Property body fears stagnation if euro entry is rejected, but German funds insist they are still buyers
Denmark’s property community was resigned to a “no” vote on the country’s participation in the euro as the pre-referendum polls signalled voters’ negative intentions as EuroProperty went to press.
According to Lars Frederiksen, managing director of ATP Ejendomme, part of ATP pension fund: “It’s depressing from my point of view.” His counterpart at property company Sjaelso Gruppen, Flemming Jensen, sympathised, and said: “People are voting with their heart and not with their brain.”
ATP Properties has invested heavily over the last decade in Copenhagen property, and now waits for growth while the capital city’s real estate market catches up with the other major European capitals.
“We have the bridge to Sweden, have a high profile as a gateway to Scandinavia and the Baltic region, a good economic climate, and corporate taxes have gone down,” said Frederiksen.
He said the final piece of the jigsaw would be participation in the euro, knocking out the currency risk, prompting more European firms to set up HQs in Denmark, and attracting more investor interest into the country.
But Peter Winther, director at property consultancy Sadolin Albæck, says the picture is more even: “Although the business world has hoped for a ‘yes’ vote, we think a ‘no’ will have a limited effect on the property market,” said Winther.
“We have strong occupational markets and a ‘no’ would not seriously hurt them. We also do not feel that foreign investors care that much whether we are in the euro or not,” he said.
A “no” vote almost certainly means that interest rates will rise. But, added Jensen, the money markets have already factored this into their calculations. Meanwhile, Rob Hodgkins, manager of international and consulting at Catella Hans Vestergaard, predicted that equities will “take a thumping”.
The Danish property association takes the most downbeat view, saying that rents will stagnate, property investment will decrease and occupational demand for office, retail and industrial real estate will fall.
A chief worry is that Denmark is moving away from the heart of Europe, said Frederiksen.
Meanwhile, according to Jensen: “It will be another two or three years before there can be another referendum on the euro, but some people are saying we can’t keep having them until the government gets the answer it wants – a ‘yes’.”
However, the outcome may not have as an adverse effect as some observers think. A spokesman for Despa, one of many German open-ended funds known to be looking hard at Copenhagen real estate, said: “We would prefer it if they went into the euro. But their currency is more or less fixed to the German mark and we are still interested in Denmark.”
