THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK JULY 2014
WEB REPORT
Emerging progress
The participants expect that 2014 will be the turning point after 3 years of decrease in total return. The expectation of 5.0 percent for the coming year is not higher than formerly expected for third quarter the actual year. In 2013, the expectation was also 5.0 percent, in 2012 5.3 percent, and in 2011 5.5 percent. Only 9 percent of the participants expect a total return of less than 4.0 percent in 2014 while 50 percent of the participants expect a total return of between 4.5 and 5.3 percent.
5.5 percent in total return in 2014-2018 2014
2015
2016
2014-2018
5.0
5.3
5.5
5.5
Quarterly change
-0.0
-0.1
0.0
0.0
Annual change
-0.3
-0.3
New
New
Total return
Source: The Danish Property Federation.
Û
In 2014 a total return of 5.0 percent is expected for investment properties in Denmark. In 2015 the total return is expected to increase to 5.3 followed by 5.5 percent in 2016. Compared to last quarter, the decrease in expectations has stopped and the expectation for 2015 has even increased by 0.1 percentage points. Compared to same time last year, there is still a decrease in expectations, which have been downsized with 0.3 percentage points in 2014 and 2015. This has to be seen in connection with the fact that total return in 2013 was a modest 3.5 percent. When the expectations for total return did not decrease in this forecast, it can be related to the fact that the Danish economy is expected to increase in 2014.
The average total return based on the replies is presented in the table. Quarterly and annual changes are in percentage points.
In 2014 total return is in progress 20% 18% 16% 14% 12% 10% 8%
Residential strengthened Compared to last quarter, residential stands out. We see progress in capital value and occupied space, while there is a slight decline in market rent. Looking at capital value, occupied space, and market rent as one, residential has never been stronger since the beginning of the forecast in 2011.
4% 2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: IPD Denmark Annual Property Index and the Danish Property Federation.
Û
The other sectors have a decline in capital value and market rent compared to last quarter, while occupied space shows minor improvements for office and retail.
6%
Total return for investment properties. 2000 to 2013 shows the total return of IPD Denmark Annual Property Index. 2014 to 2016 shows the average of the replies from the consensus forecast. 50 percent of the replies lie within the blue lines.
Industry increasing (indicator values between -100 og 100)
July 2014
Capital value Quarterly change
Annual change
Occupied space Quarterly Annual July 2014 change change
5.6
-1.7
4.3
11.1
Retail
6.7
-4.8
-0.8
Industry
-8.9
-0.6
6.1
34.4
4.2
1.9
Office
Residential
July 2014 -3.3
2.8
2.4
10.0
2.7
0.0
-5.6
-3.5
3.2
20.0
5.4
3.8
25.6
Market rent Quarterly change
Annual change
-3.3
4.2
6.7
6.7
11.7
-13.3
-13.3
6.7
-1.5
1.8
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 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 34.4 is feasible by 34.4 percent of the participants answering ‘much higher’ and the remaining answers are ‘unchanged’.
Published by the Danish Property Federation