New Housing Development: What Can the Netherlands Learn from Denmark?

It is no news that the Netherlands is in the midst of a severe housing crisis. For the first time in decades, citizens are going to the streets to protest against housing shortages and ever-increasing rents. Houses routinely fetch selling prices far above the asking price, especially in the biggest cities, but also in the periphery of the country. According to Primos (2020 prognosis) the current housing shortage is about 300,000 units, going up to more than 400,000 in 2025. It will slowly diminish after that, but by 2030, the shortage is still expected to be about 350.000 units. In other words, Dutch citizens should brace for increased housing market misery for the next decade. That is clearly unacceptable, and we need new thinking to do something about this. One place to find it is Denmark.

The first thing Dutch policy makers can learn from Denmark is how to allocate land between housing, agriculture, and nature. The allocation to agriculture does not differ much between the two countries: this is the dominant type of land use in both. Denmark devotes almost three times as much land to nature: 22% against 8% in the Netherlands. It also makes a different choice regarding the total land area for housing: that is 7% in Denmark against 6% in the Netherlands. So in both countries, housing occupies a very small part of the total land area, and the difference in allocation is even smaller. Nevertheless, it has a big effect on the availability of buildable housing land, and consequently on land prices: while the average price of housing land is €416 per square meter in the Netherlands, this is only €225 in Denmark (CBS, 2021; Statistikbanken, 2021).

Just as in the Netherlands, most of the population growth takes place in the main urban areas: in that sense the Copenhagen area is comparable to the Dutch Randstad region, with a 34% population growth since 1995 and a current population of about 4 million souls. The economic situation looks favourable, with an unemployment of 4%. Again, very close to the Dutch situation. But while the Randstad does not seem to cope, and is characterized by huge housing shortages, Copenhagen is the opposite. This is reflected in house prices, which average about €3600 per square meter in Copenhagen, against €5500 for Amsterdam and €5000 for Utrecht. So what can the Randstad learn from Copenhagen?

First, the Copenhagen model is based on scale combined with excellent public transportation infrastructure. In the last decade, Dutch house building policy has focused on inner-city (re)development and densification. This is small-scale and slow, even more so because of increased Nimbyism: there will inevitably more people affected by an urban development than by a project at the edge of a city, leading to an increased likelihood of protests and legal challenges against a new development, and so creating massive development delays.

When Dutch greenfield housing developments did take place, infrastructure often followed (much) later, causing unnecessary congestion. Copenhagen has turned this around. It has first invested in public transportation links to increase the urban radius, even when this invited initial ridicule of the “train to nowhere” kind. The famous Oresund bridge is an example, but so are the metro/light rail links to completely new urban areas like Orestad and Sydhavnen. All these investments tie the new areas of the city closer together, and turn these into attractive places to live.

The Copenhagen approach is also interesting in its financial-economic model. The city, the region and the central government have set up a joint development corporation to which underutilized public land has been transferred. Think harbour areas, reclaimed land, wasteland, former military land, etc. This corporation borrows capital under government guarantee with low interest rates, and uses that to fund the infrastructure investments that connect its land with the rest of the urban area. This improved connectivity increases the value of the land. Meanwhile, the corporation develops master plans and corresponding zoning rules in cooperation with the municipality, and then sells buildings rights to developers, institutional investors, etc. Importantly, it does not sell the land, and it shares in the development profits, which then pay back the initial loans, after which the whole cycle can start again for a new area. This can go on without straining public budgets. Meanwhile, the value gains of the public lands stay with this public entity and can be used for future developments, and the corporation operates independent of the political whims of the day and is incentivised to keep its focus on its long-run goals.

This form of intense public-private cooperation contrasts strongly with the Netherlands, where housing development seems to be using more of a conflict model, with a widely felt mutual distrust between (local) governments and market players that will not help us get out of the rut. The Dutch model of urban planning used to be the envy of the world, but no longer. Denmark is where we now should go for good ideas.