THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK JANUARY 2014
WEB REPORT
Expectation of progress in 2013
This quarters forecast, the participants expect a somewhat larger spread than last forecast in October 2013. If you leave out the 25 percent highest and 25 percent lowest expectations, a total return in 2013 is forecasted to be between 4.8 and 5.5 percent. The spread for 2015 lies from 5.1 to 6.0 percent.
Total return is expected to be 5.0 percent in 2013 2013 5.0
Total return Annual change
2014 5.3
2015
2013-2017
5.7
5.5
0.0
0.0
0.0
-0.1
-0.4
-0.4
New
New
Quarterly change
Source: The Danish Property Federation.
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When total return of investment properties in 2013 is published 25th February at the annual Index Conference, three out of four participants in the Danish Property Federation Consensus Forecast are confident that it will be an increased total return compared to 2012 and 2011. In 2013 a total return of 5.0 percent compared to 4.8 percent in 2012 is expected. For the last five years, the highest total return has been 5.3 percent (in 2010). A smaller group of 30 percent of the participants expects that this will exceed in 2013. Compared to last quarter the expectations for 2013, 2014, and 2015 are unchanged, while there is a decrease of 0.1 percentage points for the expectations for 2013-2017.
The average total return based on the replies is presented in the table.
75 percent expects a total return of at least 4.8 percent in 2013 20% 18% 16% 14%
Increasing expectations for industry
12%
For both capital value and market rent, it is the best indicator value ever for industry. The consensus forecast has existed since the beginning of 2011. The indicator values are still negative, which means expectations of decrease in capital value and market rent, but if the positive trend continues in 2014, it will mean positive indicator values for industry. The annual change in capital value for industry is 14.8 indicator points, giving industry minus 10.8 indicator points this quarter.
10%
6% 4% 2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: IPD Denmark Annual Property Index and the Danish Property Federation.
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For the year to come the expectations are still highest for residential, but for the first time in more than two years, we see a negative quarterly development in the indicator value for capital value in residential. The indica-
8%
Total return for investment properties. 2000 to 2011 shows the total return of IPD Denmark Annual Property Index. 2012 to 2015 shows the average of the replies from the consensus forecast. 50 percent of the replies lie within the blue lines.
Generally positive trend in expectations for industry (indicator values between -100 og 100)
Jan-14
Capital value Quarterly change
Annual change
Jan-14
Occupied space Quarterly Annual change change
Jan-14
Market rent Quarterly change
Annual change
Office
5.9
-9.3
1.0
11.8
2.0
13.0
-1.0
-6.4
Retail
9.8
-2.2
2.5
7.8
-3.0
10.3
2.0
-7.8
3.2
-10.8
4.4
14.8
-6.9
-1.4
20.0
-9.8
6.5
13.4
28.4
-8.5
4.0
20.6
4.3
8.4
20.6
-5.5
3.5
Industry Residential
-3.4
Source: The Danish Property Federation.
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The participants have answered: ‘very low’, ‘lower’, ‘unchanged’, ‘higher’, ‘much higher’. The answers are given a value in order to obtain an indicator between -100 and 100. An indicator of 100 is identical to everyone having answered ‘much higher’, and -100 is identical to everyone having answered ‘very low’. An indicator of 0 indicates unchanged expectations. For example, an indicator of 28.4 is feasible by 28.4 percent of the participants answering ‘much higher’ and the remaining answers are ‘unchanged’.
Published Udgivetby afthe Ejendomsforeningen Danish Property Federation Danmark.
THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK JANUARY 2014
tor point value is 28.4, which is still the highest measured indicator value this quarter. The reason for this value is that 57 percent of the participants in the consensus forecast count on higher or much higher capital value for residential the next year.
WEB REPORT
Capital value has the best development in Copenhagen
The expectations for office and retail have slightly decreased. For office it is now occupied space, which has the most positive expectations, while it is capital value for retail.
Consensus on Copenhagen The participants still believe that capital values develop better in Copenhagen compared to the rest of the country. This consensus has been constant since the start of the consensus forecast in 2011. Source: The Danish Property Federation.
The economic advisers expect an economic growth in 2013 of 0.2 percent. That is an increase compared to 2012, where we saw a negative growth of 0.4 percent. In 2014 the economic advisers expect a growth of 1.6 percent and they expect a growth of 2.2 percent in 2015. This is a downgrade of 0.2 percentage points for 2014 and an upgrade of 0.3 percentage points in 2015 compared to their expectations in spring 2013. The belief in an increase in 2015 is due to expectations of an increasing growth abroad and increased domestic demand. For 2013 the economic advisers expect an inflation of 0.8 percent, which is lower than expected earlier this year. If the expectations for inflation proves correct, it is the lowest inflation level since 1953. They expect an inflation in 2014 and 2015 of 1.3 and 1.9 percent respectively.
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Low economic growth in 2013
The map shows which regions in Denmark that have the highest value growth compared to other regions. We have asked about the Triangle Region in Jutland (Fredericia, Kolding, and Vejle), Copenhagen, Aarhus and all other regions as one region. From the replies, we have created an indicator. If the area is light green, at least 70 percent of the participants have agreed that this region is doing best compared to other regions.
51 market players participated in this forecast. 43 percent of the participants are property owners. Furthermore, 25 percent are commercial brokers, 10 percent are banks/mortgage providers, and 22 percent are other players.
Please find below the names of some of the companies, which have contributed Aareal Bank, Aberdeen Asset Management, ATP Ejendomme, Bertélco Ejendomme A/S, BBN Consult, BRF Kredit, Carlsberg Byen, CBRE, Chr. Hjorth Erhvervsejendomme, Colliers International Danmark, Cura Management, DADES, Danbolig erhverv Johnny Hallas, DTZ, EDC Erhverv Poul Erik Bech, FIH Erhvervsbank, Jeudan, Karberghus, Københavns Lufthavne, Lund & Lindhardt, NCC Construction Danmark A/S, Nordea, Nordea Ejendomme, PensionDanmark, PFA Ejendomme, PKA, PwC, Reinholdt A/S, RICS Nordic, Sadolin & Albæk, Sampension, Sinding Gruppen, TLK, Wiborg & Partners.
About the Consensus Forecast These results from January 2014 are based on data collected and released by the Danish Property Federation. The objective is to create a more transparent property market. The Consensus Forecast is published on a quarterly basis and is very dependant on the participating companies’ good will to report data every quarter. Without these companies the Consensus Forecasts would never have been possible.
Published Udgivetby afthe Ejendomsforeningen Danish Property Federation Danmark.