Colliers Denmark Market Report 2025

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RESIDENTIAL - COLLIERS MARKET REPORT 2025

HOTEL INDUSTRIAL AND LOGISTICS RETAIL RESIDENTIAL OFFICE

Hikes in owner-occupied unit prices outpace increases in rental unit prices

Owner-occupied property, %

Price developments – 2019-2024 1

Rental property 2 , %

Spread, %

Copenhagen

3.8%

30.1%

26.3%

Aarhus

-10.3%

22.7%

33.0%

Odense

-11.9%

8.2%

20.1%

Aalborg

-4.3%

5.8%

10.1%

Note: 1 Developments in the period 2019 to Q2 2024. 2 Please note that the calculation of the price development for rental property in the listed cities is based on the property being fully let at market rent. In this calculation, as the market rent develops, it is directly reflected in the value. In practice, an increase or decrease would have to be phased in over time as the property is re-let. Especially for Copenhagen, where market rents have been increasing, the calculation therefore overestimates the price development. Finally, the price development for rental properties does not factor in the running yield. Source: Finance Denmark, Colliers

The table above shows the price development for rental and owner-occupied units in 2019-2024. The price hikes in the owner-occupied housing market in the four largest cities of Denmark have significantly outpaced the price increases in the residential rental market. As the spread between prices has widened, this makes buying rental properties for the purpose of divestment more attractive in isolation. While investors have so far mainly focused on divestment strategies in Copenhagen, we expect this trend to potentially spread to other parts of the country based on the development in the prices of owner-occu pied and rental housing. If a divestment strategy is to work in practice for an investor with a limited time horizon, the target market must typically meet certain criteria:

Several investors have already initiated a divestment strategy or are considering doing so soon. In 2024, Colliers has seen several examples of transactions where the buyer had already formulated a divestment strategy. In addition, there have also been a few players who have changed their strategy from letting to divestment along the way. One of the risks of launching a divestment strategy is that you are betting that the owner-occupied housing mar ket will remain strong and that your assumptions about churn, achievable divestment prices and the market’s absorption capacity can be realised. If, contrary to expectations, the owner-occupied housing market turns during the period in which the divestment strategy is implemented, investors may find themselves in an unfavourable situation if they wish to continue divesting. However, if you stop the divestment, you are left with a portfolio of remaining units that you are poten tially unable to divest in the market without offering the buyer a risk premium compared to selling the entire property with all units. Especially in markets with the prospect of significant growth in market rents, general rent increases can decrease the churn rate of a residential rental property. This is because a tenant will (usually) choose to stay in the property rather than sign a new lease at a higher rent.

Liquid owner-occupied housing market that can absorb the apartments.

. 1

Attractive micro-location that appeals to the owner-occupied segment.

2

High churn to ensure that the units can be divest ed within the desired timeframe.

3

Reasonable running yield to ensure that it is possible to obtain a satisfactory LTV ratio.

4