Research Erhverv Poul Erik Bech
Market UPDATE W i n t e r
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edc Market update W i n t e r
Contact us: Robert Neble Larsen CEO Tel: +45 33 30 10 54 Mail: rnl@edc.dk
Copenhagen: Investment Department: Poul Randrup Chartered Surveyor, MDE Tel: +45 33 30 10 28 Mail: pra@edc.dk Sale, Leasing and Department for International Relations: Helle Nielsen Ziersen Partner, KAM, Chartered Surveyor, MDE, MRICS Tel: +45 33 30 10 17 Mail: hni@edc.dk
Aarhus: Søren Leth Pedersen Regional Director, Partner, MSc. (f), Chartered Surveyor, MDE Tel: +45 58 58 78 76 Mail: slp@edc.dk
Aalborg: Frank Jensen Regional Director, Partner, CBA Tel: +45 58 58 75 72 Mail: frje@edc.dk
Kolding: Børge S Mensel Director, Chartered Surveyor, MDE Tel: +45 76 33 80 17 Mail: bsm@edc.dk
Odense: Morten Nielsen Dept. Manager, Partner, Chartered Surveyor, MDE Tel: +45 58 58 78 56 Mail: monie@edc.dk
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Remarks for our estimates: The valuation of a property depends on various property specific attributes, including, but not limited to, the lease conditions, the tenant’s credit rating and the property’s condition. When valuing a property, the estimates should not be relied upon without seeking qualified, professional advice. However, the estimates can serve as useful input in the valuation process. Any reproduction of data in this report should be credited to EDC Erhverv Poul Erik Bech. Whilst data and estimates have been rigorously checked, EDC Erhverv Poul Erik Bech can take no responsibility for any inaccuracy within this report. Estimates and forecasts of rents and yields are as of 1 October 2014. Estimates are subject to change.
YIELDS, MARKET RENTS AND FORECASTS: Location: Yield and market rent estimates covers properties with prime, secondary and tertiary location. Facility Class: Location aside, our estimates are based upon a segmentation of property facility classes; facility class A, B and C, where class A is the best facility class. Various variables for each property type have been taken into consideration with regards to determine the facility classes, such as: size, floor plan structure, year of construction, lifts, climate control, cabling infrastructure, staff facilities, customer facilities, parking facilities, building energy rating, ceiling height, general accessibility, general condition of the property, etc. A property with prime location and class A facilities has the best possible location in an area, the highest standard when it comes to facilities, is modern and ready to move into. This type of property will typically be traded at the lowest yield for the area, have the highest market rent and have a short reletting process. Naturally, yield and market rent estimates are subject to certain deviations depending on the exact location and property specific facilities. Yield definition: All yields are net initial yields and is defined as the annualised rent generated by the property, after the deduction of estimated annual irrecoverable property outgoings, expressed as a percentage of the property valuation (property valuation is adjusted for the value of rental deposits and prepaid rent). For comparison purposes it is assumed that all properties are fully let at market-conform conditions. Market rent estimates: All rents are headline rents, in other words the contracted gross rent receivable which becomes payable after any tenant incentives have expired. Market rent estimates are expressed in € / sq m / year. Figures have been rounded when converting from DKK (Danish Kroner) to €. It is assumed that all properties are let at market-conform conditions. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months. Residential rental properties: In this report estimates are included for “Newer residential rental properties”, “Fully developed older residential rental properties” and “Older residential rental properties”. In Denmark residential rental levels cannot be determined freely and is subject to far reaching rent control. The major difference between the before mentioned types of residential rental property is that older residential rental properties are regulated by the provisions in the Danish rent act (Lejeloven) and the Housing Regulation Act (Boligreguleringsloven) concerning cost driven rental levels. Newer residential rental properties taken in to use no earlier than 1 January 1992 are subject to the rules concerning free market rent, pursuant to the Housing Regulation Act § 15 A and others.
DATA FOR VACANT COMMERCIAL SPACE ( VACANCY RATE) Source: Oline ED-Statistikken (Oline-ED Statistics) as of 1 October 2014. For more information we refer to www.oline.dk/info/statistik. The forecasts of the vacancy rates have been made by EDC Erhverv Poul Erik Bech and reflect our expectations for the development over the next 3 to 6 months.
EDC Research - Winter 2014/15 - page 2
edc Market update W i n t e r
2 0 1 4 / 1 5
Regions of Denmark and selected market areas
Capital Region of Denmark Region Zealand Aalborg
Southern Denmark Region Central Jutland Region Region North Jutland
Aarhus
Vejle
Kolding
Triangle Area
Copenhagen
Fredericia
Odense
EDC Research - Winter 2014/15 - page 3
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2014/15
Office Yield in %, yearly market rent in â‚Ź / sq m and forecast for the next 3-6 months Facility class A Copenhagen Prime
Facility class B
Facility class C
Facility class A
Facility class C
Yearly market rent in â‚Ź / sq m
Yield in % 5.00
Facility class B
5.50
6.00
230
175
150
Secondary
5.25
5.75
6.25
175
135
115
Tertiary
6.25
6.75
7.25
145
115
95
5.25
5.75
6.25
185
145
120
Aarhus Prime Secondary
6.00
6.50
7.25
150
115
95
Tertiary
6.50
7.00
8.00
115
85
75
Aalborg Prime
6.00
6.50
7.50
135
125
105
Secondary
6.25
7.25
8.00
125
110
95
Tertiary
7.25
8.00
8.50
110
90
75
Triangle area Prime
6.75
7.00
7.25
145
105
75
Secondary
7.00
7.50
7.75
110
85
70
Tertiary
8.00
9.00
10.00
60
55
50
Odense Prime
6.25
7.00
8.00
155
125
95
Secondary
7.00
8.00
9.00
135
110
90
Tertiary
8.00
9.00
10.00
90
85
70
Source: EDC Erhverv Poul Erik Bech. Data as of 1 October 2014. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.
Vacant office space in sq m, in % of building stock and forecast for the next 3-6 months Vacancy sq m Central Copenhagen
As % of building stock
Change % QoQ
Change % YoY
496,600
8.5
-0.3
-0.8
East Jutland (including Aarhus)
377,600
12.5
0.2
-1.2
North Jutland Region (including Aalborg)
152,700
7.9
1.3
1.2
South Jutland (including the Triangle Area)
247,800
10.7
-0.3
1.2
Funen (including Odense)
148,000
9.9
-0.8
-0.5
Forecast
Source: Oline ED-Statistikken (Oline ED-statistics), data as of 1 October 2014. Changes quarter on quarter and year on year. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.
EDC Research - Winter 2014/15 - page 4
edc Market update O ff i c e
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Vacant office space in sq m, in % of building stock and forecast for the next 3-6 months
Central East Jutland North Jutland Region South Jutland Copenhagen (including Aarhus) (Including Aalborg) (including the Triangle Area)
Funen (including Odense)
Source: Vacancy data from Oline ED-Statistikken (Oline ED-statistics). Data as of 1 October 2014. Forecasts: EDC Erhverv Poul Erik Bech. All forecasts reflect our expectations for the development over the next 3 to 6 months.
Key vacancy figures from Oline ED-Statistikken (Oline ED-statistics) Office
Building stock
Vacancy sq m
Change sq m QoQ
As % of building stock
Change in % QoQ
Central Copenhagen
5,824,100
496,600
-16,400
8.5%
-0.3%
Copenhagen area
3,671,300
488,700
3,000
13.3%
0.1%
North Zealand
1,582,300
188,000
-2,800
11.9%
-0.2%
114,300
3,700
0
3.2%
0.0%
11,192,000
1,177,000
-16,100
10.5%
-0.2%
680,300
42,600
-4,500
6.3%
-0.6%
Bornholm Capital Region of Denmark East Zealand West- and South Zealand
1,556,000
85,800
-7,300
5.5%
-0.5%
Region Zealand
2,236,400
128,300
-11,900
5.7%
-0.6%
Funen (including Odense)
1,487,700
148,000
-11,000
9.9%
-0.8%
South Jutland
2,315,900
247,800
-5,900
10.7%
-0.3%
Southern Denmark Region
3,803,600
395,800
-16,900
10.4%
-0.5%
East Jutland
3,026,000
377,600
6,500
12.5%
0.2%
West Jutland
1,382,700
75,600
-15,300
5.5%
-1.1%
Central Jutland Region
4,408,700
453,200
-8,800
10.3%
-0.2%
North Jutland
1,930,900
152,700
24,700
7.9%
1.3%
Region North Jutland
1,930,900
152,700
24,700
7.9%
1.3%
23,571,600
2,307,000
-29,000
9.8%
-0.1%
Denmark, total
Source: Oline ED-Statistikken (Oline ED-statistics), data as of 1 October 2014. "% of building stock" is the proportion of empty space in sq m relative to the total building stock.
EDC Research - Winter 2014/15 - page 5
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Location segmentation for offices. Copenhagen
8
Aarhus
201
Sotoften
Lystrup
Olsted
Skjoldelev
15
46 18
18
Lisbjerg
E47
511
3 20
19
505
20
Faarup E45
Kasted
Geding
Egaa
Tuborg Harbour
Soborg
Morkhoj
Sabro
Hellerup Gentofte
Gladsaxe
15
Kvottrup
O3
4
Vejby
Skejby
19
16 O4
Bispebjerg
47 Borum
Nordhavn
Husum
Brendstrup
Risskov
Utterslev
Outer Osterbro O2
180
Yderup
Tilst
Amerika Square
26
True 17
Norrebro
23
Central Osterbro
Lyngby
Labing
Vanlose
Gellerup
Hasle
Rodovre O3
CPH City
Frederiksberg 156
Havnefront South
1
Aabyhoj
Aarslev Aaby
Orestad North
Vigerslev
21
Aarhus
Aarslev Mark
Sundbyvester
E45
Marselisborg
151
Hvidovre
2
21
Valby
O2
Brondbyoster E47
O1 Brabrand
195
Kalvebod Brygge
Vesterbro
Sydhavn
Avedore
Kastrup
Orestad City
17
E20
19
501
Stavtrup
Ormslev Stationsby Ormslev
Aabo
170 2
Lemming Viby
22
20
Orestad South
21
Taarnby
Holme
E20
O2
CPH airport
Hasselager
Kolt Bering
1 km
1 km
501
451
Bjostrup Slet
Kattrup Skaade
Prime locations
51
•
Trains
•
Secondary locations
Jegstrup
Tertiary locations
Horning
Metro
Tranbjerg Overballe
Osterby
Storhoj
Horret
The map for office properties in Copenhagen/Aarhus illustrates a location segmentation in prime, secondary and tertiary locations, where the prime area typically has the best locations for office property in Copenhagen/Aarhus. The location segmentation has been made by EDC Erhverv Poul Erik Bech. The location segmentation can change over time. The segmentation is our perception of general location segmentation and should not be perceived as a definitive segmentation of the best, good and below average locations.
Copenhagen
Aarhus
Yield in % and forecast for the next 3-6 months Location
Facility class A
Facility class B
Facility class C
Location
Facility class A
Facility class B
Facility class C
Prime
5.00
5.50
6.00
Prime
5.25
5.75
6.25
Secondary
5.25
5.75
6.25
Secondary
6.00
6.50
7.25
Tertiary
6.25
6.75
7.25
Tertiary
6.50
7.00
8.00
Yearly market rent in € / sq m and forecast for the next 3-6 months Location Prime
Facility class A 230
Facility class B
Facility class C
Location
Facility class A
Facility class B
Facility class C
175
150
Prime
185
145
120
Secondary
150
115
95
Tertiary
115
85
75
Secondary
175
135
115
Tertiary
145
115
95
EDC Research - Winter 2014/15 - page 6
edc Market update R e ta i l
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Retail Yield in %, yearly market rent in â‚Ź / sq m and forecast for the next 3-6 months Facility class A Copenhagen Prime
Facility class B
Facility class C
Facility class A
Facility class C
Yearly market rent in â‚Ź / sq m
Yield in % 5.00
Facility class B
5.25
5.50
2,285
1,885
1,615
Secondary
5.50
5.75
6.25
475
340
270
Tertiary
6.00
6.50
7.00
135
115
95
Prime
5.00
5.25
5.50
740
605
475
Secondary
5.25
5.50
6.00
540
475
340
Tertiary
6.00
6.50
7.00
270
215
165
Aarhus
Aalborg Prime
5.25
5.75
6.25
540
440
305
Secondary
6.25
6.50
7.00
175
145
110
Tertiary
7.00
7.50
8.00
95
85
75
Triangle area Prime
5.75
6.00
6.25
405
325
190
Secondary
6.50
6.75
7.00
230
150
125
Tertiary
7.25
7.75
8.25
110
85
70
Odense Prime
5.25
6.00
6.50
675
515
340
Secondary
6.00
6.75
7.50
405
270
175
Tertiary
8.00
9.00
10.00
110
85
55
Source: EDC Erhverv Poul Erik Bech. Data as of 1 October 2014. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.
Vacant retail space in sq m, in % of building stock and forecast for the next 3-6 months Vacancy sq m Central Copenhagen
As % of building stock
Change % QoQ
Change % YoY
34,000
2.6
-0.1
-0.5
East Jutland (including Aarhus)
105,600
5.3
-0.5
-0.4
North Jutland Region (including Aalborg)
121,000
9.0
0.7
0.1
South Jutland (including the Triangle Area)
163,200
9.7
-0.2
0.8
65,000
5.1
0.0
-0.7
Funen (including Odense)
Forecast
Source: Oline ED-Statistikken (Oline ED-statistics), data as of 1 October 2014. Changes quarter on quarter and year on year. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.
EDC Research - Winter 2014/15 - page 7
edc Market update R e ta i l
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Vacant retail space in sq m, in % of building stock and forecast for the next 3-6 months
Central East Jutland North Jutland Region South Jutland Copenhagen (including Aarhus) (Including Aalborg) (including the Triangle Area)
Funen (including Odense)
Source: Vacancy data from Oline ED-Statistikken (Oline ED-statistics). Data as of 1 October 2014. Forecasts: EDC Erhverv Poul Erik Bech. All forecasts reflect our expectations for the development over the next 3 to 6 months.
Key vacancy figures from Oline ED-Statistikken (Oline ED-statistics) Retail Central Copenhagen Copenhagen area North Zealand Bornholm Capital Region of Denmark East Zealand
Building stock
As % of building stock
Change in % QoQ
1,283,500
Vacancy sq m 34,000
Change sq m QoQ -1,000
2.6%
-0.1%
875,500
29,100
-3,500
3.3%
-0.4%
1,079,700
57,000
3,300
5.3%
0.3%
92,400
2,700
0
2.9%
0.0%
3,331,100
122,800
-1,200
3.7%
0.0%
429,100
36,900
5,400
8.6%
1.3%
West- and South Zealand
1,304,000
95,500
-1,300
7.3%
-0.1%
Region Zealand
1,733,100
132,400
4,100
7.6%
0.2%
Funen (including Odense)
1,272,300
65,000
-300
5.1%
0.0%
South Jutland
1,682,300
163,200
-2,700
9.7%
-0.2%
Southern Denmark Region
2,954,500
228,200
-3,000
7.7%
-0.1%
East Jutland
1,991,100
105,600
-10,000
5.3%
-0.5%
West Jutland
1,019,100
73,500
9,300
7.2%
0.9%
Central Jutland Region
3,010,200
179,100
-800
6.0%
0.0%
North Jutland
1,350,400
121,000
9,300
9.0%
0.7%
Region North Jutland
1,350,400
121,000
9,300
9.0%
0.7%
12,379,400
783,500
8,400
6.3%
0.0%
Denmark, total
Source: Oline ED-Statistikken (Oline ED-statistics), data as of 1 October 2014. "% of building stock" is the proportion of empty space in sq m relative to the total building stock.
EDC Research - Winter 2014/15 - page 8
edc Market update bo x r e t a i l - W i n t e r 2 0 1 4 / 1 5
Box retail
Box retail: Box retail stores are typically located in external retail areas and selling goods that do not require unusually large quantities of floor space. In this publication, we do not include big box retailing with permission for selling items that require unusually large quantities of floor space according to the provisions in the Danish Planning Act (Planloven). Yield and rent estimates are stated as “above average”, “average”, “below average” for different areas (primary, secondary, tertiary).
Yield in %, yearly market rent in € / sq m and forecast for the next 3-6 months Above Average Capital Region of Denmark
Average
Below Average
Above Average
Average
Below Average
Yearly market rent in € / sq m
Yield in %
Primary
6.50
7.00
7.50
150
135
125
Secondary
7.00
8.00
9.00
110
95
85
Primary
7.00
8.00
9.00
125
110
95
Secondary
8.00
9.00
10.00
95
85
70
Primary
7.00
7.25
7.50
150
135
125
Secondary
7.75
8.00
8.25
110
95
85
Region Zealand
Central Jutland Region
Region North Jutland Primary
7.25
7.75
8.25
150
125
110
Secondary
7.50
8.00
8.50
125
110
95
Primary
7.00
7.25
7.50
150
135
125
Secondary
7.25
7.50
7.75
110
95
85
Tertiary
8.00
8.25
9.50
95
85
70
South Jutland
Funen Primary
7.50
8.00
8.50
150
125
110
Secondary
8.25
9.00
9.50
125
110
90
Source: EDC Erhverv Poul Erik Bech. Data as of 1 October 2014. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.
EDC Research - Winter 2014/15 - page 9
edc Market update I n d u s t r i al & L o g i s t i cs W i n t e r 2 0 14/15
Industrial & Logistics Yield in %, yearly market rent in â‚Ź / sq m and forecast for the next 3-6 months Facility class A Copenhagen Prime
Facility class B
Facility class C
Facility class A
Facility class C
Yearly market rent in â‚Ź / sq m
Yield in % 7.00
Facility class B
7.50
7.75
70
60
50
Secondary
7.50
8.00
8.25
60
55
45
Tertiary
7.75
8.50
9.00
50
45
35
Aarhus Prime
7.50
8.25
9.00
55
45
35
Secondary
8.00
8.50
9.50
45
40
35
Prime
7.75
8.00
9.00
45
40
35
Secondary
8.75
9.25
10.25
35
35
25
Aalborg
Triangle area Prime
7.75
8.25
8.50
45
40
35
Secondary
8.00
8.50
9.00
40
35
35
Prime
8.00
8.50
9.00
50
45
35
Secondary
8.50
9.50
10.50
45
35
25
Odense
Source: EDC Erhverv Poul Erik Bech. Data as of 1 October 2014. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.
Vacant industrial & logistics space in sq m, in % of building stock and forecast for the next 3-6 months Vacancy sq m Capital Region of Denmark
713,900
As % of building stock
Change % QoQ
Change % YoY
4.0
0.1
0.1
East Jutland (including Aarhus)
668,100
4.2
0.1
-1.0
North Jutland Region (including Aalborg)
274,400
2.0
-0.1
-0.2
South Jutland (including the Triangle Area)
717,300
3.7
-0.4
-0.6
Funen (including Odense)
307,700
3.3
-1.2
-1.6
Forecast
Source: Oline ED-Statistikken (Oline ED-statistics), data as of 1 October 2014. Changes quarter on quarter and year on year. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.
EDC Research - Winter 2014/15 - page 10
edc Market update I n d u s t r i al & L o g i s t i cs W i n t e r 2 0 14/15
Vacant industrial & logistics space in sq m, in % of building stock and forecast for the next 3-6 months
Capital Region of East Jutland North Jutland Region South Jutland Denmark (including Aarhus) (Including Aalborg) (including the Triangle Area)
Funen (including Odense)
Source: Vacancy data from Oline ED-Statistikken (Oline ED-statistics). Data as of 1 October 2014. Forecasts: EDC Erhverv Poul Erik Bech. All forecasts reflect our expectations for the development over the next 3 to 6 months.
Key vacancy figures from Oline ED-Statistikken (Oline ED-statistics) Industrial & logistics
Building stock
Vacancy sq m
As % of building stock
Change in % QoQ
-6,100
0.3%
-0.1%
501,000
36,000
6.5%
0.4%
196,600
-11,000
4.7%
-0.3%
Central Copenhagen
5,341,400
13,500
Copenhagen area
7,666,200
North Zealand
4,156,000
Bornholm Capital Region of Denmark East Zealand West- and South Zealand Region Zealand Funen (including Odense)
Change sq m QoQ
829,200
2,800
0
0.3%
0.0%
17,992,900
713,900
18,900
4.0%
0.1%
3,352,500
161,300
29,600
4.8%
0.9%
9,856,000
290,900
-35,800
3.0%
-0.3%
13,208,500
452,200
-6,200
3.4%
-0.1%
9,203,000
307,700
-102,400
3.3%
-1.2%
South Jutland
19,178,800
717,300
-60,000
3.7%
-0.4%
Southern Denmark Region
28,381,800
1,025,000
-162,400
3.6%
-0.6%
East Jutland
15,973,900
668,100
8,900
4.2%
0.1%
West Jutland
12,760,200
471,900
-24,200
3.7%
-0.2%
Central Jutland Region
28,734,100
1,140,000
-15,300
4.0%
0.0%
North Jutland
13,538,800
274,400
-3,400
2.0%
-0.1%
Region North Jutland
13,538,800
274,400
-3,400
2.0%
-0.1%
101,856,100
3,605,700
-168,100
3.5%
-0.2%
Denmark, total
Source: Oline ED-Statistikken (Oline ED-statistics), data as of 1 October 2014. "% of building stock" is the proportion of empty space in sq m relative to the total building stock.
EDC Research - Winter 2014/15 - page 11
edc Market update r e s i d e n t i al r e n tal p r op e r t i e s Winter 2014/15
Residential rental properties
Yield in %, yearly market rent in €/sq m and forecast for the next 3-6 months Newer residential rental properties Facility class A Copenhagen
Facility class B
Yield in %
Facility class A
Facility class B
Yearly market rent in € / sq m
Prime
4.25
4.75
245
205
Secondary
4.75
5.00
215
175
Tertiary
5.00
5.25
205
150
Aarhus Prime
4.50
4.75
205
185
Secondary
4.75
5.00
170
145
Tertiary
5.25
5.50
150
130
Prime
4.75
5.00
150
130
Secondary
5.25
5.50
130
115
Tertiary
5.75
6.25
115
110
Prime
6.00
6.75
135
125
Secondary
6.75
7.00
110
95
Aalborg
Triangle area
Odense Prime
5.50
6.00
165
130
Secondary
6.00
6.25
145
115
Older residential rental properties Facility class A Copenhagen
Facility class B
Facility class C
Fully developed older residential rental properties Facility class A
Yield in %
Facility class B
Yield in %
Facility class A
Facility class B
Yearly market rent in € / sq m
Prime
3.00
3.25
4.00
4.50
4.75
190
175
Secondary
3.50
4.00
4.75
5.00
5.25
165
150
Tertiary
4.50
5.00
6.00
5.25
5.50
150
135
Prime
2.75
3.00
3.25
4.25
4.50
175
155
Secondary
3.25
3.50
3.75
4.75
5.00
145
130
Tertiary
4.25
4.50
4.75
5.50
5.75
125
110
Prime
4.00
4.50
5.00
5.00
5.25
Secondary
4.75
5.25
5.50
5.25
5.50
Tertiary
6.50
6.75
7.25
6.00
6.25
Prime
6.00
6.50
7.25
6.25
6.50
Secondary
7.00
7.25
8.00
6.75
7.00
Tertiary
7.75
8.00
8.50
7.75
8.00
Prime
4.50
5.00
6.00
5.50
5.75
Secondary
5.00
5.75
6.50
5.75
6.00
Aarhus
Aalborg
Triangle area
Note: ”Older residential rental properties” and “Fully developed older residential rental properties” are regulated by the provisions in the Danish Rent Act (Lejeloven) and the Housing Regulation Act (Boligreguleringsloven) concerning cost driven rental levels. “Newer residential rental properties” taken in to use no earlier than 1 January 1992 are subject to the rules concerning free market rent, pursuant to the Housing Regulation Act § 15 A and others.
Odense
Source: EDC Erhverv Poul Erik Bech. Data as of 1 October 2014. Forecasts: All forecasts reflect our expectations for the development over the next 3 to 6 months.
EDC Research - Winter 2014/15 - page 12
edc Market update W i n t e r
2 0 1 4 / 1 5
Hard work, ethics and a solid business sense – were the three pillars on which I founded my company in 1978. These core values are still the same and their legitimacy has been confirmed by good results, solid growth and satisfied clients. Hard work is part of our culture which is deeply rooted throughout the company. Every day our employees do their utmost to provide our clients with knowledge-based advice and first-class service and our phones are open from 7 a.m. to 9. p.m. - 365 days a year. Our ethics mean you can have confidence in us; in our dedication and our business ethics, in our way of working together, and in our transparent processes that provide our clients with security and overview. A solid business sense is your guarantee for a satisfactory and profitable business outcome. Our focus is representing our clients and their interests in the most optimal way possible. The performance of our experienced specialists is continuously assessed with regards to competence, performance and negotiating skills to ensure our clients always have confidence in the quality of our services. Nationwide commercial real estate company – with local knowledge Our commitment to our core values has turned EDC Poul Erik Bech in to a nationwide company with a strong presence in Denmark. Our 15 commercial offices ensure that we have in-depth knowledge of the local area and the market as a whole. We continuously work actively and highly focused to have the industry’s most powerful network in order to be up to date with the changing market and our clients’ needs. We look forward to working with you.
Purchases International division
Poul Erik Bech Chairman
Selling of development projects
Developer advisory
Selling
Valuations (RICS)
EDC Property Invest – a complete solution for commercial property
Property & facilities management
Letting services
Sale & Lease Back Advisory
EDC Research - Winter 2014/15 - page 13
edc Market update W i n t e r
2 0 1 4 / 1 5
Why invest in Denmark
Why invest in Danish real estate? • Low transaction costs • High degree of market transparency and stability
The Danish mortgage system
• Low financing rates through Danish mortgage credit
institutions • Solid key economic indicators • AAA/A-1+ credit rating and stable outlook* * S&P as of 3 October 2014.
Low financing rates • Low origination costs • Low APR compared to the majority of European markets • Highly transparent, stable and liquid mortgage bond
market
Loan
Investment
Repayment. interest and margin
Bonds Repayment and interest
• Flexible loans on conditions close to funding
conditions of capital market players
Borrower
Mortgage institution
Investor
EDC Research - Winter 2014/15 - page 14
edc Market update W i n t e r
2 0 1 4 / 1 5
• Low financing rate: Bond yield plus a small markup
(margin) for the mortgage bank • Debt/value ratio: Financing through the mortgage
Low transaction costs
institutions, normally up to 60% of valuation
As buyer:
• Loan maturity: Min. 1 year (yearly refinancing), max. 20 years
Deed registration: 0.6% of purchase price + € 190
• Payment structure: Floating or fixed rates, with or
without quarterly principal repayments
Mortgage: 1.5% of the mortgage’s principal +€ 190
• Each new loan is in principle funded by the issuance of
new mortgage bonds of equal size and identical cash flow and maturity characteristics, called the Balance Principle. Proceeds from the sale of the bonds are passed on to the borrower and similarly, interest and principal payments are passed directly to investors holding mortgage bonds
Costs for own advisor, lawyer, agent etc. are typically very low As seller: Agent, lawyer etc. varies, but typically between 1 - 4% of purchase price depending on deal size
• The Danish mortgage institutions have existed since
1850 and are considered very strong and very low risk financial instruments
Denmark is known to have some of the lowest roundtrip property transactions costs
• In terms of volume outstanding, Denmark has the
second largest share of the mortgage bond market in Europe • There has never been an incidence of default on a
Danish mortgage bond
High degree of transparency Denmark is among the most transparent markets in Europe and worldwide*. The transparent Danish market provides the investor with a secure and low risk environment for foreign direct investment. Investments in Denmark are conducted in a market which benefits from a highly transparent and stable legal and regulatory framework coupled with a simple transaction process. *In the recent 2014 version of the Jones Lang LaSalle Global Real Estate Transparency Index ®, Denmark was rated a transparent market and ranked no. 16 worldwide, when it comes to market transparency.
Lease structure • Rent adjustment, normally adjusted yearly with the
rate of inflation or a fixed minimum rate • Rent review every fourth year. Terms are flexible • It is possible to agree on a threshold for the rent. Eg.
Solid key economic indicators 2014
2015
2016
GDP growth (%), YOY Denmark
0.4
1.5
1.9
EU
0.1
1.6
2.0
Unemployment rate (%) Denmark EU
7.0
6.8
6.6
10.8
10.5
10.1
Current account balance (% of GDP) Denmark
7.3
6.9
6.8
EU
1.6
1.8
1.8
Denmark
0.5
1.0
1.6
EU
1.5
1.0
1.5
Inflation (%)
Source: The Economic forecast (Spring 2014, 5 May 2014) from the European Commission.
the rent cannot drop further than the rent in force at the start of the tenancy • The landlord and the tenant can freely agree on the rent
amount as long as the rent is not unreasonable or contrary to sound business practices • Lease length: There are no statutory restrictions on the
duration of a commercial lease agreement. It is normal to have interminable leases in place
EDC Research - Winter 2014/15 - page 15
• The leading real estate agency in Denmark in the areas of selling, leasing, valuation and advisory • Founded in 1978, operating nationwide across 15 commercial real estate branches, more than 40 residential real estate branches, and finally 3 residential real estate branches in France and Sweden. • Owner of the property management company LEA • More than 350 employees Our greatest strength is our nationwide presence and local knowledge with 70 commercial specialists servicing our clients. We are chartered surveyors, valuers and certified members of RICS. We especially deal with the following types of properties: • Investment properties, properties for rent and owner-user properties • Offices, high street retail, industrial & logistics and mixed-use properties • Residential rental properties • Land and development projects • Hotels, restaurants and other properties in the leisure sector We offer our clients a wide range of services: • Execution of investment transactions of single assets. portfolios and on a company level
• Due diligence
• Letting services
• Property and facilities management
• Valuations (RICS)
• Project development consultancy
• Capital structure advisory
• Sale and Lease Back
• Tenant and landlord representation • EDC Location Search • EDC PropertySWAP® • Research services • Bespoke consultancy and market study services
Office locations: Copenhagen +45 33 30 10 00 • 114@edc.dk
Herlev +45 44 57 03 37 • 278@edc.dk
Hillerod Roskilde +45 48 26 99 10 • 342@edc.dk +45 46 33 33 33 • 403@edc.dk
Naestved +45 55 78 66 03 • 473@edc.dk
Odense Kolding +45 58 58 82 00 • 512@edc.dk +45 76 33 80 10 • 603@edc.dk
Koge +45 55 35 55 53 • 469@edc.dk
Aabenraa +45 73 33 13 00 • 620@edc.dk
Sonderborg Esbjerg +45 58 58 80 20 • 641@edc.dk +45 76 10 48 00 • 670@edc.dk
Holstebro Aarhus +45 58 58 77 10 • 751@edc.dk +45 87 30 99 30 • 802@edc.dk
Vejle +45 75 83 13 11 • 710@edc.dk
Silkeborg Aalborg +45 86 82 10 00 • 865@edc.dk +45 96 31 49 00 • 912@edc.dk
Chartered surveyors & international property consultants
Read more: edc.dk/erhverv