Expectations from the beginning of 2017 of the total Danish 2017 investment volume equating to DKK 80 billion were revised at the beginning of Q4. At the time, CBRE forecasted the total yearly investment volume to reach between DKK 92 and 98 billion. Although this forecast was received with scepticism in the industry and was characterised as overly optimistic, our estimates have proven to be standing on solid ground. The total yearly investment volume has reached an all-time high with DKK 93 billion placed into commercial real estate during 2017. The pace of investments into commercial properties has increased throughout the year with the Q4 2017 result standing at DKK 35 billion, making it the highest result ever recorded.

The expectations for 2018 are high, although we should recognise the fact that the Danish market is probably reaching full capacity in terms of investment volume. One of the main challenges for investors in 2018 will be sourcing core deals at this stage of the cycle. Therefore, investors’ increased exposure to smaller niche sectors or acquisition of projects early in the development phase in search for higher returns are expected.

With Danish prime yields hitting the lowest levels in the last 20 years and the expected increase in the long-term interest rates during 2018, the question of the current pricing is ever more present. We expect the prime property yields to remain flat during 2018 and to possibly see an upward pressure on yields in 2019. On the other hand, the investors’ willingness to diversify by investing outside of their usual core territory, as well as generally improving occupier market could put a downward pressure on secondary yields.