Colliers Market Report Denmark 2023

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Residential - Colliers Market Report 2023

Hotel I ndustrial & logistics Retail Residential Office

Visualisation Parkvejens Oase, Næstved

Attractive opportunities for long-term investors The residential property market slowed in 2022, follow ing two years of historically high transaction activity. However, the slowdown is not attributable to a lack of capital, as substantial sums are still earmarked for invest ments in residential rental properties. Instead, economic uncertainty has made investors more cautious, all the while that rising interest rates have weakened the business case of buyers and investors, both directly in terms of higher interest expenses, and indirectly in terms of the lower LTVs offered by the bank ing sector, which reduces returns unless accompanied by a corresponding drop in property prices. In addition, demand has shifted to increasingly concen trate on standing assets, where the buyer assumes lim ited risk. At the same time, fewer investors – on account of the higher risk – have a stomach for turnkey projects, least of all turnkey projects involving forward funding. Overall, the change in conditions has reduced recent years’ market liquidity. Once buyside competition becomes weaker, it gives rise to attractive opportuni ties mainly for investors with a long investment horizon, provided, of course, they reach an agreement with the sellside.

Unlike investors with a shorter investment horizon, long term investors do not risk having to divest properties at a time when the price is not to their advantage.

Interest rate hikes and lack of pricing consensus dampened activity in 2022

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10

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18

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22

Note: Transaction volume, residential, Denmark (DKK billion). Source: Colliers