Copenhagen Property Market Report 2020

Copenhagen Property Market Report 2020

60

Student housing equilibrium Thanks to large institutions like the University of Copenhagen and CBS, Copenhagen offers the most attractive student environment in the country, with some 100,000 students living in Greater Copenhagen. Due to a relatively weak supply of student housing units in previous years, the market for youth and student accommodation was out of balance. All available units were snapped up, regardless of location and quality. Landlords did not need to worry about vacancies as reletting was instantaneous and, as a result, they had ample opportunity to increase rents to the high levels seen today. Due to the supply and demand imbalance in the student housing market, mainly institutional and foreign investors have queued up to be allowed to launch new student housing schemes in recent years. In addition, the City of Copenhagen has indicated that it wants more student housing, planning to open up for the development of 15,300 student housing units, including in student residence halls (“kollegier”), by 2030. The strong demand is supported by the current pipeline of student housing and the fact that the last decade has seen the completion of more than 2,000 units in Copenhagen student residence halls. Investor demand for student housing is expected to remain strong in the years ahead. However, whereas all units were snapped up in 2018 and 2019, we believe that new developments will be characterised by caution and stronger focus on key factors such as building quality and micro-location, including access to cafés, infrastructure and attractive student-friendly shared facilities. This is to be held up against recent years’ new construction of student housing, the current pipeline and slowing growth in the student count.

Mounting demand for senior housing Copenhagen is set to see a boom in senior citizens, both because Danes live longer in general and because of a demographic shift. Since 2010, the ranks of the elderly have increased by 16% in Copenhagen. Forecasts by Statistic Denmark suggest that the number of senior citizens will have grown by 20,400 in Copenhagen by 2030, i.e. by just about one fourth. The increase is projected to be driven mainly by the group of 80-89-year-olds, boosted by the large baby boom generation born after World War II. Given the anticipated boom in senior citizens, the interest in senior housing is predicted to grow much stronger in the coming years. Already today, we see mounting demand for senior co-living and senior-friendly flats. Broadly speaking, the demand for senior housing is driven by the desire to be part of a community with focus on shared facilities and interaction with other residents. However, the market is expected to become highly diversified as the requirements of 65-year-old seniors differ a lot from those of an 80-year-old. Assuming a higher proportion of old Copenhagen residents, we expect to see mounting investor demand for the segment in the years ahead, and we expect that multiple housing schemes will be presented, tailored to suit specific old-age groups. This is supported by the project recently announced by PFA, aimed at the construction of 2,600 units in Aarhus and Copenhagen, where the elderly may pay for additional services like personal care or cleaning if needed.

The past decade has seen the completion of more than 2,000 student housing units in Copenhagen

We expect to see mounting investor demand for the senior housing segment in the years to come