Colliers Market Report Denmark 2023

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Colliers Market Report 2023

Hotel Industri & logistik Retail Bolig Kontor H t l I ndustrial l gi ics R Residential Office

(with modernisation potential). Similarly, the announced introduction of mark-to-market taxation gave rise to con cerns in foreign investor circles, not least among funds focused on operating income streams, because ear lier tax payment could jeopardise their business model. Some investors have started to question the traditional Danish stability of market conditions: Will conditions now change from year to year or from election to election? However, mark-to-market taxation was off the table when the new Danish left-right coalition government (the Social Democrats, Liberals and Moderates, mustering an independent majority vote) introduced its detailed polit ical programme in December 2022. This has served to rekindle international investor demand. The market has largely priced in the effects of the anticipated mark-to market taxation, and with the rejection of the taxes, this has a potentially favourable effect on property pricing. Sharp drop in residential transactions in 2022 … The postponement of development schemes in early 2022 was one of the factors driving the decline in transactions in the residential segment. In addition, the segment bore the brunt of the stricter financing requirements and the lower LTVs due to the rules of critical rent (see p. 9), which in combination with pricing based on low yields severely impinged on the achievable return on equity. In this

respect, commercial properties represent a more attrac tive alternative, often offering higher returns and easier financing opportunities. 2022 was also characterised by the retail sector making a great comeback, with several high-volume transactions driving up transaction volume to a level nearly twice the volume of 2021. … but poised for a comeback in 2023 Although the share of residential transactions dropped in 2022, the picture is set to change anew in 2023. The severe shock due to inflationary movements and, ulti mately, financing costs, will subside, with the sellside and buyside increasingly becoming aligned in terms of pric ing. More than anything, the dark clouds forming over the economy will fuel the demand for low-risk property assets offering stable returns – characteristics met by residential investment property. Demand for logistics facilities will remain strong, with 2022 only confirming the need for stockpiling in response to heightened supply-chain uncertainty and geopolitical unrest around the world.

Office properties in secondary locations have been in strong demand in recent years due to the intense com

Restored pricing consensus is required if activity is to pick up

H1 2022

H2 2022 - Q1 2023

Expectations for Q2 2023 onwards

No. of players

P1 P0

P1

P0

P0

P2

Buyside

Price expectations

Sellside

Activity

Note : A cocktail of rising interest rates, the risk of a sustained downtrend in prices, significant macroeconomic uncertainty along with dashed hopes of fire sales has made buyers lower their price expectations significantly compared to the sellers, many of whom have not been forced to sell. Once pricing consensus is restored, activity will pick up in 2023. Source : Colliers