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

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

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Continuous belief in the future The Danish Property Federation Consensus Forecast covering third quarter 2011 builds on the optimism of the two former forecasts.

About the Consensus Forecast These results from July 2011 are based on data collected and released by the Danish Property Federation. The objective is to create a more transparent property market.

Expected total return for 2011 is 5.5 %. This is an increase of 0.2 percentage points compared to the previous quarter. This is also 0.2 percentage points above the total return in 2010, where it was 5.3 %.

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 expected total returns for 2012 and 2013 also shows a minor increase compared to the results from the previous quarter. In 2013 the total return is expected to reach 6.8 %. For 2011 to 2015 an average annual total return of 6.5 % is expected.

Expected total return for 2011 is an increase by 0.2 percentage point

The best consensus between participants in the survey is found 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 expectations are a little more scattered. In 2013 half of the participants expect a total return of between 6.0 and 8.0 %.

Total return

2011

2012

2013

5,5 (0,2)

6,3 (0,3)

6,8 (0,1)

2011-2015 6,5 (0,1)

Source: The Danish Property Federation.

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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.

Expected decrease in vacancy for all sectors For the first time in the Danish Property Federation Consensus Forecast a decrease in vacancy is expected for all sectors: Office, retail, industrial, and residential. There are still minor changes in capital value, vacancy, and market rent for industrial. It seems that the vacancy has peaked for industrial, although industrial can still expect decreasing capital value and market rent over the next year.

Half of the participants expect a total return between 6.0 and 8.0 % in 2013 20% 18% 16%

For office as many as 74 % of the participants expect a decrease in vacancy for the coming 12 months. This results in the highest measured indicator value of 35.7 for vacancy regarding office.

14% 12% 10%

In Oline-Lokalebørs Statistikken (a large Danish database for Danish commercial real estate) the vacancy for Danish office peaked 1st October 2010 with 8.3 % and the vacancy has continued to decrease. According to the consensus forecast this development is expected to continue at least until next summer.

8% 6% 4% 2% 0%

Aarhus is improving position compared to Copenhagen

2011 2012 2013

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

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The capital value growth for Copenhagen, Aarhus, and the Triangle Region in Jutland (Frederica,

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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 JULY 2011

Kolding, and Vejle) is still expected to be more positive than for the rest of the country. 95 % of the participants anticipate that the capital value growth will be less favourable in the rest of the country. Compared to the last two quarters, Aarhus has steadily cemented the position as second best in Denmark with regards to expected capital value growth. In this quarter, 19 % even expect that the capital values will develop more positive in Aarhus than in Copenhagen.

Better macroeconomic prospects

In six months the expectations for properties have improved with 0.2 percentage point for 2011, while expectations for 2012 are unchanged. That is the result of this quarter’s consensus forecast. Thereby, the expectations for GDP have moved a little more in 6 months than the expectations for properties.

Vacancy is expected to decrease for the coming year – especially for office (indicator values between -100 and 100)

Office Retail

Capital value

Occupied space (%)

Market rent

19,0 (-1,7)

35,7 (+ 18,6)

10,7 (+ 8,3)

7,1 (-11,1)

Industrial

-13,1 (-2,1)

Residential

22,6 (+0,7)

21,4 (+ 1,9)

4,8 (-6,2)

3,6 (+ 4,8)

-17,9 (-2,0)

21,4 (+ 4,4)

19,0 (+ 8,1)

Source: The Danish Property Federation.

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The Danish Economic Council has reassessed their expectations for the Danish Gross Domestic Product (GDP) by 0.5 percentage points ending at 1.6 for 2011 and by 0.2 percentage points ending at 2.0 percentage points for 2012. Furthermore, the council has changed their predictions for unemployment with almost 20,000 less unemployed in 2011 and 2012 compared to their prediction six months ago.

GDP is still at a low level; however, an increase is still expected compared to six months ago.

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The participants have answered: ‘very low’, ‘lower’, ‘unchanged’, ‘hig her’, ‘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 19.0 per cent is achieved by 19.0 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.

Capital value growth is expected to continue in Copenhagen

42 market players participated in this survey. 50 % of the participants are property owners, 21 % are banks/mortgage providers, 14 % are commercial agents, and 14 % are other players.

Below please find some of the companies, which have contributed

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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, RICS Nordic, Sampension, and Sadolin & Albæk.

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 is doing best compared to other regions.

Published by the Danish Property Federation