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COVID-19’s Impact on Business and Real Estate in Denmark: An Interview Thomas Markert of the DAHL Law Firm

VRS has long been a member of LEInternational, a world-wide network of law firms, giving the firm the ability to network and assist business clients with international transactions. One of the law firms which VRS has a close working relationship is DAHL, a law firm in Denmark. As one of Denmark’s largest law firms with approximately 100 attorneys, DAHL offers VRS clients a full range of services, if necessary.

The COVID-19 (Coronavirus) global pandemic continues to dominate the headlines and is still the biggest issue facing businesses and real estate markets all over the world. Initially, it seemed as if Denmark was a “model” in its handling of the Coronavirus pandemic. However, recent events seem to indicate that Denmark, along with many other countries, are experiencing a “second wave.” What effects would this have on Denmark’s real estate market and DAHL? What are the effects on Denmark’s business community? Stephan Andranian, chairman of the LEInternational Real Estate Practice Group, asked DAHL partner Thomas Markert for his thoughts.

Q:         Thank you so much for taking the time to talk to me this evening, Thomas! In early March 2020, Denmark was one of the first countries to institute a “lockdown”, forcing businesses to close, in order to slow the spread of Coronavirus. It was also one of the first to close its borders. As it began to open up, it experienced what may be termed as a “second wave”, with the virus spreading among the population. What do you think accounts for this?

TM:      In my opinion, after the summer, Danes perhaps were not taking the pandemic seriously anymore, because the shut down had such a big effect: The testing positives were extremely low, as people took the virus very seriously at first. The Prime Minister went on television to address the issue and asked that we work together and take it seriously. Work places shut down, with most people, including our employees, working at home to the extent possible. They closed down on everything that was possible to close down. Businesses like DAHL essentially closed down and took every precaution. After the summer, the government loosened restrictions. For example, there was a ban on gatherings of more than 15 people. This was then raised to 100 people. Now, the Danish government has reversed itself, banning gatherings of more than 15 people (again).

Q:         What about the effect on the construction industry?

TM:      Since most construction is outdoors, the government restrictions had a minimal impact on the construction industry.

Q:         Does Denmark require citizens to wear masks?

TM:      It is now mandatory to wear masks on public transportation. In the beginning, the Government didn’t feel it was necessary to wear masks. After studying the data from other countries on the wearing of masks, the Danish Government has not yet mandated masks in stores and supermarkets.

Q:         What effect did the lockdown have on the Danish real estate market?

TM:      Sales of residential properties actually increased during the lockdown, because of low interest rates and construction. Right now, the interest rates are very low on residential and commercial real estate. The real estate market is strong in Denmark! The sales of summer houses in Denmark has gone crazy: People realized that we are not going anywhere this year and looked to buy summer houses instead. Summer homes that sat on the market for years all of a sudden command high prices!

Q:         We did see some impact here in California on evictions. California put a moratorium where we couldn’t evict residential tenants. Was there a similar rule set in place in Denmark?

TM:      No. The laws regarding evictions are already very strict in Denmark. It’s almost impossible to get rid of a tenant unless they don’t pay their rent. Residential tenants are protected by the law – as are employees.

Q:         What effect did the pandemic have on the mergers and acquisitions market?

TM:      At first, perhaps due to the uncertainty, the M&A market completely died out. However, it has come roaring back: DAHL has never been so busy!

Q:         I read that Denmark wasn’t going to do a lockdown again, but instead was likely to do something in between a total lockdown and perhaps Sweden’s approach. What are your thoughts on what the Danish Government is going to do in the near future?

TM:      Nobody wants a full lockdown again: It was horrible. Especially when kids weren’t going to school and staying home, it was quite difficult to manage work from home with kids, for example helping them with their school work and your own work at the same time. It was stressful.

Q:         What do you see as a long-term impact on commercial real estate?

TM:      Interest rates remain very low and so at the moment, there is no real estate or financial crisis in Denmark. Danes generally still have incomes and money to invest. People are looking at residential and commercial real estate as relatively safe investments. The retail and restaurant real estate market may be the exception. I haven’t been downtown in Copenhagen for a couple months (because I am working from home), but the shops had closed down. I think now it has pretty much returned to normal: People are walking around and the lockdown doesn’t seem to have had a huge impact, at least for now. The issue is that the Danish Government has subsidized these businesses, so there is likely going to be an impact in the near future, and things could yet become difficult.

Q:         Have you noticed a reduction in the need for office space now that people are working from home and businesses do not need as much space?

TM:      To some extent. However, while people are working more from home, most people I have talked to think that office space will still be necessary, as you need a place to meet and discuss issues with clients and colleagues. Let’s not forget that interaction with your coworkers is important: A lot of business gets discussed on your way to picking up a cup of coffee! It’s likely that many businesses will likely find that they don’t need quite as much office space as they did before, and will probably look to reduce the amount of office space by 30-40%.

Q:         Thank you so much for taking the time to discuss this with me today!

TM:      Thank you!