The Danish Property Federation Market Statistics – Consensus Forecast, October 2017
The Danish Property Federation Market Statistics
October 2017
WEB REPORT CONSENSUS FORECAST
Results • Investment properties are still a good investment • However, total return on investment properties are expected to peak in 2017 • Historically high expectations for market rent for industry • Still highest expectations to the increase in capital value in Copenhagen The investment property market is expected to peak in 2017 In 2017 total return is expected to be 5.8 percent. Compared to last quarter and last year this is a minor decrease of 0.1 percentage points. In 2018 and 2019 total return is expected to decrease to 5.5 percent. The participants also expect a total return of 5.5 percent in the period 2017-2021 which is a minor decrease of 0.2 percentage points compared to last quarter. This is the second minor downgrade of the expectations to total return in the period 2017-2021. A similar level of 5.5 percent for a coming five year’s period is to be found 14 quarters ago. Still, the participants expect that 2017 will be a good year. 45 percent of the participants expect that 2017 will be better than 2018, 34 percent expect an unchanged total return in 2017 and 2018, while a minority of 20 percent expect that total return in 2018 will be higher than in 2017. It is worth noticing that a total return of 5.5 percent still means that capital value can increase.
Highest expectations for office Regarding to capital value, occupied space and market rent, the highest expectations are for office to develop positive compared to the present levels. In the last Consensus Forecast, the expectations for increasing market rent for office broke a record, and this continues to increase in this Consensus Forecast. Half of the participants expects increasing market rent within office, while the other half expects unchanged market rent. There are also positive expectations for market rent within industry, which has never been so high. Expectation for capital value within industry is at the same level as office and residential, and it is also expected that occupied space will increase. Still only positive expectations to office, retail, industry, and residential within capital value, occupied space, and market rent.
Highest total return in 2017 2017
2018
2019
2017-2021
Total return
5.8
5.5
5.5
5.5
Quarterly change
-0.1
-0.2
-0.2
-0.2
Annual change
-0.1
-0.2
Ny
Ny
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.
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