Chief Executive Peter Winther today introduced the new Colliers market report. He started by concluding that the market turned out better than anticipated in 2019, and that we are currently experiencing a so-called Goldilocks scenario. In 2019, total property returns in Greater Copenhagen were 11.8%, thereby exceeding the 8.9% recorded in 2018. As a result, property returns greatly outperformed bond returns, but were outperformed by stock returns, hitting a historical high in 2019. Capital growth was 7.4%, again a substantial improvement on 2018.
This morning, Peter Winther gave an inspired and energized presentation of the report titled, “Copenhagen property market report 2020” at Tivoli Congress Center, Copenhagen. He set the tone by introducing the fairy tale about Goldilocks and the Three Bears.
“The current Danish property market is “just right” as Danish economy is rock-solid. There is growth momentum, but not overly so. Interest rates are exceptionally low, there is no risk of deflation, and vast amounts of capital are waiting to be placed”, says Peter Winther, and continues,
“Last year, foreign investors accounted for seven of the top-ten largest transactions and 52% of total transaction volume. We are reaping the benefits of Denmark’s “safe-haven” status, with foreign investor demand continuing unabated. We believe that 2020 will see several new foreign investors enter the Danish property market”.
Are the good times likely to last?
Transaction volume dropped from approx DKK 71bn in 2018 to approx DKK 57bn in 2019. The downtrend is not likely to last according to Colliers. This ties in with the fact that the decline is driven by e.g. a limited supply of the properties most coveted by investors, namely affordable housing, office properties as well as industrial/logistics facilities. Given the current market’s capital abundance, these property types will most certainly be snapped up when put on the market.
“Simply put, you could say that money has returned to the market. Apart from the foreign investors that have zoomed in on Denmark, domestic pension funds are ready and waiting to take action when the right products hit the market. They have announced that they intend to increase their exposure by some DKK 60bn overall in the years ahead”, says Peter Winther, adding,
“Investors may still rely on achieving stable returns on residential assets, mainly in Copenhagen, where population forecasts support the notion that housing will continue to be in short supply, mainly small dwellings for single households, old-age pensioners and students. The good times will not last forever, but we actually believe that 2020 will turn out to be a really good year”.
Download an extended digital version of the report here.