong for small units in immediate proximity to campuses.
Dedicated segments, highly sought after for their modern amenities: high-speed internet, common areas, and proximity to transport.
To bet on strong capital gains, the Northern regions in full industrial boom (Upper Norrland, Central Norrland) and major structuring urban projects (Älvstaden in Gothenburg, Hagastaden and Royal Seaport in Stockholm, Västra Hamnen in Malmö) offer interesting potential, at the price of greater exposure to the evolution of a few large industries or the success of major construction projects.
The development of remote work values suburban municipalities and small well-connected towns offering quality of life, spacious housing, and natural surroundings. To invest, it is crucial to cross three criteria: residential attractiveness, good accessibility (notably by rail), and job market dynamism (local or accessible remotely).
In all cases, Sweden today offers an environment combining macroeconomic stability, a clear legal framework, and sustained demographic pressure on housing, especially in urban areas. For investors ready to familiarize themselves with a highly regulated rental system, the best Swedish neighborhoods can constitute a solid and diversified pillar within a European real estate portfolio.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
