THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK APRIL 2013
WEB REPORT
Forward in a lower gear
Total return of 5.8 percent expected in the years 20132017
The expectations are still pointing in a forward direction for the coming years regarding total return of investment properties; however, the progress is expected to have a slower pace. The total return for 2013 is expected to be 5.4 percent, which is a decrease of 0.1 percentage points compared to last quarter and 0.2 percentage points compared to last year. In 2014 a total return of 5.6 percent is expected, which is a decrease of 0.1 percentage points compared to last quarter and 0.5 percentage points compared to last year. These are the lowest expectations for both 2013 and 2014, which have been measured in the consensus forecasts. Now the expectations for 2014 are measured in nine consensus forecasts.
2013
2014
2015
2013-2017
5,4
5,6
5,9
5,8
Quarterly change
-0,1
-0,1
New
New
Annual change
-0,2
-0,5
New
New
Totalt return
Source: The Danish Property Federation.
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The average total return based on the replies is presented in the table. Quarterly and annual changes are in percentage points.
In 2015 50 percent expects a total return between 5.0 and 6.8 percent
The figures should be seen in connection with the IPD Denmark Annual Property Index that was published by the end of February and showed a total return for 2012 of 3.8 percent. It was 1.4 percentage points lower than the participants in this study expected. For a total return in 2011, expectations were also too high by 0.7 percentage points, and the total return in 2010, expectations were 0.7 percentage points too low. Thus 2012 was the year in which expectations were most far away from the final result. This may be due to forecasts for economic growth disappointed in 2012. In 2011 forecasts for growth in 2012 was 1.5-2 percent, while Statistics Denmark’s latest figures for 2012 suggest a disappointing economic growth of minus 0.6 percent. Although 2012 was a disappointing year for the economy and investment properties, forecasts show a positive economic growth for 2013.
20% 18% 16% 14% 12% 10% 8% 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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Now retail has the second best expectations Although a slower pace in the future is generally expected, there is still room for improvement in the
Total return for investment properties. 2000 to 2012 shows the total return of IPD Denmark Annual Property Index. 2013 to 2015 shows the average of the replies from the consensus forecast. 50 percent of the replies lie within the blue lines.
Growth of capital value, vacancy, and market rent (indicator values between -100 and 100) Capital value
Occupied space Annual change
April 13 Office
9,3
4,4
7,0
5,8
7,0
0,1
3,5
1,0
9,2
Retail
10,5
3,1
16,1
9,3
11,7
12,7
10,5
11,7
21,8
Industrial
-22,1
3,5
7,5
-12,8
14,0
8,8
-22,1
1,1
8,6
Residential
31,4
7,0
13,2
15,1
2,9
7,2
18,6
1,5
8,4
April 13
Quarterly change
Market rent
Quarterly change
Annual change
April 13
Quarterly change
Annual change
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 31.4 is feasible by 31.4 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 APRIL 2013
outlook a year from now on the four property sectors, office, retail, industrial, and residential. Both in relation to the last quarter and compared to last year there are increases. For industry a decreasing capital value is expected, increasing vacancy and decreasing market rents, while the opposite applies to residential, which has the highest expectations. For industry it is especially a small negative expectation to vacancy which applies. Not since the third quarter of 2011, there has been a positive expectation for vacancy for industrial. For residential a more positive indicator value has not been measured as in this quarter with 31.4.
Better development in capital value in Copenhagen
Source: The Danish Property Federation.
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Both retail and office shows small positive indicator values. Up to 30 percent of the participants indicated positive expectations for retail. The first consensus forecast was issued on 26 January 2011 and the consensus forecast of the second quarter of 2013 is the first in which retail has a better indicator than office for capital value, vacancy, and market rent. This is the first time that retail is a better sector than office. Compared to last quarter, it is especially vacancy and market rent, which has increased for retail.
WEB REPORT
The map shows which regions in Denmark that have the highest value growth compared to other regions. We have asked about Copenhagen, Aarhus, the Triangle Region in Jutland (Fredericia, Kolding, and Vejle), 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.
Consensus on Copenhagen There is still a very large consensus that capital value will grow best in Copenhagen. 93 percent of participants believe that capital values in Copenhagen will develop better than in Aarhus, the Triangle Region, and the rest of the country. There is still no confidence in the large geographical area, the rest of the country, when compared with Copenhagen, Aarhus, and the Triangle Region.
Correct expectations for sectors in 2012 In this consensus forecast, expectations for 2012 were that residential would have the most positive development, while industrial would have the worst development. This is consistent with the figures from IPD Denmark Annual Property Index 2012 which showed that residential had the highest total return of 6.7 percent of the four sectors, and residential had a capital growth of 3.0 percent in 2012. Industrial gave a total return of 0.9 percent and had a capital growth of minus 5.7 percent. In 2012 retail and office had respectively 4.8 and 3.0 percent in total return and capital growth were respectively 0.2 and minus 1.8 percent, according to IPD Denmark Annual Property Index.
43 market players participated in this forecast. 47 percent of the participants are property owners, 23 percent commercial brokers, 12 percent are banks/ mortgage providers, and 19 percent are other players.
Please find below the names of 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, danbolig Erhverv Johnny Hallas, DNErhverv, DTZ, EDC Erhverv Poul Erik Bech, FIH Erhvervsbank, Jeudan, Karberghus, Lund & Lindhardt, NCC Construction Danmark A/S, Nordea, Nordea Ejendomme, PensionDanmark Ejendomme, PFA Ejendomme, PKA, RICS Nordic, Sampension, Sadolin & Albæk and Sinding Gruppen.
About the Consensus Forecast These results from April 2013 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.