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Ejendomsforeningen Danmarks markedsstatistik – forventninger, april 2017

Ejendomsforeningen Danmarks Market Statistics

April 2017

WEB REPORT CONSENSUS FORECAST

Results • Increasing expectations for total return • High expectations for office • Historically high expectations for capital value within industry • Progress for Odense, Aalborg and Aarhus

Neat total return expected In 2017 a total return of 5.9 percent is expected, which is an increase of 0.2 percentage points compared to last quarter and last year. In 2018 and 2019, a total return of 5.8 and 5.9 percent is expected and regarding the period 2017 – 2021 an average total return are expected to be 5.9 percent. These are still neat total returns considering the low inflation and relatively low level of financial costs. 50 percent of the participants expect a total return of between 5.4 and 6.3 percent in 2017. In February, Sadolin & Albæk has calculated the total return in 2016 to almost 10 percent for greater Copenhagen. This is higher than this year’s first consensus forecast, which was published in January 2017, where participants expected a total return in 2016 of 5.9 percent. The difference between the figures is that Sadolin & Albæk only calculate total return for greater Copenhagen, while this consensus forecast covers the whole country.

Expectations for market rent within office Market rent is expected to increase for office, industry, and residential. We see the highest expectations for market rent within office, where the expectations have never been higher. We also see expectations for increasing capital value within office, although this sector still has an economic vacancy of 11.9 percent in January 2017. This can be due to the fact that vacancy is expected to increase the most for office. Industry is the sector having increased expectations the most over the last year. The expectations for market rent within industry are at a historical high level, while there is a continuous decrease in vacancy and increase in capital value. Thus, there is a common tendency of positive developments for all four sectors.

Expectation of 5.9 percent in total return for the period 2017-2021 2017

2018

2019

2017-2021

Total return

5.9

5.8

5.9

5.9

Quarterly change

0.2

0.1

New

New

Annual change

0.2

0.0

New

New

Source: The Danish Property Federation Market Statistics. The average total return based on the replies is presented in the table. Total return is in percentage and shows return on investment property compared to the size of the investment for a given period. Total return consists of two types of returns: Direct return and return on value. Direct return is current net operating profit of the period divided by investments size at the beginning of the period. Return on value is the value added in the given period divided by the size of investment at beginning of period. Total return is before any financial costs and before inflation.

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The Danish Property Federation Market Statistics – Consensus Forecast, April 2017

INTERAKTIV WEBRAPPORT FORVENTNINGER

Stable return is expected 20% 18% 16% 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 2018 2019 Source: MSCI and the Danish Property Federation Market Statistics. Total return for investment properties. 2000 to 2015 shows the total return of MSCI. 2016 to 2018 shows the average of the replies from the Consensus Forecast. 50 percent of the replies lie within the blue lines.

Historically high expectations for market rent within office (indicator values between -100 and 100) Capital value

Occupied space

Market rent

April 2017

Quarterly change

Annual change

April 2017

Quarterly change

Annual change

April 2017

Quarterly change

Annual change

Kontor

28.6

-5.9

1.5

25.0

7.2

3.1

21.4

4.8

6.8

Butik

23.8

-1.7

1.9

15.5

9.9

6.1

19.0

7.9

3.4

Industri

23.8

0.5

5.1

16.7

-3.3

6.3

14.3

-3.5

10.1

Bolig

29.8

-2.5

0.6

4.8

-3.0

-4.6

19.0

2.4

-2.8

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 28.6 is feasible by 28.6 percent of the participants answering ‘much higher’ and the remaining answers are ‘unchanged’.

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The Danish Property Federation Market Statistics – Consensus Forecast, April 2017

INTERAKTIV WEBRAPPORT FORVENTNINGER

Progress expected in several cities

Increasing economic growth

Compared to the January Concensus Forecast there is a progress in the expectations for capital value in Odense, Aalborg and Aarhus. The expectations for Aalborg and Odense have never been higher. There is still highest expectations for capital value in Copenhagen, and lowest expectations for the rest of the country.

The progress for investment properties is due to an improvement in the Danish economy and expectations of increasing economic growth. Statistics Denmark calculated the economic growth to 1.1 percent late February, while the economic experts in a revised prognosis in February calculated their expectations for 2017 to 1.7 percent. In 2018, the economic experts expect an economic growth of 2.3 percent, which will be the highest economic growth in more than ten years. Increasing economic growth means increasing demand for commercial properties, increase in market rent, and increase in capital value in the short term.

Still highest expectations to capital value in Copenhagen

Regional indicator Low regional growth

Medium regional growth

High regional growth

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.

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The Danish Property Federation Market Statistics – Consensus Forecast, April 2017

INTERAKTIV WEBRAPPORT FORVENTNINGER

About the forecast These are the expectations for April 2017 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. 42 market players participated in this forecast. 45 percent of the participants are property owners. Furthermore, 21 percent are commercial brokers, 7 percent are banks/mortgage providers, and 26 percent are other players.

More information I you want to know more about this publiccation then contact Chief Economist for the Danish Property Federation

Morten Marott Larsen mml@ejendomsforeningen.dk Telephone +45 28 45 56 51

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, Focus Asset Management, Jeudan, Karberghus, Lindhardt Erhverv, Lokalebasen.dk A/S, NCC Construction Danmark A/S, Nordea, Nordea Ejendomme, Nykredit, PensionDanmark, PFA Ejendomme, PKA, PostNord Real Estate, Prodomus, PwC, Realkredit Danmark, RICS Nordic, Sadolin & Albæk, Sampension, SEB Pension, Sinding Gruppen, Situs, Spar Nord Bank, Taurus Ejendomsadministration, Thylander Gruppen, TLK, Wiborg & Partnere.

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The Danish Property Federation´s market statistics - consensus forecast (April 2017)  

- Increasing expectations for total return - High expectations for office - Historically high expectations for capital value within industry...

The Danish Property Federation´s market statistics - consensus forecast (April 2017)  

- Increasing expectations for total return - High expectations for office - Historically high expectations for capital value within industry...

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