Untouched flats in Reykjavik valued at more than 20 billion Icelandic Kronas remain unpurchased.
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In the heart of Reykjavík, over 260 swanky, freshly-constructed apartments, complete with a car-free lifestyle and plenty of urban charm, sit vacant on densification plots. A mere 40 units have found their new homes since the turn of the year, leaving a staggering 20 billion ISK (roughly USD 146 million) invested in these unoccupied flats [1].
Why the vacancy? Well, the rise of interest rates in 2023 _{(coinciding with the initial market entry)} was a primary culprit, nipping budding demand in the bud [1]. The Icelandic Central Bank has since lowered rates, but the market's response hasn't been all that buzzworthy just yet. To set the scene alight, a real estate agent interviewed by Morgunblaðið suggests that another interest rate nibble might be what the sector needs to spring into action [1].
But economic factors aren't the only players in this drama. Critics in the architectural community question whether the pursuit of density has overshadowed quality-of-life considerations in some neighborhoods [3][5]. Some believe today's edifices compromise on comfort, privacy, or aesthetics in favor of cramming more into a square foot [3].
The chair of the Icelandic Association of Architects, Helga Guðrún Vilmundardóttir, advocates putting residents' needs at the forefront. She argues that the livability of homes significantly impacts everyday life [3][5].
In essence, lower interest rates and the promise of a car-free existence may be delectable for buyers, but they're hesitant to dive in unless there are more enticing incentives and improved perceptions of quality [1][3][5].
- The vacant apartments in Reykjavík's densified areas, despite offering a car-free lifestyle and urban charm, have seen very little occupancy since 2023 due to the rise in interest rates.
- A real estate agent, interviewed by Morgunblaðið, suggested that another interest rate lowering could stimulate the stagnant housing-market and real-estate sector.
- Architectural critics question whether the focus on densification has overlooked quality-of-life factors in certain neighborhoods, as today's apartments may compromise on comfort, privacy, or aesthetics.
- Helga Guðrún Vilmundardóttir, the chair of the Icelandic Association of Architects, emphasizes the importance of prioritizing residents' needs to ensure a positive impact on everyday life.
- Potential buyers seem hesitant to invest in the vacant apartments, requiring more appealing incentives and improvements in perceived quality in addition to lower interest rates and a car-free lifestyle.
