Focus report Copenhagen - Colliers Denmark 2024

RESIDENTIAL - COLLIERS FOCUS REPORT COPENHAGEN 2024

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Youth housing earmarked for students

INDUSTRIAL/LOGISTICS RETAIL RESIDENTIAL OFFICE

7,253 resi units completed 2023 (Q1-Q4)

Although rental property prices have generally seen fair growth in Copenhagen, there is one segment where rent increases have been most pronounced: youth and micro living apartments. In both prime and more secondary locations in Copenhagen, we now observe rent levels that significantly exceed the DKK 3,000 per sq m mark for these particularly small units. The rising rents for small apartments have been driven by the City of Copenhagen's minimum requirements for the average unit size of new housing developments, whereby the supply of smaller, more affordable apart ments has not been able to keep up with demand. In addition, student housing has not previously been required to be occupied by students. This meant that students had to compete on an equal footing with others to get their hands on a small rental apartment – unless the landlord demanded to see a student ID. As a result, a large proportion of private youth housing is occupied by an adult resident who is not in education. According to the City of Copenhagen, 57% of private youth housing in Copenhagen is occupied by non-students. The new planning act, passed shortly before the turn of the year 2023/2024, authorises the City of Copenhagen to require that only people in education can live in youth housing. In other words, youth housing can now be earmarked for students. However, the amendment only applies to new local plans, so the municipality cannot set requirements for the tenant mix in either existing buildings or buildings that are already planned. Investors should keep this legislative change in mind, as students generally have a lower income, which affects the rent they are able to pay. In consequence, it is not incon ceivable that the stricter rules could eventually result in a gap in rent levels between student and non-student housing if rent levels for small units continue to skyrocket as seen in previous years.

567,645 sq m resi completions 2023 (Q1-Q3)

79 sq m Average residential unit size

83.6% Tenant share

4.9% Average residential vacancy rate

Note: The three bottom figures denote average data on Greater Copenhagen multi-storey housing.

Source: Statistics Denmark, Colliers