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

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

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Increasing total return The first Danish Consensus Forecast from the Danish Property Federation shows a sector expecting a positive continuous – however conservative – progress.

About the Consensus Forecast This is the first edition of the Danish Property Federation Consensus Forecast. The objective is to create a more transparent property market.

The total return has been influenced by the financial crisis and has been low in both 2008 and 2009. The Consensus Forecast shows a total return in 2010 of approx. 4.6 %. This is an increase compared to IPD Denmark Annual Property Index with a total return of 3.9 % in 2009.

In 2011 the total return is expected to increase to 5.4 % and in 2012 an increase to 6.3 % is expected. The average total return from 2010 to 2014 is expected to be 5.9 %.

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.

The uncertainty among the participants in the survey is highest in 2010. Half of the participants expect a total return of between 3.4 % and 6.1 %.

Expectations for increasing total return, 2010-2014

Total return

Positive expectations regarding office and residential

2010

2011

2012

2010-2014

4,6

5,4

6,3

5,9

Source: The Danish Property Federation.

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There are different expectations for the various property types. There are moderately positive expectations for the capital value growth for offices. Although the capital value is expected to increase, a continuing marginal increase in vacancy and a slightly decreasing market rent are expected. Despite moderate expectations for vacancy and market rent for offices, the expectation of the increasing capital value indicates better outlook in the long run.

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

The total return is expected to increase compared to 2008 and 2009 20% 18 %

Retail is also expected to increase in capital value, but the best expectations are for residential.

Here we find expectations of increasing capital value as well as market rent. The Consensus Forecast predicts that industrial will suffer the most.

16 % 14 % 12 % 10 %

Highest expectations in Copenhagen

8%

However, there is a remarkable consensus related to where the capital values will increase the most for investment properties in 2010.

Almost 90 % of the participants expect Copenhagen to increase the most. The second largest increase is expected in Aarhus, the third in the

6% 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

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

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Total return for investment properties. From 2000 to 2009 the total return from IPD Denmark Annual Property Index is presented.

2010 to 2012 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 JANUARY 2011

Triangle Region in Jutland (Frederica, Kolding, and Vejle), whereas a slower growth is expected in the rest of Denmark.

Expectation indicators covering every sector the coming year (indicator values between -100 and 100) Capital value

The socio-economic perspective The economic prospects for the coming years are weak, but overall positive growth is forecasted. In 2012, employment is expected to increase, while a negative public balance still is expected. In 2011 private incomes are expected to rise less than the inflation.

Office Retail

Occupied space (%)

11,7

-4,3

Market rent -13,8

5,3

-6,4

-2,1

Industrial

-17,0

-19,2

-23,4

Residential

18,1

12,8

1,1

Source: The Danish Property Federation.

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After a contraction in growth during 2008 and 2009, the economy is on track again. This also goes for the expectations for investment properties.

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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 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 11.7 per cent is achieved by 11.7 per cent of the participants answering ‘much higher’ with the remaining answers ‘unchanged’.

Expectation of highest capital value growth in Copenhagen 47 market players participated in this survey. 55 % of the participants are property owners, 11 % are banks/mortgage providers, 17 % are commercial agents, and 17 % are other players.

Below please find some of the companies, which have contributed Aareal Bank, ATP Ejendomme, Bertélco, BRF Kredit, CB Richard Ellis, Cura Management, DADES, Finanssektorens Pensionskasse, Jeudan, Karberghus, Nordea, Nordea Ejendomme, PFA Ejendomme, 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 from -100 to 100. If a region gets indicator -100, all participants have agreed that this region will have the worst development in capital value compared to other regions.

Published by the Danish Property Federation