DENMARK – Danish pension funds PensionDanmark and PKA have invested separately in residential and retail construction projects in the Copenhagen harbour-side district of Islands Brygge.

PensionDanmark is to invest DKK1.6bn (€215m) over the next 5-6 years building 500 new homes in the area, while PKA is ploughing DKK500m into another residential and retail build, the funds said.

Torben Möger Pedersen, managing director of PensionDanmark, said: "Copenhagen has a rapidly rising population, and so there is a great need for new homes."

PensionDanmark's new project was perfectly located, he said, being by the water, next to the woods but at the same time in the city centre.

"So we expect there to be a high demand for the homes," he said.

The project is expected to produce 55,000 square meters of residential space, the fund said, with the first stage of construction starting in 2014 and tenants moving in from mid-2015.

PKA, which administers five labour-market pension funds, is investing DKK500m in the same part of Copenhagen, erecting two buildings containing 200 flats, retail units and parking spaces on Artillerivej.

The investment comes on the back of PKA's DKK250m investment in a 106-apartment project on Artillerivej less than two years ago.

It said it is buying the latest project from FB Gruppen, and that the flats are expected to be ready in the summer of 2014.

Nikolaj Stampe, PKA's head of property, said: "Islands Brygge has developed very positively in recent years with the harbour bath and street life, at the same time being a short distance from the beach, countryside and the town hall square."

One building will be 4-10 storeys high with 10,495 square meters of floor space, while the second will have 15 storeys and contain 8,140 square meters of residential space, with retail units on the ground floor.

The 106 apartments the fund invested in on the same road back in 2011 were rented out before they were ready at the beginning of the year, Stampe said.

PKA's desire to invest on this large scale in the Danish property market will continue, he said, as long as it provides members a good return and the rental demand for PKA-owned properties continues.

Since 2010, the DKK200m fund has invested around DKK4bn in Danish property, he said.

"We are focusing on bigger Danish cities, where the demand for high-quality rental homes is high," he said.

At the moment, only around 1% of PKA's residential stock lay empty, he said.

PensionDanmark pointed to the possibility of more new building projects in the future, saying it aims to invest DKK2bn a year in real estate or new builds over the next few years.

Altogether, PensionDanmark has DKK10bn of its DKK139bn of total assets invested in Danish property, the fund said.