Market Report 2022

7

Colliers Market Report 2022

Hotel Industrial/logistics Retail Residential Of f ice

sional and sought-after nationwide property market where a grasp of risks, yield profiles and opportunities in provincial loca tions has improved a great deal in recent years. Here, competi tion is often less intense, but transparency still quite considera ble and risk-adjusted returns attractive relative to Copenhagen, where strong demand has driven up prices shy-high, a phenom enon that has started to feed through to the behaviour of for eign investors, now increasingly heading for provincial locations, ready to compete with the domestic investors that have tradi tionally predominated in this market. The Danish investment market has witnessed mounting demand for several years now. In 2018-2019, however, investment activity slowed although prices were climbing in the same period. Either year was marked by a mismatch in buy-side versus sell-side price expectations. Irrespective of massive demand and capital allocations to real estate, many sellers therefore retained a wait-and-see attitude in antic ipation of sustained price hikes, with the limited supply of investment properties rendering it difficult to reinvest pos sible sales proceeds. However, any reluctancy in the seller community has evap orated. Continued uncertainty concerning the pandemic’s short-term economic impact, massive capital growth, strong demand along with an investment market largely dictated by sellers, have urged several of them to pocket the profits. Strong competition and price hikes bolstering supply

Although the year started – and ended – with restrictions and lockdowns due to COVID-19, activity in the investment mar ket reached an unprecedented high in 2021. Substantial place ment requirements, strong economic growth momentum, high employment, sustained low interest rates and a spill-over effect from 2020, a year marked by restraint, drove up transac tion volume in Denmark to an all-time high in 2021, exceeding the DKK 100 billion mark for the first time in history. Activity was driven largely by demand for properties in all parts of Denmark, whereas previous years had typically seen Greater Copenhagen accounting for far more than 50% of transaction volume. In the previous record year (2017), transaction volume in Greater Copenhagen exceeded the level recorded in 2021. Back then, however, non-Copenhagen locations accounted for just shy of DKK 30 billion or 35%. This is in stark contrast to 2021, when total transaction volume outside Greater Copenhagen amounted to DKK 47 billion, indicating a more mature, profes

Activity outside Greater Copenhagen continues to rise

2014-2017

2018-2021

27 %

Avg. annual share, Gt. Copenhagen Avg. annual share, non-Gt. Copenhagen

45 %

55 %

73 %

57 DKKbn

76 DKKbn

Average annual transaction volume

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