The Danish economy is thriving and has entered a period with a moderate booming economy after 6 years with healthy growth, which will likely be sustainable and resilient against impacts in the coming years according to leading economic councils in Denmark.
This is evident as Denmark enjoys historically high employment rates, low interest rates, a solid mortgage system and a very stable political climate. Furthermore, Denmark’s national debt to foreign states has never been lower and is probably one of the reasons why Denmark continuously enjoys triple A ratings from leading rating agencies, e.g. S&P and Moody’s.
This is, as we see it, a quality stamp for the Danish society, and we’re not the only ones, as foreign investors tend to see Danish government bonds as a safe haven, even though they pay negative interest rates.
This is reflected in a solid and prosperous real estate market, which experienced record level transaction volumes in 2017 primarily driven by international investors with an eye on the flourishing real estate market in Copenhagen. The transaction volume for 2018 was approximately 10% lower, which was mainly due to significantly fewer transactions above 65 million euros, but after years of high demand the supply is currently limited, and we are seeing signs of investors’ increasing attention outside the biggest cities.
In 2019, we are, therefore, expecting investors to shift the demand for smaller-sized transactions within the top 30 largest cities, where the yield is higher – especially within residential project development, where many cities have planned high growth in coming years to satisfy the need for new units after many years with limited project development.
*S&P as of February 2019
Copenhagen is the biggest city in Denmark. The city has excellent facilities for the inhabitants and businesses.
Copenhagen expects a heavy population growth towards 2035, where the population is expected to increase by 18% from the current 718,000 inhabitants to 847,000 inhabitants.
The City of Copenhagen has appointed a trade council consisting of representatives from businesses, educational institutions and organisations. The trade council will contribute towards the direction of the city’s enterprise policy. The council aims at an annual economic growth rate of five per cent, e.g. to attract international investments.
If this aim is realised, in combination with the heavy population growth, it will ensure a steadily increasing need for housing as well as commercial properties.
In order to meet the increasing housing demand, areas such as Nordhavnen, Sydhavnen and Ørestaden are being heavily developed. In the past few years, thousands of new homes have been built here and a heavy increase in housing constructions are expected for the coming years.
The Copenhagen infrastructure is extremely well-developed. Ongoing investments are made to further improve the infrastructure, and Cityringen – the newly developed metro line connecting all the Copenhagen urban districts – will open in 2019. In the years to come, this line will be extended with new stations in both Nordhavnen and Sydhavnen. Upon completion of the ongoing metro projects, the metro will cover most of Copenhagen and thus considerably improve the efficiency of the public transport system, and in this connection many inefficient bus lines will be discontinued.
Copenhagen Airport is a very well-managed and popular airport that offers a wide range of national and international destinations and, therefore, attracts passengers from South Sweden and all of Jutland.
Furthermore, Copenhagen is the home of several established educational and research institutions. Among others, you will find Copenhagen University, which ranks as number 116 on the “World University Rankings” list, and Copenhagen Business School, which ranks as an impressive number 49 on Quacquarelli Symonds’ (QS) list of business schools. Institutions such as these ensure that businesses will have access to qualified manpower and the latest knowledge.
Aarhus has a position as the main city in the western part of Denmark. The City wishes to maintain this position via a continued population growth. Aarhus currently has approx. 340,000 inhabitants, and the number is expected to increase to 405,000 towards 2045. In order to accommodate this heavy population increase, a continuous expansion of the city’s physical boundaries is required by means of housing, commercial areas and infrastructure, and Aarhus aims at building 50,000 new homes towards 2030.
One action worth mentioning is the expansion of motorway E45 which has already been expanded to 6 lanes between Skanderborg S and Aarhus S and which has facilitated the traffic considerably and realised a significant social gain. The need for an additional expansion of E45 is now being analysed with the launch of environmental impact assessment (EIA) studies for the sections Aarhus S – Aarhus N and Aarhus N – Randers N.
Aarhus is the home of a number of highly profiled educational and research institutions. For example, Aarhus University, Aarhus University Hospital and Aarhus Tech. These institutions contribute to the consolidation of the city as a knowledge city. This means that the businesses in the area will have access to highly educated and qualified manpower as well as the latest research.
At present, the share of the population with a higher education is 40%, and the City of Aarhus intends to increase this share to 45% by 2035.
In the past few years, the City of Odense has made great efforts to market the city as an attractive place to live, work and visit as a tourist. At present, up to DKK 40 bn are invested in strategic urban development in order to make the city able to compete with other big urban areas in Denmark.
Heavy investments are made in areas such as future-proof infrastructure, leisure activities such as sports and shopping as well as attractive cultural activities for people of all ages.
The biggest ongoing urban development project is the construction of Odense Tramway. Odense Tramway will consist of 26 stations, connecting Tarup in the north with Hjallese in the south and stopping at Rosengårdscenteret, Odense station and other places in the centre of Odense. When the tramway is completed in 2021, it is expected that it will serve about 1 m passengers every month.
Odense is one of the biggest university towns in Denmark but has had difficulties retaining the students after graduation. The City expects that the new attractive facilities and community improvements will make it more attractive for students to stay and start a family in Odense instead of moving away when they graduate.
Furthermore, Odense serves a large area that the City wants to include according to the strategy “Fra stor dansk by til dansk storby” (From big Danish city to Danish big city). Currently, there are approx. 480,000 inhabitants in Funen, of whom approx. 202,000 (42%) live in Odense. In 2045, it is expected that the share of the population living in Odense will increase from 42% to 44% or a total population of approx. 225,000 people.
Every quarter we publish a Market Update report, and every year we publish Expectations/outlook for the upcoming year.