Colliers Market Report Denmark 2023

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Colliers Market Report 2023

Aerial photo: Amager and Amager Beachpark, Copenhagen S

petition and low yields in prime locations, mainly in Copenhagen. Although investor appetite will remain intact over the next 12 months, tenant covenants and vacancy rates will be key concerns, being prone to a risk typically exposed in downturns. Limited capital growth prospects in 2023 As of year-start, 2023 is characterised by the same trends that prevailed in 2022, in particular in the year’s final quarter. Sustained widespread uncertainty about the economic situation and interest rate movements therefore keep most investors safely on the sidelines. Despite bud ding signs of inflation coming under control, the fallout margin continues to be too wide for the taste of many investors, with bid levels in many instances still fall ing way short of sellside expectations. However, activ ity is expected to pick up as 2023 wears on. By and by,

previous widespread recession fear has been replaced by brighter expectations for the year. Recession is still expected to hit, but Danish economy is presumably in for a softer landing than previously indicated. Together with a decline in inflation rates, the downturn will only have a limited effect, not only on demand but also on yield requirements on Danish property assets. Yield requirements will remain under upward pressure in H1 2023 as the full effect of the autumn’s increase in interest rates is yet to materialise, just as the gap between buyside and sellside price expectations remains wide. Although the picture continues to be muddled by uncer tainty, the second half of the year may see renewed activ ity, because yield requirements are expected to stabilise. Conversely, the effect of rent indexations on account of high inflation rates in 2022 will buoy up capital growth. Overall, this spells prospects of low but positive capital growth in 2023.

Emil Helmsøe-Zinck Senior Director & Head of Valuation & Advisory emil.helmsoee-zinck@colliers.com

Ahmad Raad Associate I Valuation & Advisory ahmad.raad@colliers.com

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