MR 2018

86

Copenhagen Property Market Report 2018

Unlike Copenhagen, for instance, the Aarhus market for large rental flats is relatively small. The large flats are difficult to let mainly for two reasons. Firstly, demand is driven largely by the young and students that value a low rent over plenty of space. Secondly, newly built large flats often command a monthly rent that — even with fixed-rate mortgages with instalments — exceeds the housing burden associated with the ownership of single-family or terraced housing in relatively short proximity of the city centre. However, it is possible to let flats, also for co-habitation by several students, provided the right space planning is in place. Nevertheless, the fact that landlords typically demand a three-month deposit and three months’ prepaid rent as security, in addition to advance payment of the first monthly rent, that is, continues to be a barrier. Consequently, the tenant is faced with having to pay seven times the monthly rent in total up-front, which exceeds what most students can afford. This by no means implies that there is no market for other than small sharing-friendly student housing. Large flats may also be let in Aarhus, but should the market be flooded with a supply of large flats, it will be difficult to achieve a high absorption rate, especially if the flats fail to be sharing-friendly at that. Developers have been known to be forced to establish an additional room in newly built, large family flats in order to meet today’s demands. Overall, it is essential not to underestimate the diverse demographic composition in central Aarhus and the fact that new developments impact tenant demand. Development schemes involving family flats therefore require careful planning in terms of interior layout, location, pricing and quantity. Positive outlook for residential properties As illustrated in the migration map on p. 85, there is a net population outflow from Aarhus to the surrounding municipalities, fronted presumably by young graduates with dependent children. The opening of the new light rail in December 2017 may well help to reduce this outflow, because the more peripheral parts of the City of Aarhus are provided with top-tier public transport, ensuring swift and easy access to the city centre. In this context, the development areas outside the city centre could well come into play as new residential areas. Areas in close proximity of a light-rail station, e.g. Lisbjerg and the Lystrupvej area, are interesting as they may all serve as sites for greenfield developments or conversion of old commercial facilities. In these areas, we expect space-efficient, relatively small-sized family housing to be in demand. Demand is seen to be fronted by young families in search of up-to-date dwellings with room to grow, close to city life in Aarhus. Similarly, we see demand for small studio flats/bedsits, knowing that Aarhus University has increased its annual student uptake from some 5,000 to 7,000. As a result, the number of university graduates has started to increase, in 2016 standing at some 6,100 and in 2017 at 5,900, reflecting an increase of about 2,000 students annually relative to 2013.

Aarhus city centre