Colliers Denmark Market Report 2025

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COLLIERS MARKET REPORT 2025

0.57%. The figures hide a remarkable dynamic: although increases in yield requirements in isolation reduced property values by 5.49% and a slight increase in vacancy contributed to a negative impact of 0.18%, these effects were offset by significant rental growth that contributed positively by 6.24%. This result testifies to a robust market where improved operating income - driven by rent increases - has ensured stable property values despite yield decompression. High employment and a stable economy provide favourable framework conditions for the Danish property rental mar ket, which is once again showing positive trends in the form of low vacancy rates. Especially in light of the geopolitical and macroeconomic turmoil that has marked recent years, the Danish commer cial property market appears relatively resilient, which has helped boost investor confidence despite the uncertainty that has characterised the property market during 2024.

Elmehuset, Ballerup

in 2026. In the eurozone and Denmark, long-term inter est rates moved down in 2024, especially towards the end of the year, providing a much better starting point for the property market in 2025. However, falling interest rates are initially favourable for existing bond investors as they can make capital gains. At the same time, the bond market will remain attractive for new investments as long as fur ther interest rate reductions are expected. Core investors are therefore likely to start reallocating capital towards alternative asset classes such as real estate only when interest rates stabilise. We expect a gradual recovery in core capital in 2025, which will really accelerate in 2026 when interest rates are expected to stabilise. The combination of stable economic conditions, lower financing costs and reduced competition from the bond market will create ideal conditions for attracting low risk capital back into the property market. The Danish economy is strong compared to many other European countries, and as interest rates stabilise, the frame work conditions for the Danish property market will become even more attractive. This is also expected to be reflected in property investors’ yield requirements as we predict slight yield compression in 2025 in the most sought-after segments. Positive total return despite increasing yield requirements In 2024, the overall total return for commercial prop erty was 5.15%, driven primarily by an average income return of 4.58%. Capital growth is marginally positive at

Marginal positive capital growth driven by significant rent increases

8%

6%

4%

2%

0%

-2%

-4%

-6%

- 8%

Income return

Capital growth

Rental growth

Total return

Yield decompression

Increase in vacancy

Note: Decomposition of total return, commercial property, Greater Copenhagen. Source: Colliers