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.

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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.

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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.

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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 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.

THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK OCTOBER 2013

WEB REPORT

Capital value has the best development in Copenhagen

Expectations are still positive with regards to residential. We have never seen such a high indicator value as the expectations for development in capital value for residential this quarter. The indicator value is 37.0, which is an increase of 4.5 indicator points compared to last quarter. 78 percent of the participants believe in increased capital value for residential the coming year.

Light green Copenhagen

Behind the figures Although the expectations for 2013 are unchanged at 5.0 percent in total return, it does not mean that the participants do not change their expectations (compared to last quarter). Among the participants this and last quarter we find 85 percent, who has changed their expectations to the total return in 2013 or the years ahead. Among these 85 percent, participants have both down- and upgraded their expectations to total return. If you only look at 2013, the absolute average change is 0.4 percentage points for participants, who gave input to both this and last quarter.

Source: The Danish Property Federation.

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Almost all participants in the forecast (96 percent) are of the opinion that capital value will increase more in Copenhagen than in Aarhus, the Triangle Region in Jutland and the rest of the country. Compared to last quarter the Triangle Region in Jutland has lost a little when compared to Copenhagen, Aarhus, and the rest of the country. The major part of the participants gives input each and every quarter.

The map shows which regions in Denmark that have the highest value growth compared to other regions. We have asked about the Triangle Region in Jutland (Fredericia, Kolding, and Vejle), Copenhagen, Aarhus 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.

46 market players participated in this forecast. 48 percent of the participants are property owners. Furthermore, 24 percent are commercial brokers, 9 percent are banks/mortgage providers, and 20 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, Carlsberg Byen, CBRE, Chr. Hjorth Erhvervsejendomme, Cura Management, DADES, Danbolig erhverv Johnny Hallas, DN-Erhverv, DTZ, EDC Erhverv Poul Erik Bech, FIH Erhvervsbank, Jeudan, Karberghus, Københavns Lufthavne, Lund & Lindhardt, NCC Construction Danmark A/S, Nordea, Nordea Ejendomme, PensionDanmark, PFA Ejendomme, PKA, Reinholdt A/S, RICS Nordic, Sadolin & Albæk, Sampension, Saxo Properties, Sinding Gruppen, TLK, Wiborg & Partners.

About the Consensus Forecast These results from October 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.