April 2023

During April, James Whitmee undertook a review of real estate conditions in Nuuk, the capital of Greenland. The population of the city is only 18,000, and Greenland is just 58,000 people so this is small market, and not particularly easy to get to, requiring an overnight transit both ways, either through Reykjavik or Copenhagen.

Nuuk is the growth centre of Greenland, and as a percentage of population there is a relatively high influx of persons to the city both from within the country, and from abroad (mostly from Denmark). This high percentage influx puts extreme pressure on the housing market, which manifests itself in a long waiting-time for public housing allocation, and in the high cost of real estate. The waiting-time for public housing is around 10-12 years, and the price for new homes in the city is in the range of DKK 35,000-40,000 /sq m.

There is an element of market subsidy, as private buyers have the opportunity to borrow up to almost DKK 600,000 interest and instalment-free from the Greenlandic Government and the Municipality for up to 15 years

Rental prices in the city are disproportionately high, and it is common practice for companies as part of their employment contracts, to make housing available for employees and their families. Housing is generally offered in connection with most public employment.

In general, the real estate market in Nuuk is very favourable for investors and landlords. There are big challenges in keeping up with demand and most real estate agents struggle with obtaining product which then sells quickly.

Large companies in Greenland such as Royal Arctic Line, Tele Greenland and Air Greenland have significant property portfolios which they rent out to employees. The same applies to the public sector which is also obliged to offer non-profit housing regardless of an employment relationship.

In the private sector, given the landlord-friendly market dynamics, it is not unusual for long and non-cancellable leases to be entered into in Nuuk – typically in the range of three to five years.

Construction costs are very expensive for the following reasons:

• Ground conditions in Nuuk which are rocky and can require blasting

• Construction materials mostly need to be imported

• Sea transport of goods to Greenland is a state monopoly and is very expensive.

• Limited construction company capacity in the market

• High demand for public works projects (including airport improvement works)

• Construction needs to be built to last because of the extreme weather conditions (cold, snow and high winds particularly)

It is important to note that all land in Greenland is owned by the State, and it is only possible to have an Area Allocation which represents a right to use in perpetuity. Nuuk is very much an open-plan city, without fences to designate the boundaries between properties, giving the city a frontier/pioneer feel to it.

For more information on Greenland or any “new” or emerging market please contact us.