Development in residental rental properties

Development in residential rental properties

Continued strong investor interest

Investment activity in the residential rental property market, like the rest of the investment market, remains low due to high interest rates. With a transaction volume of DKK 10 billion in the first 8 months of the year, residential rental properties are still the most attractive segment for investors.

The decline in transaction volume is driven by elevated interest rates and uncertainty in general. This has led to significantly higher return requirements from buyers, while sellers have been slow to adjust their expectations to the new market situation.

Overall, yield requirements remain lower in Denmark compared to neighboring countries. This is partly explained by the fact that Danish property investors generally have a more robust financing structure, making them less sensitive to interest rate fluctuations than for example, investors in the Swedish market. As a result, many investors have the ability to hold onto their properties rather than accept a lower sale price.

The combination of high interest rates and rising taxes may lead more private individuals to choose, or be forced, to rent rather than buy, as renting is currently relatively more attractive in many areas.

Market rents are expected to remain stable to slightly increasing in the coming year, while yield requirements are expected to stay stable at current levels. This is partly due to the expectation of continued declines in interest rates over the next year, which will naturally improve conditions in the transaction market.