Property Glossary

Glossary for Commercial Real Estate

A concise reference for common terms in the Nordic real estate industry — from valuation and legal to planning and construction processes.

B

BOA

Living Area. The area in a dwelling intended for habitation, measured according to Swedish standard. This forms the basis for rent setting and price statistics per square meter.

Building Rights. The right to build on a property as permitted by a zoning plan. Expressed in square meters GFA or number of units. Building rights are a central value driver for development properties.

D

DCF

Discounted Cash Flow. A valuation method where future net operating incomes and a residual value are discounted to a present value using a yield requirement. Standard method for commercial properties in the Nordics.

Detaljplan

A municipal plan regulating how land may be used and developed within a defined area. Binding for building permits and a prerequisite for most major construction projects.

Driftnetto

Rental income minus operating, maintenance, and property tax expenses, before interest and depreciation. The basis for yield and DCF-based valuation.

E

ERV

Estimated Rental Value. Assessed market rent for an area if it were leased on today's market. Used to compare current rent levels against market conditions.

Exit Yield

The required yield assumed upon sale at the end of a DCF model. Used to calculate the residual value and is one of the most value-sensitive parameters.

F

Freehold Apartment

A three-dimensional property that constitutes an individual residential apartment with freehold ownership, as opposed to a tenant-owner right. Possible in Sweden since 2009.

I

ICR

Interest Coverage Ratio. Net operating income divided by interest expenses. A key figure used by banks and credit institutions to assess a property's ability to service its financing.

L

Lagfart

Official registration of property ownership with the Swedish Mapping, Cadastral and Land Registration Authority (Lantmäteriet). Applied for after acquisition and is the public confirmation of the change of ownership.

Land Allocation

A municipality's decision to allow a specific developer to exclusively negotiate to acquire and develop municipal land. A common entry point for developers in early stages.

LOA

Commercial Area. The area in a building used for purposes other than residential, such as office, retail, or warehouse. Measured according to Swedish standard.

LTV

Loan-to-Value. Loan amount in relation to the property's market value. A central parameter for credit risk and covenants.

N

NOI

Net Operating Income. Rental income minus operating and maintenance costs. The basis for both yield and DCF valuation.

P

Prickmark

Land within a detailed development plan that may not be developed, marked with dots on the plan map. Restricts where buildings may be placed on the property.

Property Formation

Legal process where properties are formed, re-formed, or altered by the Swedish Mapping, Cadastral and Land Registration Authority (Lantmäteriet). Includes subdivision, consolidation, and property regulation.

S

Servitut

A right for one property to use another property in a specific way, for example, for a road, utility line, or view. Can be an official easement or a contractual easement.

T

Taxable Value

The Swedish Tax Agency's assessed value of a property, which forms the basis for property tax and property fee. Typically corresponds to approximately 75 percent of the market value two years prior to the assessment year.

Tomträtt

Right of use for a property owned by a municipality or the state, granted for an indefinite period against an annual charge. Common for land in larger cities, particularly Stockholm.

V

Vakansgrad

The proportion of unleased space in a property or portfolio, often expressed as a percentage of total lettable area or potential rent. A key measure of occupancy status.

W

WAULT

Weighted Average Unexpired Lease Term. Weighted remaining term for leases in a portfolio, weighted by rental income or area. A measure of contractual stability.