THE DANISH PROPERTY FEDERATION MARKET STATISTICS – CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK July 2016
WEB REPORT
The participants expect 6.0 percent in total return in 2016
Results • A total return of 6.0 in 2016, which is the highest measured so far
2016
2017
2018
20162020
• Best expectations for office
Total return
6.0
5.9
5.9
5.9
• Expectations for industry have not been higher
Quarterly change
0.3
0.1
0.0
0.1
• Prosperity in expectations for Aalborg
Annual change
0.4
0.3
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 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.
The high level of total return continues Overall, the investment property market is doing well this year with a continued growth in expectations for total return. In 2016 there is a growth of 0.3 percentage points compared to last quarter and of 0.4 percentage points compared to last year expecting a total return of 6.0 percent in 2016. This is the most positive expectation survey measured for 2016 in the past ten consensus forecasts.
The period 2015-2018 lies above the period 2008-2014 20% 18% 16% 14% 12% 10%
Almost 75 percent of the participants expect a total return of 6.0 percent or more in 2016. While the majority of the participants agree that 2016 looks good for the investment property market, we see expectations look different when it comes to 2016 to 2018. Overall, a slight decrease in return is expected from 2016 to 2018, from 6.0 percent to 5.9 percent. Approx. a third of the participants expect an increased total return, approximately a third expect unchanged total return, and approx. a third expect a decrease in total return from 2016 to 2018.
8% 6% 4% 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.
Highest expectations for office (indicator values between -100 og 100)
Capital value July 2016
Quarterly change
Occupied space
Annual change
July 2016
Quarterly change
Market rent
Annual change
July 2016
Quarterly change
Annual change
Office
32.2
5.1
5.6
21.1
-0.8
-8.7
21.1
6.5
7.3
Retail
25.6
3.7
2.2
-2.2
-11.6
-15.0
16.7
1.0
-0.4
Industry
21.1
2.4
16.9
12.2
1.8
6.9
7.8
3.6
9.9
Residential
30.0
0.8
-7.2
15.6
6.2
1.7
21.1
-0.8
-4.4
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 32.2 is feasible by 32.2 percent of the participants answering ‘much higher’ and the remaining answers are ‘unchanged’.
Published by the Danish Property Federation