THE DANISH PROPERTY FEDERATION MARKET STATISTICS – CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK January 2017
In the period 2016-2020 a total return of 5.8 percent is expected
Results • Total return for investment properties expected to be 5.9 percent in 2016 • Never has so much been expected of the results for the Industry sector • Never have expectations for capital value growth for the office sector been higher • Progress for Odense and Aalborg
The election of Donald Trump had no effect At the time of Brexit, the participants lowered their expectations, but the election of Donald Trump had no immediate impact on expectations. Expectations for total return remain unchanged compared to last quarter. Total return in 2016 is expected to be 5.9 percent, which is an increase of 0.3 percentage points compared to expectations a year ago. Total return in 2017 is expected to be a little less, 5.8 percent, which is an increase of 0.1 percentage point compared to last year.
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 in 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.
In 2018 half of the participants expect a total return between 5.4 percent and 6.0 percent 20% 18% 16% 14% 12% 10% 8% 6% 4%
Half of the participants expect that total return in 2016 will lie between 5.3 and 6.5 percentage points. In 2017 half of the participants believe that total return will lie between 5.2 percent and 6.0 percent. Almost three out of four participants expect total return to remain unchanged or decrease from 2016 to 2017.
2% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: IPD Denmark Annual Property Index and the Danish Property Federation Market Statistics. Total return for investment properties. 2000 to 2015 shows the total return of IPD Denmark Annual Property Index. 2016 to 2018 shows the average of the replies from the Consensus Forecast. 50 percent of the replies lie within the blue lines.
Slight increase in expectations to capital value (indicator values between -100 and 100)
Capital Value January 2017
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 34.4 is feasible by 34.4 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 DENMARK
High expectations for industry Compared to last quarter, there is an increase in expectations for industry. Expectations for capital value growth, vacancy and market rents have not been seen higher in 25 quarters when we started this survey. It is a noticeable change that now brings the Industry sector in line with the three other sectors. In common for all four sectors compared to last quarter are the expectations for increased capital value growth, while the results for vacancy remain both positive and negative and market rental value growth is predominantly negative compared to last quarter. The indicator value of 34.4 for capital value for offices has never been higher. Almost 70 percent of the participants expect increasing capital values for offices.
by 7.5 percent in Stockholm for 2016. The growth in market rents in Stockholm is due to expected growth in employment and a limited supply of modern offices. In Oslo there is an opposite tendency with negative market rental value growth of 2.0 percent for offices, while in Helsinki market rental value growth for offices is 0.1 percent in 2016. In the forecast from IPF, there is an expected market rental value growth for offices in 2016 of 1.3 percent in Copenhagen, while the market rental value growth is expected to be 1.9 percent in 2018.
Capital value expected to increase the most in larger cities Regional indicator Low regional growth
Odense and Aalborg are moving forward
Medium regional growth
Expectations for capital value growth have never been higher both for Odense and Aalborg since 2014, when they were first included in the Consensus Forecast. Expectations for capital value growth remain the highest in Copenhagen and Aarhus, but Aalborg is now in third place. Odense has almost caught up with the Triangle Area, while there are still low expectations to the rest of the country. The result seems to indicate that the participants now expect that the investment activity will increase in Odense and Aalborg.
Different development in market rental value growth for office in the Nordic countries In the latest forecast from IPF (Investment Property Forum) market rental value growth for office is expected to increase
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.
About the forecast These are the expectations for January 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. 45 market players participated in this forecast. 49 percent of the participants are property owners. Furthermore, 18 percent are commercial brokers, 9 percent are banks/mortgage providers, and 24 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, EK-Ejendomsadministration A/S, 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.
Published Udgivet byafthe Ejendomsforeningen Danish Property Federation Danmark