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 Residential Office

Why a commercial property price index?

The past two decades have seen an increasing amount of capital being fun nelled into investment property as real estate is increasingly considered an attractive alternative asset class to stocks and bonds.

THE MOUNTING DEMAND has clearly manifested itself in Denmark too, with 2022, despite challenges in the second half of the year, turning out to be one of the best years ever in terms of transaction volume. Whereas stocks and bonds are easy to price, investment proper

ties are much more diversified products that are only rarely traded. However, the Colliers commercial prop erty price index represents a way to overcome this issue, by applying data from both property sales and valuations in lieu of actual trades.

Sky-high inflation and uncertainty made 2022 the least profitable post-financial crisis year

2022

2000-2022

Return

Mean return

Risk

Sharpe ratio

Commercial property, Greater Copenhagen 1

1.5%

9.6%

5.9%

1.22

Nordea benchmark 7-year bonds

-15.6%

3.9%

6.5%

0.23

MSCI Denmark Gross Total Return Index

-4.3%

14.6%

25.3%

0.48

Note : Average return and risk on commercial property, bonds and stocks. 1 Please note that the Colliers property price index is based on observations recorded throughout the whole year and therefore the return computed is an average across the year compared to the average across the previous year. Source : MSCI, Nordea, Colliers

Model and approach

FOR BOTH THE COLLIERS PROPERTY PRICE INDEX (cap ital growth) and the net ini tial yield calculations, we have used a hedonic multiple regres sion analysis based on empirical data collected from more than 6,500 property sales and prop

erty valuations in the Greater Copenhagen area since 1985, all involving Colliers (pre-2018, Sadolin & Albæk). The model cov ers all types of commercial prop erty, where individually fixed prices are applied for the various property characteristics, mainly

location, use, state and condi tion/quality, suitability/rationality and economies of scale, as a cor rective measure to account for the differences between individ ual properties.