Colliers Market Report Denmark 2023

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Colliers Market Report 2023

Hotel Industri & logistik Retail Bolig Kontor l I ndustrial l i ics R Residential Office

Uncertainty carrying over into 2023 As of year-start 2023, the job market has proved stronger and more resilient than anticipated, with several key mac roeconomic indicators suggesting that inflation has prob ably peaked. Nonetheless, the property market is still gripped by widespread uncertainty due to continued inter est rate concerns and recession fears, among other things. At the same time, the limited number of sales has been a contributing factor in clouding market transparency. The uncertainty will leave its mark on the first six months of 2023, all the while investors are trying to regain their footing. A narrow field of investors, all bringing to the table expectations that prices should be below the peak some 9-12 months ago, presents a challenge in a market where sellers did not start to align their expectations to the new normal until year-end 2022. Meanwhile, many investors are sitting on the sidelines, just like they did in the better part of H2 2022. They are awaiting more stable market and interest rate conditions and more stable property pricing before making new investments.

Potential tailwinds could rapidly improve market conditions Still, we believe that the market could be in for a quick turnaround, heralding numerous and high-volume investments. This is supported by the fact that an unprec edented capital abundance had accumulated at year-end 2021, e.g. in funds for property investments, just as sev eral pension funds and property companies announced plans to expand their property portfolios. However, most large-scale potential investments were hampered by uncertainty in 2022, with sizable amounts of money still ready and waiting to be invested in brick and mortar. As soon as key macroeconomic indicators start to stabi lise, restoring predictability and pricing consensus, it is likely that activity will pick up, just like the repeated reo pening of society after the coronavirus pandemic trig gered something along the lines of a ketchup effect. H2 2022 was also characterised by a wide gap between sellside and buyside price expectations. Mainly the sell side is increasingly coming to terms with the change in the market and the drop in prices. These are the first

Yield decompression severely reduces capital value regardless of method

Full-year 2022 vs. full-year 2021

End-2022 vs. end-2021

6%

6%

4%

4%

2%

2%

0%

0%

-2%

-2%

-4%

-4%

-6%

-6%

-8%

-8%

-10%

-10%

-12%

-12%

-14%

-14%

Total return Income return

Capital growth

Rental growth Yield decompression

Increase in vacancy

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