Colliers Denmark Market Report 2024

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Bolig - Colliers Markedsrapport 2023 RESIDENTIAL - COLLIERS MARKET REPORT 2024

Slower residential newbuilding

Residential newbuilding has slowed down in recent years. Since 2021, project developers have had to deal with sharp increases in construction costs, rising labour costs and higher interest rates. At the same time, the market for forward-funding and forward-purchase transactions – where pension funds, funds and other investors step in early with capital or commit to buy the project when it is completed – has been almost non-existent in 2023. These transactions have helped to boost property development schemes in recent years, as they have given developers the opportunity to complete pro jects without having to raise the necessary capital themselves. At the same time, investors have also benefited from earlier entry into projects in terms of more favourable pricing. Already in 2022, we saw a trend of projects being postponed or put on hold, and this became even more pronounced in 2023 with a drastic drop in the number of construction projects. Rising financing and construction costs, cou pled with investors’ current expectations of returns and forward premiums, mean that the business plan from a developer’s perspective is not profitable, and we will continue to see very few new housing projects.

Deteriorating conditions potentially means fewer residential completions than pipeline suggests

Completions 2018-2022 1

Pipeline 2024-2026 2

Demand 2024-2026 3

Copenhagen

445,000

224,500

193,000

Greater Copenhagen

309,500

228,500

50,000

Aarhus

348,000

146,500

145,500

Triangle Region

358,000

93,000

161,000

Odense

149,500

77,000

36,000

Aalborg

204,500

69,500

77,500

Note: 1 Annual average of residential completions, sq m. 2 Annual average of projected residential floorspace based on data from Byggefakta, sq m. 3 Estimated average of residential demand based on population forecasts and average area consumption, sq m. Data for selected Danish locations. Source: Byggefakta, Statistics Denmark, Colliers