In spite of their northerly location, the Scandinavian countries of Norway, Sweden, Denmark and Iceland are consistently hailed as having the best quality of life in Europe. The sense of community, the hauntingly beautiful landscapes and the rich economies are drawing disillusioned westerners to these Scandinavian countries in droves – and this is having an inevitable effect on the property prices. A recent Knight Frank report described property in the countries as 'on the rise', explaining: "We are now seeing an increasing push towards remote and new unexplored locations for second homes." But which of the four diverse Scandinavian nations represents the best investment? We find out.

Norway
The Scandinavian country described in the Guardian newspaper as 'the richest society in the world', Norway is certainly not the obvious spot for picking up bargain property. Nevertheless, if you have a little more cash to spare then Norwegian property could be a sound investment prospect. Over the last few years, Norway has seen a steady growth in property prices, averaging at approximately 7.5 per cent. Boom growth has been centred around Oslo and its surrounding districts, mainly due to the burgeoning economy in these areas and the corresponding increase in industry and financial services. If you have a 'rather safe than sorry' approach to property investment, then Norway real estate could be for you. This Scandinavian country has traditionally been seen as having a 'safe' property market, due to its established economy and political stability. Recently, real estate in Norway has also been consistently outperforming the Oslo stock market, leading to a greater number of people investing in property.

Sweden
Of all the Scandinavian countries, Sweden is currently being tipped as the best investment prospect. Property prices are cheaper than in Norway, with family villas in some areas going for as little as £69,000. The country has proved popular with commercial investments in recent years – such bluechip companies as Faberge, Acta and GE Real Estate have put their cash into Swedish projects – and individual buyers are beginning to follow suit. "The Swedish property market is outperforming all the other Scandinavian countries," says Abul Chowdhury, Business Manager at Scandinavian Property. "Since the market crash in the 1990s it has been picking up steadily, and is now stable. It's definitely a good time to buy." So where in Sweden should you look to make your investment? According to Kate Godfrey, head of research at Property Frontiers, the south coast is a good bet. "Malmo, just across the Oresund from Copenhagen, is a hot tip," she says. "The city has benefited from the opening of the bridge as workers have chosen to live in Malmo and commute to Copenhagen, where property prices are dearer."

Denmark
During the first quarter of 2006, property in the Scandinavian country of Denmark saw a remarkable price growth rate of between 15 and 24 per cent. Growth has slowed to a more sustainable level since then, but Danish property will still yield reasonable returns. According to the Knight Frank global residential house price index, prices in the country increased on average 4.7 per cent between the first quarter of 2006 and the first quarter of 2007. The prime property hotpost in Denmark is its charming capital, Copenhagen, where the most popular areas are the harbour and the docks. Denmark's west coast is also becoming increasingly popular with second home owners.

Iceland
Iceland's increasing accessibility and growing tourist appeal have both contributed to a steady growth in property prices. The capital of Reykjavik in particular has a thriving property market, and real estate in the fashionable 101 area has seen a local boom.  The property purchasing process in the country is relatively simple, and foreign investors have been attracted by low interest rates offered by Icelandic banks. Buy to lets are generally profitable – buyers can expect an average rental yield of around 6 per cent of the purchase price in popular areas.

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Article published in July 2007