Our specialist team have spotted the following trends in the M&A Real Estate market in Denmark.
Danish real estate transaction volume has slowed down
The total transaction volume within Danish real estate was approximately DKK 90bn in 2022. Down by approximately DKK 38bn from 2021, which, however, was a record year.
The high transaction volume is mostly attributed to a strong first half of 2022 where 64 % of all transactions were completed. Looking only at Q4 of 2022 the transaction volume amounted to 13.5bn.
In correspondence with that, most marked players attribute the decline to the rising interest rate and the uncertainty related to the war in Ukraine, and even though interest rates seem to be stabilizing here in the beginning of 2023 the low transaction volume is expected to continue into the foreseeable part of 2023.
Continued demand for construction of logistic properties
Despite the overall decline in the transaction volume in Denmark, in 2022 the demand for logistic properties appears to continue.
The total investment in construction of logistic and industry property rose to DKK 30bn total in 2022, which is an increase of 63 % compared to 2021.
The increase in construction of logistic properties can also be seen in 10 biggest investment projects in 2022 (combined value of DKK 11bn) of which four were related to logistic properties.
Are finance conditions coming back?
Given the significant rise in interest rates and the general uncertainty on the financing market, we see more buyers demanding that purchase agreements are subject to finance conditions. That said sellers continue to resist such conditionality as it compromises deal certainty.
Whether such discussions will become a general trend is still too early to say. However, we expect that buyers that can pay cash or undertake the finance risk will have an (increased) competitive advantage.
For further detail see our article on Is it time for buyer-friendly clauses such as financing reservations?
Footnotes
1. According to an analysis of the Danish real estate transaction marked, conducted by the analysis firm, Redata.(see reference)
2. According to an analysis conducted by the analysis firm, Byggefakta (see reference)
Originally published 24 March 2023
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