This article was first published in The Real Estate Law Review - Edition 6 and is reproduced with permission.
The Danish real Estate market has been divided in two since the gradual bursting of the Danish real Estate bubble, which started in 2007 and culminated following the credit crunch. While transactions activity in the major urban and industrial areas in Denmark - including Copenhagen, Aarhus and the Triangle Region - has been steadily increasing since the credit crunch, and in 2016 came up to pre-crisis levels, activity in the rest of Denmark remains low, and a number of properties in the peripheral regions are simply unsaleable and will inevitably have to be pulled down.
Through the Danish mortgage credit associations, financing of real estate is available at relatively low cost when compared internationally. However, because of the increased regulation of the financial sector following the credit crunch and the financial crisis, and more careful lending policies, requirements for financial solidity in investments, including requirements for equity and sustainable positive cash flow from the target property, are strict. Normally, equity at 30-50 % of the investment will be required even if cash flow from the target property is clearly positive and the risk of vacancies or falling market rents is low.