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Danish transaction volume up by 20% in Q1 2021 on Q1 2020

commercial property copenhagen

The increase in transaction activity in the Danish commercial property market is driven mainly by foreign investors with a focus on Copenhagen.

Recent data released by Denmark’s largest commercial property consultant, Colliers, show that transaction activity was brisk in the first quarter of the year. In fact, transaction volume has in-creased by 20% relative to the same quarter last year. Foreign investors account for slightly more than half (56%) of transactions, corresponding to a 2 percentage-point increase relative to their share of total transaction volume in 2020.

“The stronger activity tallies with our projections last year. We are possibly witnessing something resembling a ketchup effect, because low-key practi-calities such as inbound travel restrictions due to COVID-19 made it difficult for several foreign investors to inspect and, by extension, invest in major Danish properties last year, although the Danish market, in an internation-al context, is still perceived as a true safe-haven investment destination.”

Peter Winther, CEO

Greater Copenhagen remains coveted 
According to Colliers, the quarterly data also show that the majority of Q1 transactions took place in Greater Copenhagen, viz. 65%, reflecting an increase relative to 2020, when the share was only approx 50%. 

“This supports the notion that Greater Copenhagen remains an investment destination coveted by several investors, although the transaction volume registered in a single quarter may of course be affected by major single-asset sales,” explains Peter Winther. 

Pressemeddelelse_TransaktioneriQ12021_fig1_UK

Residential and office remain the most attractive segments
Finally, the Q1 analysis shows that residential and office investment properties continue to top investors’ agendas: Combined the two segments account for two thirds of the quarterly trans-action volume.

Not surprisingly, the outlook is less bright for the retail market, mainly in terms of physical shopping goods stores and major shopping centres, which have been hit particularly hard by COVID-19 restrictions and e-commerce growth. However, the increase in supermarket sales has helped to ease the blow dealt to the otherwise beleaguered segment.

 Pressemeddelelse_TransaktioneriQ12021_fig2_UK

Unchanged appetite for risk
“We still see that investors tend to tread carefully when it comes to property investments – even in a highly secure market as the Danish market. As a matter of fact, we believe that inves-tors have largely the same risk tolerance as they had last year, and some 75% of sales still in-volve so-called “core” assets, which are associated with very high security,” adds Peter Winther.

Peter Winther expects the remainder of the year to see a sustained increase in transaction ac-tivity as Denmark gradually reopens, also taking into consideration the substantial placement requirements of domestic pension funds, property funds and other professional investors that need to place capital in a market where interest rates are exceptionally low. 


However, he dares not venture a specific guess as to the volume
“We know that investors are keen to go ahead with investments. However, the coronavirus pandemic is still taking its toll, and the rollout of vaccines appears to be a decisive factor for developments in the remainder of 2021 – also in the market for investment property.” 

Gain more insight
In Copenhagen Property Market Report 2021, you can learn more about developments in the most important segments in the commercial real estate market throughout Denmark. You can download the report here.

 

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Peter Winther

Executive Director | Partner | MRICS

Copenhagen

Peter is Executive Director and heads Colliers’ Danish Investment & Capital Markets teams. Peter provides strategic property consultancy services and facilitates the sale of commercial and investment properties, including hotels and shopping centres, as well as property portfolios and companies.

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