Unrest and interest rate hikes continue to put the strain on investors, slowing transaction activity in Q3 2022.
The total transaction volume of DKK 13.8bn is in stark contrast to the Q3 2021 volume, which marked a record high of some DKK 29bn. This is revealed by the latest data reviewed by Colliers, based on input from Denmark’s largest commercial property agents.
“In the third quarter, we have seen multiple high-volume transactions collapsing close to the finishing line. Climbing interest rates and great uncertainty in the financial markets have made investors jittery in terms of pricing, financing has become a more costly affair, and loan-to-value ratios have become more restrictive. As a result, transaction activity has slowed,” explains Peter Winther, Partner, Executive Director and Head of Capital Markets, Colliers in Denmark.
Residential property more popular
In Q3 2022, residential property continued to represent the most sought-after segment of the Danish investment property market, in this quarter accounting for more than 50% of total transaction volume. In Q2 2022, residential property accounted for approx 46%, up from approx 36% in Q1 2022.
This confirms that investors continue to focus on core properties, offered mainly in the residential segment. In Q3 2022, core properties accounted for some 88% of residential transactions, compared to 61% of all properties sold across all property types.
Strong demand from abroad
Being another main driver of Danish transaction activity, international investors accounted for just shy of 56% of all transactions, predominating in the residential segment with an 84% share in terms of volume.
Mainly large-scale international investors remained highly active, demonstrating particular competitive strength in top-volume transactions, mostly residential sales.
Irrespective of great uncertainty, Denmark is still considered a safe haven relative to other European economies, states Peter Winther:
“The fourth quarter too is expected to see much slower transaction activity than the record-breaking year of 2021. Nevertheless, we have great hopes for 2023, as abundant liquidity is still waiting on the sidelines. And when inflation, hopefully within a few months from now, starts to edge down, the upward pressure on interest rates will ease off. We believe that this will spark a renewed increase in market activity.”
Colliers PULSE Q3 2022
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