The Danish Property Federation´s market statistics - consensus forecast (April 2011)

THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK APRIL 2011

WEB REPORT

Slow progress The Danish Consensus Forecast covering the second quarter 2011 confirms the conservative but positive expectations from the first quarter 2011.

About the Consensus Forecasts This is the expectations for April 2011 from the Danish Property Federation Consensus Forecast. The objective is to create a more transparent property market.

The expectation for 2011 is at the same level as IPD Denmark Annual Property Index reported as the total return for 2011 (5.3 %).

The expectations for 2011 and 2012 are almost similar compared to last quarter’s forecast. In 2013 the total return is expected to increase to 6.6 %. This is still somewhat under the 9.1 % that properties have shown in average annual total return during the last ten years. For 2011 to 2015 a total average return of 6.4 % is expected.

Expectations of 25 % increase in total return, 2011-2013

Total return

2012

2013

2011-2015

5,3 (0,0)

6,0 (-0,3)

6,6 (new)

6,4 (new)

Source: The Danish Property Federation.

The average total return based on the replies is presented in the table.

The figures in parenthesis indicate change in percentage point compared to last quarter.

Market rent increases Contrary to last quarter, there are now the first expectations towards an increase in market rent within the next year. This goes for office, retail, and residential properties, while industrial property, despite an increase, still can expect a slightly decreased market rent. The expectations for office have increased the most. This can be seen in the table covering the expectations for the four sectors on the next page.

2011

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There is the best consensus among the participants with regards to the development in 2011.

Half of the participants expect the total return to be between 5.0 and 6.0 %. With regards to the coming years the uncertainty increases a little. In 2013 half of the participants expect a total return of between 5.8 and 7.8 %.

The Consensus Forecasts will be published on a quarterly basis and are highly dependant on the participating companies’ goodwill to report data every quarter. Without these companies, the Consensus Forecast would never have been possible.

Expectation of the same total return in 2011 as 2010 20% 18 % 16 % 14 %

A larger change is expected for the vacancy, where the expectations for all property types have moved towards fewer vacancies. When it comes to industrial properties, we see expectations of a neutral development for vacancies.

12 % 10 % 8% 6%

Higher market rent and fewer vacancies are increasing the expectations for capital values. This goes for office, retail, and residential.

4% 2% 0% 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 10 2 0 11 2 0 12 2 0 13

Source: IPD Denmark Annual Property Index and the Danish Property Federation.

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Total return for investment properties. From 2000 to 2010 the total return from IPD Denmark Annual Property Index is presented.

2011 to 2013 shows the average of the replies from the Consensus Forecast. 50 per cent of the answers lie within the blue lines.

Published by the Danish Property Federation

THE DANISH PROPERTY FEDERATION CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK APRIL 2011

Still highest expectations for Copenhagen The expectations for which areas in Denmark that will manage best the coming year are unchanged compared to last quarter’s forecast.

However, there is a small decrease for Copenhagen and the Triangle Region in Jutland (Frederica, Kolding, and Vejle) compared to Aarhus and the rest of the country. There is still a very significant expectation for the increase of capital values in Copenhagen compared to other parts of the country.

Increasing market rent and decreasing vacancy (indicator values between -100 and 100) Capital value

Occupied space %

Market rent

Office

20,7 (+9,0)

17,1 (+21,3)

2,4 (+16,3)

Retail

18,3 (+13,0)

19,5 (+25,9)

11,0 (+13,1)

Industrial

-11,0 (+6,0)

-1,2 (+17,9)

-15,9 (+7,6)

Residential

22,0 (+3,9)

17,1 (+4,3)

11,0 (+9,9)

Source: The Danish Property Federation.

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There is a relationship between the regional ranking with regards to the expected capital values and the last ten years regional increase. Copenhagen has an average annual GDP increase of 1.6 % in fixed prices. In comparison Eastern Jutland has 1.3 %, but both areas are above the national average for the last ten years, which is 0.9 %. Southern Jutland has experienced the second lowest annual growth of 0.6%, while Bornholm has had a difficult decade with a growth of -0.5 %.

WEB REPORT

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 means that everybody has answered ‘much higher’, and -100 shows that everybody has answered ‘very low’. An indicator of 0 indicates unchanged expectations. For example an indicator of 20.7 per cent is achieved by 20.7 per cent of the participants answering ‘much higher’ with the remaining answers ‘unchanged’. The figures in parenthesis indicate change in indication point compared to last quarter.

Still expectation of capital value growth in Copenhagen 41 market players participated in this survey. 49 % of the participants are property owners, 20 % are banks/mortgage providers, 17 % are commercial agents, and 14 % are other players.

Below please find 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, FIH Erhvervsbank, Finanssektorens Pensionskasse, Jeudan, Karberghus, Nordea, Nordea Ejendomme, PFA Ejendomme, PKA, Sampension, and Sadolin & Albæk.

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The map shows which regions in Denmark have the highest capital value growth compared to other regions. We have asked about Copenhagen, Aarhus, the Triangle Region in Jutland (Frederica, Kolding, and Vejle), and all other regions as one region. From the replies, we have created an indicator. If an area is light green, at least 70 % of the participants have agreed that this region are doing best compared to other regions.

Published by the Danish Property Federation