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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


THE DANISH PROPERTY FEDERATION MARKET STATISTICS – CONSENSUS FORECAST COVERING THE PROFESSIONAL INVESTMENT PROPERTY MARKET IN DENMARK

July 2016

WEB REPORT

Increasing expectations for office

Growth in Copenhagen market rent for office in European top 10

Compared to last quarter, office has experienced the best growth in expectations. Office has now passed residential being the sector with highest expectations for the year to come. This goes for both capital value, occupied space, and market rent. The expectations for capital value and market rent have not been higher since 2011, when this survey was first published. Expectations for residential are still positive, but have been high for so long that the participants now expect office to increase the most. Total occupied space might also be influenced by the fact that occupied space for office is higher than for residential. In April 2016, the occupied space was 12.7 percent for office but only 3.0 percent for residential. The result for industry also beat all records. The indicator values for capital value as well as occupied space and market rent have never been higher for industry. Overall, this means that there are no longer negative expectations for any of the sectors.

Expectations on market rent for office have not been higher in this Consensus Forecast. At the same time, the latest survey from IPF (Investment Property Forum) show that the increase in market rent for the period 2016-2020 in average is expected to be 1.8 percent a year in 30 European economic centres. In Copenhagen, the average growth is expected to be 1.9 percent a year in the period 2016-2020 which results in a tenth place within the 30 European centres. The highest annual growth in market rent during the period is expected to be Madrid with 4.2 percent. Over the next five years the annual growth is expected to be 2.6 percent in Stockholm and 0.8 percent in Oslo.

Aalborg is gaining ground The ranking of areas regarding expected capital value has been unchanged for four quarters in a row: Copenhagen, Aarhus, Aalborg, the Triangle Area, Odense, and the rest of the country. The difference between Aarhus and Aalborg remains, although it has been diminished. Aarhus is decreasing a little while Aalborg increases. The difference between Aalborg and the Triangle Area has never been higher before, but we only have to look back five quarters to see that the Triangle Area was considered better in capital value than Aalborg. The rest of the country still has the lowest expectations for capital value.

About the forecast

Still highest expectations for capital value i 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.

The Danish Property Federation Consensus Forecast present the expectations for the investment property market for July 2016. 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. 44 percent of the participants are property owners. Furthermore, 24 percent are commercial brokers, 9 percent are banks/mortgage providers, and 22 percent are other players. Please find below the names of some of the companies contributing: 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, Jeudan, Karberghus, Lokalebasen.dk A/S, Lund & Lindhardt, NCC Construction Danmark A/S, Nordea, Nordea Ejendomme, Nykredit, PensionDanmark, PFA Ejendomme, PKA, PostNord Real Estate, PwC, Realkredit Danmark, RICS Nordic, Sadolin & Albæk, Sampension, SEB Pension, Sinding Gruppen, Situs, Spar Nord Bank, Taurus Ejendomsadministration, Thylander Gruppen, TLK, Wiborg & Partnere.

Published by the Danish Property Federation

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The Danish Property Federation´s market statistics - consensus forecast (July 2016)  

- A total return of 6.0 in 2016, which is the highest measured so far - Best expectations for office - Expectations for industry have not be...

The Danish Property Federation´s market statistics - consensus forecast (July 2016)  

- A total return of 6.0 in 2016, which is the highest measured so far - Best expectations for office - Expectations for industry have not be...

Profile for hverve