Colliers Copenhagen Property Market Report 2019

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Copenhagen Property Market Report 2019

LOCATIONS RESIDENTIAL Read more

Liquid market challenged by high price expectations

24% population growth in Copenhagen by 2045

Housing prices continue to climb in the Copenhagen residential market despite new financing regulations and added housing supply. However, the pace of price hikes has slowed and is expected to continue to do so, following a pronounced dip in the second half of 2018. Newly constructed housing is already starting to see stagnant prime rent levels due to rising affordability constraints among existing and prospective Copenhagen residents. Population growth driven by the young and the elderly Copenhagen 1 continues to boom with population growth rates greatly exceeding the national average. By 2045, the population is projected to have grown by 24%, equiva- lent to 159,000 new residents, driven mainly by an increase in the ranks of the young and the elderly. The city’s appeal to the young ties in with its educational scene and great offering of career opportunities, whereas the elderly typically covet city living and cultural activities, trading in their single-family houses and gardens in tranquil suburbia for a Copenhagen flat. Nevertheless, the domestic net influx into Copenhagen has in fact been downtrending since 2015. This suggests a change in the city’s underlying demographic composition, driven mainly by a growing surplus of births and higher net immigration. As mentioned, however, the net inflow of residents aged 20-29, remains very strong, in recent years averaging 10,000 annually. The age of those who migrate to Copenhagen from other parts of the country is also interesting: Since 2008, the number of newcomers aged 60+ has increased by 40% relative to a mere 16% increase in younger age brackets overall. This trend is not least attributable to a certain centralisation of cultural activities and shop- ping opportunities. In addition, the new housing stock of Copenhagen typically features lifts and balconies as well as noise-reducing and largely maintenance-free materials, making it more appealing to the elderly than the old housing stock. Unprecedented scale of newbuilding Although 2017 was a record-breaking year for residential completions in terms of sqm space, 2018 may in fact top this volume, with the completion of more than 500,000 sqm housing, marking a watershed in the Copenhagen market for new residential construction. Recent years’ increase in production has helped to drive up capacity utilisation levels in the construction sector. As a result, an increasing number of businesses today report labour shortage. According to a measurement of cyclical variations by Statistics

Newcomers aged 60+ have increased by 40% 11% increase in construction costs since 2011 

1 Copenhagen in this context includes Copenhagen proper and the district of Frederiksberg