● THE DANISH PROPERTY MARKET NEWSEC PROPERTY OUTLOOK • SPRING 2021
THE DANISH PROPERTY MARKET
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STRONG RECOVERY IN Q4 TURNED 2020 INTO A SATISFYING YEAR
The Danish economy contracted sharply in Q1 and Q2 and unemployment rose from 3.6% in February to 5.5% in May. Restrictions were briefly relaxed during the summer, which led to a rapid economic recovery and a drop in unemployment in Q3. How ever, due to a second wave of covid-19, infection lockdown was reimposed in Q4 and restrictions tightened further at the beginning of 2021. GDP is estimated to have fallen by approx. 4% in 2020. The economy is expected to start growing again in 2021 with GDP increasing by approx. 2.9%. The Danish government has financial leeway to address the situation with stimulus packages. It has adopted huge fiscal and financial schemes to support businesses and households.
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Danish bond yields rose and share prices fell in March as uncertainty about the impact of covid-19 spread. However, these movements were soon redressed and by the end of 2020 share prices were higher and yields lower than at the beginning of the year. Meanwhile, the transaction volume on the Danish real estate market ended up at DKK 70 billion, up by 25% compared to 2019 and above the 5-year historical average. Investment activity was surprisingly high considering the difficult macroeconomic situation. In addition, new housing regulations for residential rental properties and changes in taxation of commercial estate caused uncertainty about the
return on real estate investments. The challenging conditions impacted the market in Q2 and Q3 where investment activity was low, but Q4 saw a strong return of activity – most significantly the transaction of a residential portfolio for DKK 12.1 billion. The outlook for the property investment market in 2021 is positive as market conditions will be more favourable than in 2020.
Contact: Robin Rich robin.rich @newsec.dk Daniel Nielsen daniel.nielsen@newsec.dk
