THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK APRIL 2012

Increasing return in the years to come

Expected total return decreases compared to previous forecasts 2012

2013

2014

2012-2016

Total return (%)

5,2

5,6

6,1

5,9

Quarterly change

-0,2

-0,3

new

new

Annual change

-0,8

-1,0

new

new

Source: The Danish Property Federation.

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Despite the fact that the present economic crisis is regarded as a long-term affair, the consensus forecast for this quarter shows an expected increase in total return in the years to come. This despite the fact that the result for the IPD Denmark Annual Property Index showed a slightly smaller total return for 2011 than the consensus forecast had predicted. The total return for investment properties in 2011 was 4.7 per cent according to the IPD Denmark Annual Property Index. This is 0.5 percentage points lower than what the latest consensus forecast had shown. The expected total return for 2012 and 2013 has decreased with 0.2 percentage points and 0.3 percentage points respectively in the space of this quarter. If we look a year back, the expectations for 2012 and 2013 have decreased with 0.8 percentage points and 1.0 percentage points respectively. The participants expect a return of 6.1 per cent in 2014 and 5.9 per cent in the period 2012-2016. In January 2011 the participants expected a total return of 6.3 per cent in 2012. Now they expect a total return of 5.2 per cent. The property market is expecting an increase compared to the 4.7 per cent in 2011, however economic growth has increased in a slower pace than what was expected.

WEB REPORT

The average total return based on the replies is presented in the table. Quarterly and annual changes are in percentage points.

Expected total return increases 1.4 percentage points from 2011 to 2014 20% 18% 16% 14% 12% 10%

Lower expectations compared to a year ago

8% 6% 4% 2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2011 2012 2013 2014

Source: IPD Denmark Annual Property Index and the Danish Property Federation.

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In general, office and residential are managing well, when it comes to capital value, occupied space, and market rent across the four investment property types: office, retail, industrial, and residential. These two types have more positive indicator values, hinting that an improvement is expected. With regards to retail and industrial, a decrease in capital value, occupied space, and market rent is expected within the coming year. Compared to last year, the participants are more skeptical about the future today. More participants are expecting lower capital value, occupied space, and market rent than a year ago.

Total return for investment properties. From 2000 to 2010 the total return from IPD Denmark Annual Property Index is presented. 2011 to 2013 shows the average of the replies from the Consensus Forecast. 50 per cent of the answers lie within the blue lines.

Still low confidence regarding industrial April 2012

Capital value Quarterly change

Annual change

April 2012

Occupied space (%) Quarterly Annual change change

April 2012

Market rent Quarterly change

Annual change

Office

2,3

2,3

-18,5

5,7

11,5

-11,4

-5,7

3,6

-8,1

Retail

-5,7

1,3

-24,0

-3,4

3,6

-22,9

-11,4

2,6

-22,3

Industrial

-29,5

-9,8

-18,6

-21,6

2,8

-20,4

-30,7

-2,8

-14,8

Residential

18,2

6,6

-3,8

8,0

-3,7

-9,1

10,2

-3,7

-0,7

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 that everybody has answered ‘much higher’, and -100 is identical to that everybody has answered ‘very low’. An indicator of 0 indicates unchanged expectations. For example an indicator of 18.2 is feasible by 18.2 per cent of the participants answer ‘much higher’ and the remaining answers ‘unchanged’. Quarterly and annual changes are absolute differences in indicator value.

Published by the Danish Property Federation.

THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK APRIL 2012

Confidence in Copenhagen

WEB REPORT

Capital value growth performs best in Copenhagen

Copenhagen is still expected to do better than Aarhus, the Triangle Region in Jutland, and the rest of the country. This ranking has not changed since the first consensus forecast. Capital value growth in Copenhagen is expected to perform better, while capital value growth in the rest of the country is expected to be less strong relatively speaking. During the last year, Aarhus has increased its position compared to the Triangle Region in Jutland, as the area in Denmark, where the participants expect capital value growth to be strongest, just after Copenhagen.

Lower expectations for both economy and property There is significant difference between the four property sectors: office, retail, industrial, and residential. The overall tendency is that the expectations for investment properties have decreased during the last year.

In January 2011 a majority of Danes expected that in year the economy would be stronger. In January 2012 a majority of Danes were of the opinion that the Danish economy would be in a worse state in a year.

44 market players participated in this forecast. 48 per cent of the participants are property owners, 23 per cent commercial brokers, 14 per cent are banks/mortgage providers, and 16 per cent are other players. Below please find some of the companies, which have contributed Aareal Bank, ATP Ejendomme, Bertélco Ejendomme A/S, BBN Consult, BRF Kredit, CB Richard Ellis, Cura Management, DADES, DN-Erhverv, DTZ, EDC Erhverv Poul Erik Bech, FIH Erhvervsbank, Finanssektorens Pensionskasse, Jeudan, Karberghus, NCC Construction Danmark A/S, Nordea, Nordea Ejendomme, PFA Ejendomme, PKA, RICS Nordic, Sampension, and Sadolin & Albæk.

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The same overall picture can be found in figures from Statistics Denmark. They publish a monthly indicator showing local expectations for the Danish economy in general.

The map shows which regions in Denmark that have the highest capital value growth compared to other regions. We have asked about Copenhagen, Aarhus, the Triangle Region in Jutland (Frederica, Kolding, and Vejle), and all other regions as one region. From the replies, we have created an indicator. If an area is light green, at least 70 per cent of the participants have agreed that this region is doing best compared to other regions.

About the Consensus Forecast This is the expectations for April 2012 from The Danish Property Federation Consensus Forecast. The objective is to create a more transparent property market. The Consensus Forecast is published on a quarterly basis and is very dependent on the participating companies’ good will to report data every quarter. Without these companies the Consensus Forecast would never have been possible.

Published by the Danish Property Federation.