THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK OCTOBER 2013
WEB REPORT
Increasing optimism
In the period 2000-2007, the lowest obtained total return of properties was 6.7 percent. The expectations for the coming years will not reach this level. 50 percent of the participants expect a return from 4.9 percent to 5.5 percent in 2013. The expectations for 2014 are somewhat more diverse, whereas 50 percent expect at total return from 5.0 percent to 5.9 percent.
No downgrades in quarterly changes 2013
2014
5.0
Total return Quarterly change Annual change
5.4
2015
2013-2017
5.7
5.6
0.0
0.1
0.1
0.1
-0.6
-0.6
New
New
Source: The Danish Property Federation.
Û
The expectations for total return in coming years have gained a small increase in this year’s last consensus forecast. The expectations for the coming years have been upgraded with 0.1 percentage points, which means an expectation of 5.4 percent in total return for 2014, 5.7 percent for 2015, and 5.6 percent for the period covering 2013-2017. The increased expectations in the forecast do not compensate for the decrease seen in the latest quarters. In a year, the expectations for 2013 and 2014 decreased with 0.6 percentage points. This quarter, the participants expect a total return of 5.0 percent in 2013, which is unchanged compared to last quarter. For five quarters the expectations for total return in 2013 have not increased.
The average total return based on the replies is presented in the table.
Expectations on total return are still lower than the historic total return in the period 2000-2007 20% 18% 16% 14% 12% 10%
Positive development for office, retail, and residential
8%
The expectations for capital value, occupied space, and market rent for both office, retail, and residential have developed in a positive direction since last forecast. Only industry is still standing out with a negative trend. For office, it is especially the increase in capital value, which is noticeable. Compared to last quarter, the expectations have increased with 14 indicator points. The negative expectations from last quarter with regards to a small decrease in market rent in the sectors office and retail have now turned into an expectation of a small positive increase in market rent.
4%
6%
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.
Û
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 (indicator values between -100 og 100) Capital value Quarterly change
Oct-13 15.2
Office Retail Industry Residential
Annual change
Oct-13
Occupied space Quarterly Annual change change
14.0
10.5
9.8
1.0
8.6
Oct-13
Market rent Quarterly change
Annual change
5.4
12.9
15.0
12.0
4.5
10.8
10.9
0.9
7.3
9.8
14.8
16.9
-15.2
-0.2
9.8
-5.4
3.3
19.6
-16.3
3.7
11.1
37.0
4.5
13.1
16.3
0.1
3.2
26.1
2.3
14.2
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 15.2 is feasible by 15.2 percent of the participants answering ‘much higher’ and the remaining answers are ‘unchanged’.
Published Udgivetby afthe Ejendomsforeningen Danish Property Federation Danmark.