Economic Memos provide insight into the analysis work being performed by Danmarks Nationalbank’s employees. For example, Economic Memos contain background analyses and method descriptions. Economic Memos are primarily targeted at people who already have a knowledge of economic and financial analyses.
Commercial real estate in Denmark
The value of the Danish commercial real estate market is large and developments within this market can have widespread implications for the financial system and the real economy. This memo provides an overview of the Danish commercial real estate market. It maps the stock of Danish commercial real estate properties by region, type of property and ownership. It also provides an overview of the business model of commercial real estate companies, focusing on the economic drivers of income and expenses and the principles underlying the valuation of commercial real estate. Lastly, it describes credit institutions’ exposure to the commercial real estate sector.
Key messages
Why is this important?
Commercial real estate is one of the most significant non-financial assets held by companies, and the total value of all Danish commercial real estate is substantial. The significant size of the market and its interconnectedness with both the financial system and the real economy mean that developments within the commercial real estate market can have widespread implications. Historically, the commercial real estate market has been a source of substantial losses for credit institutions, particularly during periods of economic stress. Therefore, the commercial real estate market is an important focus area for financial stability.
Main chart
Property values have decreased in recent years
Note:
Yearly growth rates in the property value indicator for prime office space in Copenhagen, with an approximate decomposition of contributions from yields and rents.
Source:
Own calculations based on data from Colliers.