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.
Û
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.
Û
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.
Û
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.