Chapter name 1 THE PROPERTY PERSPECTIVE Denmark 2017 CBRE Research CBRE Research The Property Perspective Denmark 2017 Contents 3 INVESTOR 25 PERSPECTIVE Investors need to embrace the evolution and the level of change NEW HUBS, NEW DEVELOPMENT POSSIBILITIES Zealand, the Triangle 24 Region and Jutland CON06ECONOMY All indicators are pointing towards an upswing in Danish economy MAIN TRANSPORT 08 CORRIDORS AND TRANSPORT OF GOODS The Fehmarnbelt tunnel will wbecome a major link between Scandinavia and Central Europe TENTS 12DOMESTIC AND INTERNATIONAL TRADE 14DANISH INDUSTRIAL MAIN LOGISTICS AND 18 MARKET INDUSTRIAL CENTRE Transportation of national and international goods takes up a Gains popularity as Denmark covers a relatively small large part of the infrastructure international trade and retail geographical area. Therefore, most capacity are on the way up logistics companies only require two large-scale facilities in Denmark focused in these areas © 2017 CBRE Research The Property Perspective Denmark 01.05.2017 Chapter name 5 DANISH MARKET All indicators are pointing towards an upswing in Danish economy Denmark in a Nordic setting transactions of the Nordics is on reforms already implemented, O V The countries constituting the estimated at ca. 15-20% throughout employment growth continues Nordics are considered the EU’s the last 5 years. but at a slower pace. Wages are fifth largest economy, Europe’s continuing to exhibit strong growth sixth largest economy and the Danish economy that will underpin consumer world’s 12th largest economy with All indicators are pointing spending going forward. a GDP representing 10% of the US towards an upswing in Danish economy and more than 50% of the economy. According to the Danish 2017 appears to be the year with a German economy. central bank, there are no major turn in interest rate levels. Long- imbalances in the economy to term government bond yields The Nordic countries represent prevent a continued stable recovery. are expected to remain low by a significant economic factor The global economic outlook historical standards but higher in the eurozone commercial has not changed since late 2016, than in recent years and trending property market and amount meaning that the basis for future up. After reaching almost zero-zone V I to approximately 10-20% of the economic growth in Denmark in Q3 2016, the long-term interest entire recorded European real remains favourable. Real GDP is rate was 0.66% in Q1 2017 and is estate market transactions. The expected to increase by 1.6% in expected to reach 0.83% at year- Danish share of the known market 2017 and 1.8% in 2018-2019. Based end. Figure 1: Danish GDP and employment growth, q-o-q E E • GDP • Employment R W Source: Oxford Economics, 2017 © 2017 Market specific copyright CBRE Research The Property Perspective Denmark 01.05.2017 Danish Market Overview 7 Main economic indicators AVG. 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2012-2016 GDP growth 1.1% 0.2% 0.9% 1.7% 1.6% 1.1% 1.6% 1.8% 1.8% 1.9% Employment growth 0.8% -0.8% 0.0% 0.7% 1.5% 2.7% 1.0% 0.6% 0.7% 0.5% Unemployment rate 5.1% 6.1% 5.8% 5.0% 4.6% 4.2% 4.2% 4.2% 4.1% 4.1% Inflation 0.9% 2.4% 0.8% 0.6% 0.5% 0.3% 1.1% 1.5% 1.7% 1.7% DKK per USD 6.10 5.79 5.62 5.62 6.73 6.73 7.18 7.35 7.16 6.97 Govt. budget balance (% of GDP) -1.2% -3.5% -1.0% 1.4% -1.3% -1.4% -0.4% 0.0% 0.0% 0.0% Long-term interest rate 10-year 1.1% 1.5% 1.8% 1.4% 0.7% 0.3% 0.8% 1.1% 1.4% 1.7% Source: Oxford Economics Inflation not have an inflationary target As a consequence of the Domestic demand to make a substantial contribution to countries. Starting from 2016, the Consumer prices are still but is committed to a currency commitment to a stable Private consumption is supported by Danish economic growth. Towards corporate tax is at 22% compared showing a weak trend. Long- target against the Euro. currency, the Danish central low interest rates, steadily rising real the end of 2016, exports of both to 23.5% in 2015. This should term inflation ran at an average bank follows the European disposable income and increasing services and goods picked up, and lead to further improvement in annual rate of 1.6% in the Stable currency and credit Central Bank closely regarding wealth and home equity. Going the same is expected to continue in profitability and incentives to invest period 2007-2016 and was rating the leading interest rates. forward, real disposable income is 2017. Due to the size of the Danish over the medium term. Economic relatively high in 2010-2012. Denmark is a member of the expected to grow at a slightly lower merchant fleet, sea freight is an growth should also improve by An inflationary pressure easing EU but does not participate As one of few countries, rate than in the past few years. This is important export component. major investments in public was seen first in 2013. In 2017, in the EMU. The Danish Denmark has a triple-A (AAA) a result of price growth normalisation transport infrastructure, notably the inflation is expected to increase currency (DKK) is pegged to credit rating with all major and upward movement of interest Lower corporate tax and Fehmarnbelt tunnel that will link to around 1.1% and 1.5% in the Euro in a narrow band of rating agencies (Standard & rates. improved infrastructure Denmark to Northern Germany. 2018. From 2019 onwards, it is +/- 2.25%. The stability of the Poor’s, Moody’s and Fitch The Danish government has estimated to stabilise at 1.7%. DKK vs. EUR is a cornerstone Group). Exports lowered the corporate tax rate to The Danish central bank does in Danish economic policy. Looking ahead, exports are expected levels comparable to neighbouring Figure 2: Figure 3: Industrial Exchange rates production and turnover, (2010=100) • ¤/DKK • $/DKK • Industrial prd. w/o pharma • £/DKK • Industrial Source: Statistics Denmark, 2017 Source: Statistics Denmark, 2017 © 2017 CBRE Research The Property Perspective Denmark 2017 Transport 9 MAIN TRANSPORT CORRIDORS AND TRANSPORT OF When the Fehmarnbelt fixed link opens, Danish and German transport networks will become further integrated, and the GOODS corridor will become a major link between Scandinavia and Central Europe There are more than 400 named goods as the current 160 km detour main corridor runs through Jutland islands in Denmark. The largest via the Danish-German border in from the Danish-German border are Funen and Zealand, where Jutland can be avoided. in the south to the northern part Copenhagen is situated. There of Jutland, where it links up with are several bridges connecting the A large proportion of the flow ferry connections to Sweden and various islands with the Danish of goods via Funen and Jutland Norway. A second north-south mainland. These bridges are to Germany is expected to be corridor connects the eastern part of essential to an integrated Danish substituted by the more direct Denmark (Zealand) to neighbouring transport system. Besides, they link corridors available with the countries. From Elsinore in the Scandinavia to Central Europe. With new Fehmarnbelt connection to north and the Øresund Bridge few exceptions, Danish roads and Germany. This will reduce the near Copenhagen, it runs through bridges are free of charge for the amount of traffic on the Storebælt the eastern part of Denmark to individual user. Bridge and thereby ease capacity the south, where ferry connections constraints. across the Fehmarnbelt connect In 2027, a fixed link across the the Danish transport system to Fehmarnbelt, between Denmark Efficient transport corridors are Germany. and Germany, should open up essential to a modern transport for traffic. Construction works are system. Besides facilitating the When the Fehmarnbelt fixed expected to start in January 2018 mobility of goods and passengers link opens, Danish and German and will take 8½ years. The fixed across borders, they also link the transport networks will become link will significantly reduce the domestic network together. The further integrated, and the corridor travel time between Scandinavia main transport corridors in Denmark will become a major link between and Central Europe. It will improve connect Denmark to its European Scandinavia and Central Europe. the market conditions for railway neighbours along two north-south transport and for the transport of axes as well as a west-east axis. A © 2017 CBRE Research The Property Perspective Denmark 2017 Transport 11 HIRTSHALS PORTS AND AIRPORTS Denmark has some 120 commercial ports in Denmark, Second-line warehouses and FREDERIKSHAVN commercial seaports, including in terms of freight turnover, are other logistics next to existing RØNNE a lot of very small local ports. the port of Aarhus (8,038 tonnes first-line (airside) cargo area and Three ports are of a size to be in 2016), the port of Fredericia main gate to the airport should appointed to the core network (7,728 tonnes in 2016) and the be developed. of the EU’s Trans-European port of Copenhagen (7,636 Transport Network (TEN-T), tonnes in 2016). Copenhagen Airport has namely the ports in Aarhus, announced that it will invest Copenhagen and Frederikshavn. Airports - cargo some DKK 20 billion in new AALBORG Twenty other ports are There are two cargo terminals infrastructure and airport appointed to the comprehensive at Copenhagen Airport: Spirit extension. This would allow for network of the TEN-T.