2 MARKET UPDATE PULSE

QUARTER 3 | 2019

MARKET UPDATE: No signs of gloom in the property market – quite the opposite

2

Property market Has the indicators market for student housing finally reached saturation point? 5 10

No reason not to go ahead with speculative building of logistics facilities 14 Q3 2019 | MARKET UPDATE PULSE 2 Colliers International | Denmark Colliers InternationalDenmark By Peter Winther,CEO, –QUITETHEOPPOSITEMARKET NO SIGNSOFGLOOM INTHEPROPERTY dampener onnewinvestmentactivity. rise toadditionalconcerns,putting a this, thechaossurroundingBrexitgives both theUSAandGermany. Ontopof setback entailingtheriskofrecessionin mounting concernofaglobaleconomic equivalents. Atthesame time,thereis substantially belowthe2017and2018 the investmentproperty marketwas the H12019transactionvolumein In Denmark,likeintherestofEurope, Right now, the Danish pensionfund 100,000bn carry anegative yield today. It isestimated that bondsworth DKK tor demandfor investment properties. interest rate decreases boostinves will - that monetary easingand this summer’s economic activity, itisawell-known fact havethis will the intendedeffecton scale. Although noonecanknow if tors withmonetary easingonamassive slowdown inmacroeconomic key indica- central bankshave responded to the that the Federal Reserve andEuropean However, itisimportant to bear inmind Q3 2019 | MARKET UPDATE PULSE 3 Colliers International | Denmark CIBOR 3M Copenhagen Towers standing out as a standing Copenhagen Towers notable exception. particularly pipeline strong see a fairly we However, transactions, investment of large-scale estimates, quite to our and according of transactions a few single-property scheduled are than DKK 1bn each more year-end. before to be completed International investors International investors for the market dominate transactions high-volume demand investment In spite of strong the institutional sector, the domestic in - - 10-year Danish government bond Source: Statistics Denmark Source: 2018-03 2018-06 2018-09 2018-12 2019-03 2019-06 09/20/2019 0% It goes without saying that almost ten that almost It goes without saying the proper prices in of uptrending years ty market will invariably be accompanied be accompanied will invariably market ty voices claiming that the has market by and a crisis is imminent. peaked it will pan out. this is not how However, character demand in a world Investor ised by historically low interest rates rates interest low historically ised by substantial savings will make very and of that. sure In H1 2019, Denmark saw only one saw only Denmark In H1 2019, the DKK in transaction single investment acquisition AXA’s namely 1bn+ bracket, at Bella Center portfolio of a residential Copenhagen. The centre, exhibition transactions of high-volume number ac- in Q3, with NIAM’s was moderate complex office and hotel the quisition of - will re volume Transaction the remainder main high for of the year 0.4% 0.8% 0.6% 0.2% -0.4% -0.8% -0.6% -0.2%

It is a well-known fact that monetary easing and this fact that monetary easing It is a well-known investor rate decreases will boost summer’s interest properties. demand for investment FIGURE 1: 10-YEAR CIBOR 3M VS. BOND YIELD GOVERNMENT Start-2018 to date Obviously, this trend could potentially this trend Obviously, - net initial yield require in lower result on ments, driving up prices in particular risk. low very with associated properties setting, rate interest the low by If, driven institutional sector Danish the entire to reallocate should in one go decide the from its assets just 2% of even this market, to the bond property market surge an immediate prompt alone would than DKK 80bn in investment more by the than demand – more property volume of the last transaction aggregate 12 months. Of course, interest rates may drop even even drop may rates interest Of course, thereby and price hikes triggering further, at negative trading gains on bonds further the this does not change yields. However, short-term bonds or that government fact to yield any fail today mortgage bonds maturity. reaching before returns sector alone probably has more than has more alone probably sector yielding placed in assets DKK 1,000bn returns. negative Q3 2019 | MARKET UPDATE PULSE 4 Colliers International | Denmark Copenhagen prices to beattractive. international investors consider still Berlin andMunich,many prominent properties trade in Stockholm,Hamburg, yield requirements atwhichcomparable Nevertheless, relative to the netinitial excessive. well-located investment properties to be they find thepricingof very large and tic institutionalsinfact indicate that by foreign investors. Several domes- continuetions will to bepredominated market for really high-volume transac- financial sector. bubbles, nor the riskoflosses in the increase the riskofproperty market financial institutionsishardly going to ing to the managementofindividual loans for high-volume property financ- the power to decidewhether to grant in fact become overregulated. Returning tion ofwhether the financialsector has Nationalbank, recently raised the ques- that Governor Lars Rohde, Danmarks In this context, we are pleased to note financial sector ona very large scale. has optedfor detail regulation of the zeal to prevent property market bubbles which initsnodoubtwell-intentioned rigorous statementsby the DanishFSA, domestic financialsector,but rather to tive approach to property financingin the This ishardly due to anoverly conserva 40-50%. structures, even atanequity ratio of credit sector that they require for SPV in the Danishbankingandmortgage increasingly difficult to procure theLTVs inent globalinvestors seem to findit demand for loans,even the most prom- deposit surplusandbemoans the weak sector isbeleaguered by asubstantial financial domestic while thatthe All the in the financialsector stricter loanrequirements Low risk tolerance and n - (DKKbn), includingforecastforH22019 TRANSACTION VOLUME, DENMARK2014-2019 FIGURE 2: 100 20 40 60 80 50 90 30 70 10 SELECTED MAJORCITIES REQUIREMENTS, OFFICE, PRIME INITIALYIELD NET FIGURE 3: Kilde: Colliers International 0 Source: Colliers International Budgeted transaction volume for H2 2019 for volume transaction Budgeted 0421 0621 082019 2018 2017 2016 2015 2014

3.00% Hamburg 2.60% Munich 3.75%

Copenhagen 2.80% Berlin Source: Colliers International 3.50% Stockholm 5 Colliers International | Denmark Q3 2019 | PROPERTY INDICATORS MARKET

PROPERTY MARKET INDICATORS

DEFINITIONS First year stabilised return on investment (less deposits, less transaction costs) based on rental income less operating costs.

Vacancy data based on supply statistics by Ejendomstorvet.dk and current market supply estimates.

Prime: Prime location and quality. Either a new, modern building, or refurbished so that it is up-to-date and configured to meet future requirements. Low vacancy risk relative to market conditions.

Secondary: Average location and condition. The vacancy risk is moderate and reflects current market conditions.

The number is expected to increase in a year

The number is expected to be unchanged in a year

The number is expected to be lower in a year

You may quote PROPERTY MARKET INDICATORS by providing a full source of reference. Q3 2019 | PROPERTY MARKET INDICATORS 6 Colliers International | Denmark OFFICE 1. Triangle Region refers to Vejle, Kolding andFredericia. of Copenhagen of Copenhagen Copenhagen proper Vacancy rates % Funen Odense Northern Jutland Aalborg Esbjerg Triangle Region Randers Horsens Aarhus suburbs ofCopenhagen Southern andwestern Northern suburbs Copenhagen Net initialyields% Funen Odense Northern Jutland Aalborg Esbjerg Triangle Region Randers Horsens Aarhus Zealand suburbs ofCopenhagen Southern andwestern Northern suburbs Copenhagen DKK/sqm/year excluding operating costs and taxes Rent levels Greater Copenhagen Northern Zealand Eastern Zealand Western andSouthernZealand Funen Southern Jutland Eastern Jutland Western Jutland Northern Jutland (1) (1)

Prime Prime Prime Prime Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Secondary Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Secondary Secondary Prime Secondary Prime Secondary Prime Prime Q2 2,000 1,000 1,400 1,300 1,525 11.20 1,100 1,100 1,100 1,100 1,100 1,150 6.00 6.00 6.00 8.00 8.00 8.00 5.00 5.00 5.80 4.80 4.25 4.50 6.50 6.50 8.25 5.25 3.00 5.50 5.50 5.50 8.50 5.50 9.00 8.90 7.00 7.00 3.40 3.40 6.75 6.75 5.75 5.75 7.80 7.25 7.25 3.75 600 800 800 500 900 650 850 850 550 550 550 950 750 750 575 2018 Q3 2,000 10.00 1,000 1,400 1,300 1,550 1,100 1,100 1,100 1,150 1,150 1,150 6.00 6.00 8.00 8.00 8.00 5.00 5.00 5.00 5.00 5.20 4.25 4.25 6.50 6.50 6.50 8.25 5.25 5.25 5.50 5.50 4.90 3.80 9.00 8.30 5.70 7.00 7.00 5.30 6.75 5.75 7.25 7.25 3.75 600 800 800 500 900 650 850 850 550 550 950 8.10 750 750 575 575 7.10 Q4 2,000 1,000 1,400 1,300 1,550 10.10 1,100 1,100 1,150 1,150 1,150 6.00 8.00 8.00 5.00 5.00 5.00 1,125 8.00 4.80 4.25 4.25 6.50 6.50 6.50 8.25 5.25 5.50 5.50 8.40 5.40 9.00 8.30 7.00 7.00 4.75 6.75 5.75 5.75 5.75 3.90 7.25 7.25 3.75 600 600 7.75 800 900 900 550 550 700 950 525 4.10 5.10 750 750 675 875 575 Q1 2,000 10.60 1,200 1,000 1,600 1,400 1,300 1,100 1,100 1,150 1,150 6.00 8.00 5.00 5.00 5.00 8.00 5.20 8.20 4.25 4.25 4.40 5.60 6.50 6.50 6.50 6.50 8.25 5.25 5.50 5.50 5.50 1,175 8.40 4.90 9.00 3.60 4.75 6.75 6.75 5.75 5.75 7.25 7.25 3.75 600 600 7.75 7.75 800 500 900 550 550 700 700 950 750 750 875 575 975 2019 Q2 2,050 1,200 1,200 1,000 1,600 1,450 1,350 11.40 1,100 1,100 1,150 1,150 4.00 8.00 5.00 5.00 6.20 5.20 8.20 4.25 4.25 6.50 6.50 6.50 6.50 8.25 5.80 5.25 5.50 5.50 5.50 5.50 8.50 6.30 9.00 3.80 4.75 4.75 6.75 6.75 5.75 7.25 7.25 7.50 3.75 7.70 600 600 7.75 800 900 550 550 700 950 750 750 725 475 875 575 975 Q3 2,050 1,200 1,200 1,000 1,000 1,600 1,450 1,350 12.10 1,100 1,100 1,150 1,150 8.00 5.00 5.00 4.00 6.20 4.25 4.25 4.50 6.50 6.50 6.50 6.50 6.50 8.25 8.25 5.25 5.50 5.50 5.50 5.50 6.40 4.30 5.90 9.00 6.70 9.00 9.20 4.75 6.75 5.75 7.25 7.25 7.25 7.50 3.75 600 600 800 900 550 550 700 950 750 750 750 475 875 575 Forecast Q3 2019 | PROPERTY MARKET INDICATORS 7 Colliers International | Denmark Forecast 3.25 5.50 6.50 750 750 4.00 7.75 7.75 7.25 7.25 3.90 5.75 6.75 6.75 4.75 5.90 6.90 6.90 3.60 8.50 5.50 5.50 5.50 5.50 5.50 8.25 6.50 6.50 5.80 6.25 6.25 8.60 8.80 4.50 4.40 4.25 4.25 5.00 6.00 6.00 1,700 1,450 1,450 5,100 1,400 1,400 2,100 2,100 1,600 1,600 1,000 2,450 3,250 2,900 3,500 3,600 6,250 3,000 3,200 8,600 2,500 2,500 4,600 2,800 2,000 24,000 Q3 3.75 5.25 6.50 3.00 750 750 7.75 7.50 7.25 7.25 3.70 6.75 6.75 4.75 5.70 6.70 6.30 6.50 5.50 5.50 5.50 5.50 5.25 5.25 8.25 6.50 6.25 6.25 6.25 4.50 4.40 4.25 8.60 8.20 4.60 8.00 5.00 6.00 6.00 4.00 1,700 1,700 1,550 1,550 1,500 1,500 1,600 1,000 3,300 2,450 3,250 5,300 3,500 3,600 3,000 3,000 6,500 8,600 2,500 2,500 4,600 2,800 2,000 2,200 2,200 24,000 Q2 2019 3.75 3.00 750 750 6.10 7.75 7.50 7.50 7.25 7.80 3.90 6.75 6.75 4.75 6.70 6.70 6.90 6.30 5.50 5.50 5.50 5.50 5.25 5.25 8.25 6.50 6.50 6.25 6.25 6.25 8.80 4.50 4.25 5.00 5.00 5.00 6.00 6.00 4.00 4.00 1,700 1,700 1,550 1,500 1,600 1,600 1,600 1,000 6,750 3,300 2,450 3,250 5,300 3,500 3,600 2,300 3,000 3,000 8,800 2,500 4,600 2,800 2,600 2,000 2,200 24,000 Q1 3.75 5.25 6.50 3.00 750 750 5.00 7.75 7.75 3.75 7.50 3.90 6.75 6.75 9.20 4.75 4.75 7.00 6.30 6.30 6.30 6.50 5.50 5.50 5.50 5.25 8.25 6.50 6.25 6.25 6.25 5.60 4.25 4.25 8.20 5.00 5.00 6.00 6.00 4.00 1,100 1,700 1,650 1,500 1,800 1,800 1,600 1,600 3,700 7,000 3,300 3,400 2,450 5,300 3,500 3,000 3,000 2,400 8,800 2,500 4,600 2,800 2,600 2,000 2,200 24,000 Q4 3.75 5.50 6.50 3.00 750 750 6.10 5.00 7.75 7.30 3.75 7.50 7.25 3.70 6.75 6.75 6.75 4.75 4.75 6.70 6.90 5.50 5.50 5.50 5.50 5.25 8.25 6.50 6.25 6.25 6.25 5.80 8.80 4.25 4.25 4.60 5.00 6.00 6.00 6.00 1,100 1,750 1,700 1,700 1,500 1,800 1,800 1,600 3,700 7,000 2,450 5,300 9,000 3,500 3,000 3,000 2,250 3,200 3,200 3,200 2,500 2,500 4,600 2,800 2,000 24,000 Q3 2018 7.75 7.50 7.25 5.75 6.75 6.75 6.75 8.25 6.50 6.50 6.50 750 750 5.10 5.00 4.00 3.75 7.80 3.30 5.70 5.40 5.40 5.50 5.50 5.50 5.25 6.50 3.00 6.25 4.40 4.25 4.25 8.20 6.20 5.00 5.00 5.00 6.00 6.00 6.00 1,100 1,750 3,150 1,700 1,700 1,450 1,800 1,800 1,600 3,700 7,000 2,450 5,300 9,000 3,500 3,000 3,000 2,250 3,200 3,200 2,500 2,500 4,600 2,800 2,000 24,000 Q2 Prime Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Prime Secondary Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Secondary Prime Secondary Prime Secondary Secondary Prime Secondary Prime Prime Prime Prime Prime

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Northern Jutland Western Jutland Western Eastern Jutland Southern Jutland Funen Western and Southern Zealand Western Eastern Zealand Northern Zealand Greater Copenhagen Greater Rent levels Rent taxes and costs operating excluding DKK/sqm/year Copenhagen High Street Vacancy rates % rates Vacancy Copenhagen proper Odense Funen Aalborg Northern Jutland Triangle Region Triangle Esbjerg Horsens Randers Aarhus Southern and western Southern and western suburbs of Copenhagen Zealand Copenhagen Northern suburbs Funen Net initial yields % Copenhagen High Street Northern Jutland Odense Esbjerg Aalborg Randers Region Triangle Aarhus Horsens Southern and western Southern and western suburbs of Copenhagen Zealand Copenhagen Northern suburbs of Copenhagen of Copenhagen

1. Triangle Region refers to Vejle, Kolding and Fredericia. Kolding to Vejle, refers Region Triangle 1. RETAIL Q3 2019 | PROPERTY MARKET INDICATORS 8 Colliers International | Denmark INDUSTRIAL 1. Triangle Region refers to Vejle, Kolding andFredericia. *) of Copenhagen of Copenhagen Horsens Aarhus Zealand suburbs ofCopenhagen Southern andwestern Northern suburbs Copenhagen proper Vacancy rates % Funen Odense Northern Jutland Aalborg Esbjerg Triangle Region Randers Horsens Aarhus Zealand suburbs ofCopenhagen Southern andwestern Northern suburbs Copenhagen Net initialyields% Funen Odense Northern Jutland Aalborg Esbjerg Triangle Region Randers Copenhagen DKK/sqm/year excluding operating costs and taxes Rent levels Greater Copenhagen Northern Zealand Eastern Zealand Western andSouthernZealand Funen Southern Jutland Eastern Jutland Western Jutland Northern Jutland Industrial includespr (1) (1)

oduction, storage andlogistics facilities, butnotbuilt-to-suit or airside logistics facilities Prime Prime Prime Prime Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Secondary Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Secondary Prime * Q2 6.00 6.00 2.20 2.40 2.50 6.25 0.30 6.50 6.50 2.70 7.00 7.00 7.00 3.40 3.40 6.75 6.75 6.75 9.25 7.50 200 200 300 300 300 300 250 450 1.60 225 225 550 8.00 2.10 525 350 350 350 350 325 1.90 1.90 1.70 275 8.25 8.25 8.25 475 475 8.50 375 9.00 5.75 9.25 9.50 9.50 9.50 7.75 7.75 175 625 275 275 375 2018 Q3 6.00 6.00 2.00 8.00 6.25 0.30 6.50 6.50 6.50 8.25 8.25 8.25 2.50 8.50 2.90 9.00 9.00 7.00 7.00 3.40 3.40 3.50 6.75 6.75 6.75 9.25 9.25 9.50 9.50 7.50 200 200 500 300 300 300 250 250 1.80 450 1.80 225 550 550 350 350 350 325 325 1.90 1.90 1.30 275 475 375 375 5.75 7.75 7.75 175 300 650 275 375 Q4 2.00 6.00 6.00 8.00 2.20 6.25 6.25 6.25 6.50 6.50 8.25 8.25 8.25 8.50 3.00 2.90 2.30 9.00 9.00 7.00 6.75 6.75 6.75 8.75 9.25 9.50 9.50 7.50 200 200 500 300 300 300 250 250 1.80 0.10 1.80 450 225 550 350 325 325 1.90 1.90 1.30 275 475 5.50 575 375 375 375 375 7.50 7.75 175 300 650 275 375 Q1 2.00 6.00 6.00 2.00 2.20 2.80 2.40 6.25 6.25 6.25 6.25 0.30 6.50 5.25 7.00 6.75 6.75 5.75 7.50 200 200 400 400 400 400 600 500 300 300 300 250 250 1.60 450 225 550 8.00 8.00 8.00 325 325 325 1.70 275 275 8.25 475 8.50 675 3.10 375 375 9.00 9.00 8.75 9.25 9.50 9.50 7.25 7.75 175 1.10 2019 Q2 6.00 6.00 6.00 6.00 2.40 6.25 6.25 6.50 3.00 5.25 8.50 5.50 9.00 7.00 3.50 6.75 6.75 8.75 9.25 9.50 9.50 7.50 200 200 400 400 400 400 500 300 300 250 250 0.10 450 1.80 225 550 8.00 8.00 625 1.40 2.10 325 325 325 1.90 1.90 1.90 1.90 275 8.25 475 675 375 375 9.00 7.25 7.75 7.75 175 1.10 300 275 Q3 2.00 6.00 6.00 6.00 6.00 5.00 2.60 0.40 6.25 6.50 5.25 8.50 8.50 9.00 7.00 6.75 6.75 8.75 5.75 3.30 3.30 9.25 9.50 7.50 200 400 400 1.20 300 300 250 250 450 450 650 225 225 550 425 425 425 8.00 8.00 2.10 525 1.50 325 325 325 1.70 1.70 275 8.25 675 3.10 375 9.00 7.25 7.50 7.50 175 325 275 Forecast Q3 2019 | PROPERTY MARKET INDICATORS 9 Colliers International | Denmark Forecast 3.75 5.50 5.50 4.50 4.25 4.25 4.25 950 850 850 900 800 3.75 3.75 3.75 5.75 4.75 4.75 4.75 3.50 5.50 5.50 6.25 4.50 4.50 4.50 4.25 5.00 5.00 4.00 4.00 1,150 1,100 1,100 1,100 1,100 1,675 1,075 1,275 1,425 1,425 1,350 1,450 1,525 1,900 1,650 1,300 1,050 1,250 2,100 1,500 1,200 Q3 4.75 5.50 5.50 4.50 4.50 4.25 950 850 850 4.00 900 800 3.75 3.75 5.75 4.75 4.75 4.75 3.50 5.50 5.50 5.25 6.50 4.50 4.50 4.50 4.25 4.25 5.00 4.00 4.00 1,150 1,100 1,100 1,100 1,100 1,675 1,075 1,275 1,425 1,425 1,450 1,900 1,650 1,300 1,300 1,050 1,250 2,100 1,500 1,500 1,200 Q2 2019 4.75 5.50 5.50 4.50 4.25 4.25 850 850 4.00 900 900 800 3.75 3.75 5.75 4.75 4.75 4.75 3.50 5.50 5.50 5.25 6.50 4.50 4.50 4.50 4.25 4.25 1,125 5.00 4.00 4.00 1,150 1,100 1,100 1,100 1,075 1,275 1,425 1,700 1,450 1,450 1,900 1,650 1,300 1,300 1,050 1,250 2,100 1,500 1,500 1,200 Q1 5.75 5.75 4.75 775 4.50 4.25 4.25 850 850 850 850 4.00 1700 3.75 3.75 1500 1050 5.75 2100 6.75 4.75 4.75 4.75 4.75 4.75 4.75 3.50 5.50 5.25 6.50 4.50 4.25 4.25 4.00 4.00 1,100 1,100 1,100 1,075 1,425 1,450 1,850 1,650 1,300 1,300 1,300 1,250 1,250 1,500 1,500 1,200 1,200 Q4 the Capital Region of Denmark, eg. Lyngby, Hillerød and Hillerød eg. Lyngby, of Denmark, the Capital Region 5.75 5.75 4.75 775 4.50 4.25 4.25 850 850 850 850 4.00 1700 3.75 3.75 3.75 1050 1500 5.75 5.75 6.75 4.75 4.75 4.75 4.75 5.25 6.50 4.50 4.50 4.50 4.25 4.00 4.00 4.00 2050 1,100 1,100 1,075 1,425 1,350 1,550 1,850 1,650 1,300 1,300 1,300 1,250 1,250 1,500 1,500 1,200 1,200 Q3 2018 * 5.75 5.75 5.75 5.75 6.75 4.75 4.75 775 4.50 4.50 4.25 4.25 825 825 850 850 4.00 1700 3.75 3.75 3.75 1500 4.75 4.75 4.75 4.75 1000 * 5.25 6.50 4.50 4.25 4.00 4.00 4.00 1,150 1,150 1,100 1,100 2000 1,075 1,425 1,350 1,850 1,650 1,300 1,300 1,250 1,250 1,500 1,500 1,500 1,200 Q2 Prime Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Secondary Secondary Prime Secondary Prime Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Prime Secondary Prime Secondary Prime Secondary Secondary Secondary Prime Prime Prime Prime Prime of Copenhagen and City of Frederiksberg. of Copenhagen and City estern suburbs of Copenhagen: Municipalities and cities south and west of Copenhagen in the Capital Region of Denmark, eg. of Denmark, the Capital Region of Copenhagen in estern suburbs of Copenhagen: Municipalities and cities south and west

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Hvidove, Glostrup, Herlev, Ballerup. Glostrup, Herlev, Hvidove, Hørsholm, albeit excluding Hellerup, which is part of the Municipality of Gentofte but where data for Copenhagen are valid. Copenhagen are data for of Gentofte but where the Municipality Hellerup, which is part of albeit excluding Hørsholm, Note Z Prime r Sec Copenhagen: City Northern suburbs of Copenhagen: Municipalities and cities north of Copenhagen in Southern and w R Definitions:

Rent levels Rent taxes and costs operating excluding DKK/sqm/year Copenhagen Odense Funen Aalborg Northern Jutland Triangle Region Triangle Esbjerg Randers Aarhus Horsens Southern and western Southern and western suburbs of Copenhagen Zealand Net initial yields % Copenhagen Northern suburbs Odense Funen Aalborg Northern Jutland Triangle Region Triangle Esbjerg Horsens Randers Zealand Aarhus Northern suburbs Southern and western suburbs of Copenhagen of Copenhagen of Copenhagen 1. Triangle Region refers to Vejle, Kolding and Fredericia. Kolding to Vejle, refers Region Triangle 1. let. fully virtually are rent to market subject properties notincludedasunitsinresidential are rates vacancy that residential andRoskilde. eg.Slagelse,,Næstved onZealand, located towns ealand: Large inCopenhagensuburbs. inCopenhagensuburbs. inCopenhagen;Brøndby/Glostrup/Albertslund andRødovre Syd andØrestad esidential location:e.g.LangelinieandHavneholmeninCopenhagen;Lyngby location:e.g.Valby residential ondary

**) units. andpenthouse ground-floor sqm,discounting unitsof80-100 builtresidential newly andnetinitialyieldsquotedfor ent levels RESIDENTIAL Q3 2019 | MARKET UPDATE PULSE 10 Colliers International | Denmark Associate, Colliers InternationalDenmark Associate, By MartinHedegaard Christensen, SATURATION POINT? STUDENT HOUSING FINALLY REACHED HAS THECOPENHAGEN FOR MARKET Copenhagen students. are nowenoughstudentdwellingsforall be replacedbyrealbreakingnews:there some yearsthesererunsmayceaseand analysis showsthatwithinamatterof students lackinghousing.AnewColliers’ the newsmediarerunreportsof term startafterthesummerholidays, It happenswithoutfail:Everyyearat at homewith their parents. Thesame resorting to couch-surfing or staying with reports ofhome-hunting students media coverage ismassive, overflowing in demandfor studenthousing.The international alike, witharesulting surge influx ofnewstudents,domesticand Copenhagen hasasubstantialannual tional programmes andinstitutions, Thanks to itslarge offering ofeduca- in student halls ten years Almost 2,000 newrooms in of newregulations. velopment activity aswellprospects the studentcount, studenthousingde- student housingunits,developments in of ananalysis the current supply of This conclusion isbasedon the findings Q3 2019 | MARKET UPDATE PULSE 11 Colliers International | Denmark Source: Statistics Denmark Source:

75-99 100-124 125-149 150-174 >175 left a highly visible mark on the Copen- visible mark on left a highly years. in recent hagen cityscape Change in market Change in market fundamentals the demand for years, In previous by largely driven student housing was in and count student an ever-increasing the Copenhagen. Since 2010, around some by has increased student count - Copenhagen, corre in Greater 47,750 overall of 24% to an increase sponding annually. 2.4% and approx has growth student-count However, The number years: in recent slowed 0.30% only by of students increased - Based on pro 2018 and 2019. between of 20-29-year- the number jections of the student Copenhagen, olds in Greater fact, it off. In to level is expected count by 0.5% approx by to drop is predicted the a decline in by mainly 2030, driven generations. population of future youth a the stagnating student count, Given of new student housing pipeline strong high years’ recent and developments of student housing completions, volume student for the Copenhagen market -

< 50 50-74 The main emphasis is on the development of large units of 75-149 sq m. Between start-2016 start-2016 sq m. Between units of 75-149 of large the development The main emphasis is on in developed than 50 sq m were units of less student-friendly some 1,400 only and end-2018, Copenhagen. Statistics Denmark Source: CHANGE IN HOUSING SUPPLY (Q1 2016-Q4 2018), SUPPLY CHANGE IN HOUSING SIZE (SQ M) BY 0 1,000 6,000 5,000 4,000 3,000 2,000 FIGURE 2: SUPPLY CHANGE IN HOUSING (Q1 2016-Q4 2018), BY SIZE (SQ M) The main emphasis is on the development of large units of 75-149 sq m. Between Between m. sq 75-149 of units large of development the on is emphasis main The than 50 units of less student-friendly some 1,400 only and end-2018, start-2016 in Copenhagen. developed sq m were 16,500 16,000 15,500 15,000 14,500 14,000

the coming years. At the same time, the time, the same At years. the coming to increase of Copenhagen intends City - student housing in Copen of the supply - of Copen the City end, this hagen. To 400 some DKK hagen has earmarked capital million contributed of municipal housing for of social the construction for people. young activity new construction years’ Recent the hous brisk in has been exceptionally volume the In 2016-2018, ing sector. exceeded completions of residential Co- in Greater sq m annually 525,000 high penhagen, with a record-breaking sq m in 2018 than 800,000 of more alone. the period saw the same Similarly, hall student of some 1,580 completion the 10% of to approx equivalent rooms, for Since 2017, stock of 16,150. current housing student instance, about 1,000 the central in been developed units have and about 420 units district of Nørrebro the Copenhagen island of Amager. on student housing units several In addition, development the city’s been built in have (the South Sydhavnen including areas, - the devel Harbour). As a phenomenon, therefore opment of student housing has -

10 11 12 13 14 15 16 17 18 [Total (‘000 sq m) Student hall rooms (no.) Since 2015, residential new construction activity has seen a steady increase in Copenhagen. increase has seen a steady activity new construction Since 2015, residential in of rooms sq m. The new construction 525,000 exceeded completions annual In 2016-2018, the same period newbuilding, in as residential trend the same traced student halls has annually. than 3.5% more by increasing Statistics Denmark Source: COMPLETIONS, HOUSING (L.A.) HOUSING COMPLETIONS, (R.A.) ROOMS HALL STUDENT VS 0 800 600 400 200 1,000 Since 2015, residential new construction activity has seen a steady increase in increase has seen a steady activity new construction Since 2015, residential sq m. The 525,000 exceeded completions annual Copenhagen. In 2016-2018, - as residen trend the same traced halls in student has of rooms new construction annually. than 3.5% more by the same period increasing tial newbuilding, in COMPLETIONS, HOUSING (L.A.) (L.A.) COMPLETIONS, HOUSING (R.A.) ROOMS HALL STUDENT VS FIGURE 1: As a result, recent years have seen the seen have years recent As a result, student many of a great completion the cur housing schemes. In addition, Recent years’ housing shortage has, years’ Recent that demonstrated clearly however, to not been able have these players accord. own their meet demand on number This has made an increasing including players, of private-sector and international institutional investors in active become companies, property the market. this segment of new that many pipeline suggests rent scheduled for student housing units are Copenhagen in around in or completion Historically, the student housing market the student housing market Historically, social housing by has been fronted authorities the local while organisations the ensuring for been responsible have all students. of housing for availability It is true that many students may students may that many true It is student housing; vain for still look in the scenario has changed nevertheless, years. recent in significantly story happens year after year, painting year, after year happens story a by marred of a metropolis a picture in student demand imbalance and supply housing. Source: Colliers International institutions inLyngby northofCopenhagen. dent dwellings have beencompleted inGreater Copenhagen,includingincloseproximity ofeducational Newly constructed studenthousingunits,Greater Copenhagen.Over the past three years, many stu- NEW STUDENT HOUSING, COPENHAGEN Q3 2019 | MARKET UPDATE PULSE 12 Colliers International | Denmark NEW STUDENT HOUSING, COPENHAGEN penhagen student count, the demand Irrespective of the declinein the Co- market saturation Backlog demandmay prevent its, are becoming scarce. and where “easy pickings”,or fast prof- the supply anddemandgapisclosing, has seenashift towards astagewhere cycle justafewyears ago, the segment Compared to itsposition in the market housing hasfundamentally changed. Source: Colliers International in Lyngby northofCopenhagen. dwellings have beencompleted inGreater Copenhagen,includingincloseproximity ofeducationalinstitutions Newly constructed studenthousingunits,Greater Copenhagen.Over the past three years, many student prox 37%ofstudentshave optedfor According to aYouGov survey, ap- lists for aroom etc. inastudenthall, room, share aflat,beonlongwaiting dwelling ifpossible, rather than rent a optforstudents will their own student housing shortage.Inother words, many caused by the pastandpresent student expected to be the backlog ofdemand The maindriver offuture demandis remain strong for some time to come. for newstudent housingisbelieved to Approx 25%ofCopenhagen students, is the solution preferred by students. Next to co-habitation, stayingathome completed. but only 1,400 smaller flatshave been date, approx 11,150 flatsof75-149 sqm size unitsinrecent years. From 2016 to has beenon the development oflarge- Copenhagen where the mainemphasis affordablethe shortageofsmall flatsin with otherin Amongst things,thisties co-habitation inrelatively large flats. indstillingsudvalget). Copenhagen) andCIU(Central- and Youth Accommodation Office are managedby KKIK(Student areexpensive)least typically the lists for rooms studenthall (which fund. InCopenhagen, the waiting property investor, e.g.apension housing complexes, owned by a may rent aroom or flatinstudent rented flat. Alternatively, students Some studentsshare aprivately in aprivately owned houseor flat. ofresidencehall (“kollegium”) or rent aroom either inastudent or school.Instead,studentscan buildings ofauniversity, college campus or next to the grounds and is only rarely concentrated on In Denmark, studenthousing Q3 2019 | MARKET UPDATE PULSE 13 Colliers International | Denmark - - 124 2 Other Other accommodation 3 124 Parent Parent landlord n 5 125 Student hall 126 of the residential sector for development development for sector the residential of view of in However, and investment. of stu new construction years’ recent the Copenhagen, dent housing in Greater student pipeline and stagnating current to be is expected market the future count, - fo caution and greater by characterised in con as quality such factors cus on key including struction and micro-location, opportunities, to good shopping access shared attractive cafés, infrastructure, etc. facilities, 7 125 Ownership housing 124 21 Renting alone 120 25 Living at home 113

106 37 Co- habitation Source: Ungdomspulsen 2019, YouGov Ungdomspulsen 2019, Source: Approx 37% of students opt for co-habitation while 25% stay at home with their parents. parents. their at home with while 25% stay co-habitation 37% of students opt for Approx student hall accommodation. 5% of students have STUDENT ACCOMMODATION, 2019 ACCOMMODATION, STUDENT Approx 37% of students opt for co-habitation while 25% stay at home with their parents. 5% parents. their at home with while 25% stay co-habitation 37% of students opt for Approx student hall accommodation. of students have YouGov Ungdomspulsen 2019, Source: FIGURE 4: 2019 ACCOMMODATION, STUDENT Since 2010, the Copenhagen student count has grown significantly but is expected to expected but is significantly has grown student count the Copenhagen Since 2010, 2030. by a slight decline off and see level FIGURE 3: COPENHAGEN GREATER COUNT, STUDENT (Index 100 = 2010) Source: Statistics Denmark Statistics Source: 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Antallet af studerende er steget betydeligt siden 2010, men forventes at ade ud og falde falde at ade ud og siden 2010, men forventes steget betydeligt er Antallet af studerende mod 2030. frem marginalt Kilde: Danmarks Statistik Kilde: Danmarks 100 UDVIKLING I STUDERENDE, I STUDERENDE, UDVIKLING STORKØBENHAVN 100 = 2010) (INDEKS market in terms of more pronounced pronounced terms of more in market the rent in segmentation and a spread (prime) first-rate by commanded levels We housing, respectively. and secondary the fu- that location will become believe offering determinant as a wider key ture to pick students for it possible will make student different and choose between dwellings. is still the student housing market Overall, sub-market to be an attractive believed As the supply of student housing in- of student housing the supply As student housing for the market creases, increasingly to become is expected housing aligned with the traditional If the current pipeline is held up against the current If to boost vision of Copenhagen’s the City - stu stock of some 15,300 the current to about 26,850 units dent housing units student for market the rental 2031, by to see fundamental housing is expected of the City time, the same changes. At the Copenhagen has hinted at easing - in connec minimum size requirements newbuilding. tion with residential Because of a relatively small stock Because of a relatively been of student housing, units have of location or up regardless snapped This high rents. often at relatively quality, - into excep translated imbalance has virtually rates, tionally high turnover and high rent rates vacancy non-existent the Copenhagen student across levels housing market. Due to the exceptionally strong demand strong the exceptionally to Due the student housing characterising has so the focus years, in recent market periods, been on short construction far such as of factors the expense often at and location. in construction quality with possibilities A market but also challenges equivalent to some 25,000, opted for opted for to some 25,000, equivalent in 2019, type of accommodation this for those cited as same reasons the for supply the weak that is, co-habitation, competi- fierce of student housing and single-person tion with some 300,000 off better households, often financially of supply the weak than students, for small flats in Copenhagen. traditional the student housing in As conditions of students this group improve, market student housing the to enter is expected overall increasing in future, market demand. Q3 2019 | MARKET UPDATE PULSE 14 Colliers International | Denmark Colliers InternationalDenmark By Søren Skovbjerg, Associate, LATIVE BUILDING OFLOGISTICS FACILITIES NO REASONNOT TO GO AHEADWITHSPECU- back. demand appearstomakethemhold the actualstrengthanddepthofmarket More thananything,uncertaintyabout on speculativebuildinginthissegment. past onlyrarelyseendeveloperstake strong. Evenso,Denmarkhasinthe and logisticsfacilitiesisseemingly Occupational demandforindustrial in the industrial sector, the Greater Irrespective ofcontinued spare capacity short supply Vacant leasepremises in premises,better. the the faster they canbuildgood-quality a competitive parameter for developers: market ismature, and quickdelivery is Funen andin the Triangle Region. The along the motorway corridor bisecting for instancein Greater Copenhagen, and logistics facilities onspeculation, market possible to construct storage product and timing, itisin today’s however, that given the rightlocation, and actual tenant demand,we believe, Based onour knowledge of the market

Q3 2019 | MARKET UPDATE PULSE 15 Colliers International | Denmark 1918171615141312111009

129 2018

115 2017 facilities that meet tenant demands in that meet facilities etc. terms of location, layout, On the supply side, developers in the in side, developers the supply On to segment claim industrial and logistics facilities pipeline of new a strong have the demands of meet that potentially many words, tenants. In other today’s sites development the most attractive of the view of up. In been snapped have and strong rate vacancy low currently that lease demand, it seems surprising in place and not already are agreements started. construction and a the matter the crux of However, in this is that ten- connection paradox the 12-24 to wait often unable ants are Quick delivery a key a key Quick delivery parameter

101 2016

87 2015

74 2014 Source: Statistics Denmark Denmark Statistics Source:

70 90 80 60

110 on account of recent years’ growth growth years’ of recent on account This is momentum in Danish economy. a sustained increase by also confirmed with a 27% index, the production in to date. in 2019 increase demand the strong of driver Another and distribution storage especially for in Danish consumer is growth facilities online into higher translating spending, In 2018, online sales hit an sales as well. billion high of DKK 129.3 unprecedented 13% on 2017. total, up by in online sales between in A 181% surge highlights a 2011 and 2018 clearly The patterns. change in consumer in online sales has made quick increase - require key weightier an even delivery the demand for spurring ment, naturally but also in particular facilities logistics smaller, so-called last mile distribution 130 140 120 100 62 2013

55 2012

46 2011

Source: FDIH Source: DENMARK DENMARK (DKKBN) ONLINE SALES ESTIMATES, ESTIMATES, ONLINE SALES FIGURE 2: Copenhagen industrial and logistics Copenhagen industrial and logistics to 3.1% from dropped rate vacancy start-Q2 At of 2018. the course in 2.7% 2.9%. to back up it had edged 2019, old and mainly vacancies are Current tune with obsolete, not in functionally terms of in requirements user today’s turning space, location, ceiling height, etc. of ramps, number the market in developments In Denmark, have facilities industrial and logistics for with correlated been strongly historically Favourable trends. economic general feed through therefore trends economic than segment quicker this particular to the property of segments to other market. is driven rate vacancy low The currently demand for strong a generally by largely activity higher extension, goods and, by CONTINUED STEADY STEADY CONTINUED IN INDUSTRIAL UPTREND OUTPUT Production index, seasonally adjusted (index 100 = 2015) FIGURE 1: Q3 2019 | MARKET UPDATE PULSE 16 Colliers International | Denmark prices (DKKbn) seasonally adjusted,periodical Danish consumerspending, SPENDING IN DANISH CONSUMER [SUSTAINED GROWTH FIGURE 3:

200 300 250 100 150 50 0 Source: StatisticsDenmark 09 10 11 12 13 14 Fjeldhoff, Transaction Associate, whois commodate justsuchneeds”,saysMads Speculative buildingenablesus to ac necessary for them to rent more space. from oneday to the other makingit contracts atfewmonths’notice, virtually “We oftenseecompanies winning large logistics facilities. ventured into the speculative buildingof very fewdevelopers inDenmark, NREP fully recognises. Lastyear, asoneof Nordic Real EstatePartners (NREP) demand isaphenomenon that developer Indeed, tenants’ demandfor spaceon ments. building withoutsignedpre-let agree opers are averse to startingspeculative such newfacilities, whilemany devel months itnormally takes to construct in asomewhatsecondary location uncertainwhetheris still afacility logistics developments. Firstly, it against speculative industrialand explanations for the general aversion We believe that there are several strength anddepth Uncertainty aboutmarket Denmark. and development oflogistics facilities in involved mainly withNREP’s acquisition

15

16 17

18 19 - - - Q3 2019 | MARKET UPDATE PULSE 17 Colliers International | Denmark both the pharmaceutical and transport both the pharmaceutical and transport as wholesalers. as well industries is further market today’s Demand in of the limited number by underpinned lo- sites available in prime development - previous that users cations. This means - owner-oc for to build facilities looking ly to do so. All able no longer cupation are things being other to equal, this serves demand pressure. exacerbate demand the hidden is there In addition, en- recently that have businesses from on premises agreements into lease tered an acute to satisfy in old-stock buildings most likely shortage of space but would up-to-date facilities more opted for have been available. they had build- that speculative believe Finally, we the advantage of offering on-de- ing has given of space, especially mand delivery of speculative modest supply the current schemes. development to empha- it is important this context, In the potential of assessment that our sise made building is of course speculative for on the that the assumption facilities in requirements user today’s question meet etc. location, layout, terms of in that in the believe therefore we Overall, to good sense it makes market current facilities standard-type build relatively instance for proximity, with motorway from stretching corridor the south in Co- in Greater to Køge Høje- penhagen, with high ceiling height and automated sorting systems, for room the to support etc. robots, self-drive technological advances continued in this e.g. by field. This notion is supported with its partly which in connection NREP, scheme at Ishøj development speculative such generic buildings erected recently risk the re-letting to reduce in a move if face potentially may that developers individual by too restricted become they  tenants’ special fittings. the right product on Focus and the right timing in particular market, today’s Given are demand, we occupational current for is a potential there that confident and building of storage speculative demand Occupational facilities. logistics to be both stronger considered today is are developers than many and deeper inclined to think. Similarly, possible etc. fittings, special tenant demands for from developers need not discourage many building as a great speculative no significant to have believed are users special fittings. demands for among is supported, This assessment involving a case study things, by other - Distri to Greve relocation Interdan’s bution Center, GDC (see case study the general as as well elsewhere) box prospective from receive feedback we the same case, In the market. tenants in the that instance expected it was for to mainly appeal would GDC facilities but with an online platform, businesses a much to have turned out have they the fact by as illustrated appeal broader in touch with businesses in are that we - develop some Finally, facilities. logistics of specu- wave that a possible fear ers building will cause an oversupply, lative the for to find users making it difficult new space.

Furthermore, developers consider it a consider developers Furthermore, the that serious element of risk very the demand is subject of actual strength true more This is even to uncertainty. things, depth. Among other market for with concerns is fraught this uncertainty recession economic a possible of how and industrial the demand for will impact In addition, developers are concerned that concerned are developers In addition, be prepared tenants will only prospective short-term lease into relatively to enter and logistics the industrial as agreements to changing susceptible is highly sector typically Businesses conditions. market contracts without long-term fixed operate value chain the down with clients further to to be agile and quick need they as will- their adjust, which also impacts on leases. to long-term to commit ingness Production facilities are typically built- typically are facilities Production to the industry-specific to-suit, tailored As such, of businesses. requirements for suited not ideally obviously are they fear building as developers speculative the specific predict to that it is difficult that ten- many requirements fitting-up facilities and logistics ants of e.g. storage have. may on completion is able to achieve a to achieve is able on completion on value which, based market capitalised net of market-conforming a calculation and yield requirements, income operating new construction. of costs the exceeds Q3 2019 | MARKET UPDATE PULSE 18 Colliers International | Denmark TO GREVEDISTRIBUTION CENTER INTERDAN RELOCATES eral, the locationcould notbebetter”, saysJesper Rasmussen, delivery inboth the Copenhagenarea andinDenmark ingen- mainly Germany andFrance aswell as the possibility ofquick “The locationatGreve isstrategically ideal.Withsuppliers in minant for choosingGDC. way atGreve asakey deter the locationnear the motor space atHedehusene,cites relocation rented storage whichbeforeInterdan, the problems. to have experienced nosuch Real Estateinfact appears with project completion, MG bly have feared that itcould prove difficult toletunitsinstep on speculation.Although many other developers would proba- What makes this casesospecialis the fact that GDCwasbuilt therefore the very first tenant, takingaleaseof14,120 sqm. (20,000 sqm)wascompleted inFebruary, andInterdan was joint letting agentsfor GDC.Thefirst stageof thedevelopment veloped by European MGReal Estate.Colliers andCBREactas Center (GDC),a100,000 sqmstorage andlogistics centre de- Interdan was the first tenant tosignaleaseatGreve Distribution In January this year, itwasannounced that car importbusiness CASE STUDY - - Chief Executive Officer, K.W. Bruun Logistik A/S JESPER RASMUSSEN general, thelocationcouldnotbebetter. both theCopenhagenareaandinDenmark as wellthepossibilityofquickdeliveryin With suppliersinmainlyGermanyandFrance The locationatGreveisstrategicallyideal.

over another business andneeded to actinstantly. the required spacerelatively quickly asInterdan hadjust taken tance that the developer, MGReal Estate,wasable to deliver Finally, Jesper Rasmussen explains that itwasof vital impor however, is that asimple,high-ceilingedsquare or rectangular demands of the building.Theadvantageofanewbuilding, “As such,we don’t really have any large-scale or special tating Interdan’s optimumspaceutilisation: 12.20-metre ceilingheightand the flexible spacelayout, facili- for GDC,Jesper Rasmussen makes aspecialmentionof the Among other decisive factors that made the business opt Logistik A/S, the actualoccupier of the newlease. Chief Executive Officer withInterdan’s subsidiary, K.W. Bruun

parts of the building.” load-bearing columns insome consider for instancespecial vary andwhere you have to where the ceilingheightmay an old-stocklogistics facility to gauge the utilisationratio of as itmay prove more difficult upper-floor expansion, where- vision the possibilities of,say, building makes iteasier to en- n - Q3 2019 | MARKET UPDATE PULSE 19 Colliers International | Denmark CONTACT COPENHAGEN Palægade 2–4 RESEARCH EDITORS DK-1261 Copenhagen Peter Winther, CEO, Partner Lisbeth Kempel Mobile +45 28 19 66 76 Editor in chief AARHUS [email protected] CMO Søren Frichs Vej 38 A Mobile +45 21 72 83 67 DK- 8230 Åbyhøj [email protected] Martin Hedegaard Christensen Assoiate ODENSE Thora Nielsen Mobile +45 21 79 23 86 Tagtækkervej 8 Editor [email protected] DK- 5230 Odense M PA | Senior Project Coordinator Mobile +45 33 43 25 25 [email protected] AALBORG Søren Skovbjerg Østre Havnegade 20 Associate DK- 9000 Aalborg Mobile +45 58 58 38 15 [email protected] GRAPHIC DESIGN VEJLE Nana Keiding Den Hvide Facet 1 Graphic Designer mDD Alexander Visby Berthelsen DK- 7100 Vejle Mobile +45 22 21 75 12 Associate [email protected] Mobile +45 61 39 18 77 www.colliers.dk [email protected] T: +45 70 23 00 20

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