DENMARK - The Danish property industry has responded cautiously to claims by the finance minister that a "frozen" property market was one of the few problems in an otherwise bullish economic scenario.

Finance minister Claus Hjort Frederiksen's comments came after Denmark narrowly missed a third quarter of negative economic growth - technically, recession.

The government is standing by its earlier forecast of 1.3% growth in 2011.

Danish Property Federation chief executive Torben Christensen said: "The property market is slow at the moment, but not entirely frozen."

He pointed out that rental income in commercial property had improved over the past 6-9 months.

"Office is quite positive," he said. "Things are going on. There are problems in private housing, but not in the investment market, especially not in prime. There are signs of spring in the air - but we could use a bit more activity."

Morten Marott Larsen, chief economist at the Danish Property Federation, attributed recent low transaction volumes in residential to continuing uncertainty in the market.

"People were scared by August's stock market volatility, and they're still getting over the bubble and crash a couple of years back," he said. "There was a big bubble on the private market, less so in the commercial market."

Saxo Real Estate, which earlier this month launched a €250m joint venture with UK firm Resolution Property to invest in Danish value-added residential and office, drew a sharp distinction between the private and investment markets.

Chief executive Jesper Damborg told IP Real Estate: "Pension funds are looking to real estate for secure cash flows, and they're looking to the investment market. We are having good times - but the private housing market is having very different times these days."

While there was broad agreement on the government's outlook for macro growth, Larsen was wary of supporting what was widely perceived to be an election speech from the minister.

He said: "There's an election coming up. You should always be careful when you hear from politicians at election time."