● THE DANISH PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • AUTUMN 2021
THE DANISH PROPERTY MARKET
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THE DANISH ECONOMY AND PROPERTY MARKET IS BACK ON TRACK
The Danish economy is back on track. Activity picked up in Q2 2021 as restrictions were gradually eased, and the economy has now regained what it lost since the onset of the COVID-19 crisis in Q1 2020. Employment rose significantly in Q2 and unemployment dropped to 3.8% in June, approaching pre-crisis levels. An increasing number of businesses report that they cannot find the necessary manpower, and shortage of labour is now the main impediment to growth in many industries. The Danish Central Bank expects GDP to grow by 3.3% in 2021. This is a significant upward adjustment compared to the previous forecast. Economic growth rates are expected to remain high in the coming years and, most likely, we will see a
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continuation of the current sizable employment growth and further decline in unemployment numbers. Inflation has been rising since March and is expected to reach 1.3% in 2021, up from 0.4% in 2020. Interest rates are also rising, although from low levels. The yield on a 10-year Danish government bond has risen from -0.5% at the beginning of 2021 to -0.3% in July. Most forecasts predict that Danish interest rates will only be moderately higher by the end of 2021. Strong macroeconomic fundamentals, low interest rates and ample capital chasing property provide beneficial conditions for the Danish real estate market. The transaction volume reached DKK 40 billion in H1, up by
54% compared to H1 2020. Foreign investors have been very active on the investment market acquiring property for DKK 22 billion in H1. Foreign players have increased their presence on the Danish market with a market share of 55% so far this year. Investors from the UK, USA and Sweden have been especially active acquiring property in 2021. In light of the high investment activity during H1 and the positive sentiment, Newsec has made an upward adjustment of our expectations to the total transaction volume in 2021 from DKK 75 billion to DKK 80 billion.
Contact: Robin Rich robin.rich @newsec.dk
