THE DANISH PROPERTY FEDERATION MARKET STATISTICS – CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK October 2015
Good times The participants in the market statistics consensus forecast expect the total return to be 5.5 in 2015, which is an increase of 0.1 percentage points compared to third quarter and 0,2 percentage points compared to last year. The next two years, the participants expect the total return to increase from 5.6 to 5.7 percent, which is a flat rate compared to last quarter. In 2015 2019 a total return of 5.6 percent is expected. Even though the participants expect acceptable total return in the years 2015 – 2019, total return is still below the last fifteen years average of approx. eight percent. Only about one tenth of the participants believe that the total return will reach 7.0 percent or above in 2015. Another ten percent expects a total return of 4.3 percent or below.
All indicators are positive for the first time ever
The property industry’s expectations for 2015 increase 2015
Source: The Danish Property Federation Market Statistics. The average total return based on the replies is presented in the table. Quarterly and annual changes are in percentage points.
Half the property industry expects a total return of between 5.0 and 5.8 in 2015 20% 18% 16%
For the first time since this survey was established (January 2011), all indicators covering all sectors are positive. This indicates that the property industry expects increasing capital value, occupied space and market rent for office, retail, industry and residential. The prospects for industry has earlier been negative, but this quarter, the market rent expectations for industry is now positive. It shows that this positive feeling makes industry an attractive sector for investors. 21 percent of the participants expect the coming year to show an increase in market rent covering industry, while only six percent believe that it will decrease. The rest expects it to be flat.
14% 12% 10% 8% 6% 4% 2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: IPD Denmark Annual Property Index and the Danish Property Federation Market Statistics. Total return for investment properties. 2000 to 2014 shows the total return of IPD Denmark Annual Property Index. 2015 to 2017 shows the average of the replies from the Consensus Forecast. 50 percent of the replies lie within the blue lines.
Especially, when it comes to market rent, indicator values for all four sectors have never been higher than this
For the first time ever, all indicators are above zero (indicator values between -100 and 100)
Capital value October 2015 Office
Retail Industry Residential
Source: The Danish Property Federation Market Statistics. The participants have answered: ‘very low’, ‘lower’, ‘unchanged’, ‘higher’, ‘much higher’. The answers give 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 35.3 is feasible by 35.3 percent of the participants answering ‘much higher’ and the remaining answers are ‘unchanged’.
Published by the Danish Property Federation
THE DANISH PROPERTY FEDERATION MARKET STATISTICS – CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DANMARK October 2015
quarter. 43 percent of the answers from the participants expect increasing market rent for all four sectors, while only three percent of the answers from theparticipants expect a decrease in market rent. This indicates that the demand for space is increasing, which has a positive influence on the property industry. The best expectations are for capital value and market rent in the residential sector, while the occupied space percentage increases the most for the office sector.
Progress for Aarhus and Aalborg There is still consensus that capital value develops most positively in Copenhagen. The faith in no. two Aarhus has increased since last quarter, and the expectations have never been higher to the second largest city in Denmark. Aalborg is no. three and increases a little this quarter. Then comes the Triangle Region and Odense, while there is still consensus that capital value develops the least in the rest of the country.
Copenhagen. In the survey from IPF, the expected development in office market rent for 30 European cities. In 2015-2017 it is expected that the market rent in Copenhagen will increase by 1.4 percent annually. In Moscow, Warsaw, Zürich, Prague and Athens a negative market rent is expected in 2015, while Dublin and London City have the highest expected market rent increase in 2015 of 13.5 respectively 9.9 percent. In Dublin, London City and Stockholm it is expected that the market rent growth peaks in 2015, while Copenhagen sees an increase all through the period 2015-2017. In 2017, Copenhagen expects to have the 13th highest market rent growth compare to the 30 cities participating in the survey.
Capital value expected to increase the most in the economic centres Regional indicator Low regional growth Medium regional growth
High regional growth
Market rent for office is increasing in Copenhagen in the years to come This Consensus Forecast shows that the market rent for office will increase in the coming year. At the same time, a survey from IPF (Investment Property Forum) shows that the market rent increases in office in
Source: The Danish Property Federation Market Statistics. The map shows which regions in Denmark that have the highest capital growth compared to other regions. We have asked about the Triangle Region in Jutland (Fredericia, Kolding, and Vejle), Copenhagen, Odense, Aalborg, Aarhus, and all other regions as the rest of the country. From the replies, we have created an indicator. If the area is the lightest colour, at least 70 percent of the participants have agreed that this region is doing best compared to other regions.
About the forecast These are the expectations for October 2015 from the Danish Property Federation Consensus Forecast. The objective is to create a more transparent property market. The Consensus Forecast is published on a quarterly basis and is very dependent on the participating companies’ good will to report data every quarter. Without these companies, the Consensus Forecast would never have been possible. 52 market players participated in this forecast. 42 percent of the participants are property owners. Furthermore, 25 percent are commercial brokers, 12 percent are banks/mortgage providers, and 21 percent are other players. Please find below the names of some of the companies, which have contributed: Aareal Bank, Aberdeen Asset Management, ATP Ejendomme, Bertélco Ejendomme A/S, BBN Consult, BRF Kredit, Carlsberg Byen, CBRE, Chr. Hjorth Erhvervsejendomme, Colliers international Danmark, Cura Management, DADES, Danbolig erhverv Johnny Hallas, DTZ, EDC Erhverv Poul Erik Bech, EY, Jeudan, Karberghus, Københavns Lufthavne, Lund & Lindhardt, NCC Construction Danmark A/S, Nordea, Nordea Ejendomme, PensionDanmark, PFA Ejendomme, PKA, PwC, Reinholdt A/S, RICS Nordic, Sadolin & Albæk, Sampension, Saxo Properties, Sinding Gruppen, Situs, Taurus Ejendomsadministration, Thylander Gruppen, TLK, Wiborg & Partnere.
Published by the Danish Property Federation