There is plenty of space in Denmark for its existing population (and for millions more, for that sake). The issue is that there is not that much space in Copenhagen.
There is plenty of space in Copenhagen. However plans to build anything anywhere gets shot down constantly with silly laws and restrictions. Politicians don’t want a more healthy housing market in the capital because they are all some of those who are profiting most from how unhealthy it is.
Because they want to sell expensive housing close to the sea, not affordable housing far from the sea.
It's a stupid prestige project, primarily designed to attract rich investors, who will let their investment object apartments sit empty, creating another dead neighborhood.