|Case number||12/2017||Get document|
|Name||Merger of Almenna leigufélagið ehf. and BK eignir ehf.|
The Icelandic Competition Authority (ICA) has reviewed the acquisition by Almenna leigufélagið of BK eignir ehf. These companies are investors and lessors in the residential real estate market in Iceland. It is ICA's result that an intervention by the agency on the basis on the Icelandic Competition Act no. 44/2005 is not applicable.
Almenna leigufélagið is the largest real estate company in the Capital area and is managed by Gamma which is an asset management company. Their portfolio consist of over 1000 apartments in the Capital area. In addition the company has a number of apartments in the countryside especially in Suðurnes. ICA estimates that the company has between 5-10% markets share in the market for lease of residential real estate in the capital area and between 10-15% in Suðurnes.
The professional residential real estate companies have grown significantly in the recent years. In ICA's estimates that their share in the residential real estate rental market in the Capital area may be is up to 40%. Other properties in the market are owned by individuals or small companies. In Suðurnes the professional real estate companies own between 70-80% of the rental market in the residential real estate.
ICA belies that this development should be scrutinised closely, even though it is likely that a short supply and increased demand for real estate is a contributing factor of rising residential real estate prices. Increased concentration in the market can also lead to less competition and contribute to even higher prices.
A further concentration in the market is likely to be subject to a closer scrutiny by the ICA. There is also a reason for other government agencies to assess the situation and evaluate if an intervention by other agencies may be applicable.
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