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

INTERAKTIV WEBRAPPORT FORVENTNINGER

Half of the participants expect a total return of between 5.2 and 6.0 percent in 2017 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: IPD Denmark Annual Property Index and the Danish Property Federation Market Statistics. Total return for investment properties. 2000 to 2016 shows the total return of IPD Denmark Annual Property Index. 2017 to 2019 shows the average of the replies from the Consensus Forecast. 50 percent of the replies lie within the blue lines.

Expectations to market rent for industry have never been higher (indicator values between -100 and 100) Capital Value

Occupied Space

Market Rent

October 2017

Quarterly change

Annual change

October 2017

Quarterly change

Annual change

October 2017

Quarterly change

Annual change

Office

28.4

1.6

-0.3

27.3

2.9

8.1

23.9

1.9

5.8

Retail

15.9

1.3

-5.4

8.0

-3.0

4.8

14.8

-1.1

-2.2

Industry

26.1

9.1

11.2

17.0

1.2

8.5

13.6

6.3

5.1

Residential

27.3

4.1

-0.4

4.5

-0.3

-5.0

17.0

-1.2

-6.4

Source: The Danish Property Federation Market Statistics. The participants have answered: ‘very low’, ‘lower’, ‘unchanged’, ‘higher’, ‘much higher’. The answers give a value 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 28.4 is feasible by 28.4 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, October 2017

INTERAKTIV WEBRAPPORT FORVENTNINGER

Copenhagen still in first place Since the launch of the Consensus Forecast in 2011, there has always been the highest expectations for a positive development in capital value in Copenhagen compared to other economic centers and the rest of the country. 82 percent of the participants in this forecast choose Copenhagen to be the region where

capital value develops most positively. The ranking thereafter is still Aarhus, Aalborg, Odense, the Triangle Area and the rest of the country. Property investors have started to invest in properties outside the best locations, but until now it has no significance for the expectation to development in regional capital values.

Capital values are expected to develop the most 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, October 2017

INTERAKTIV WEBRAPPORT FORVENTNINGER

About the forecast These are the expectations for October 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.

Further information If you want to know more about this publication then contact Chief Economist

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

44 market players participated in this forecast. 48 percent of the participants are property owners. Furthermore, 23 percent are commercial brokers, 5 percent are banks/mortgage providers, and 25 percent are other players.

Please find below some of the companies, which have contributed Aberdeen Asset Management, ATP Ejendomme, BBN Consult, Bertélco Ejendomme A/S, BRF Kredit, Carlsberg Byen, CBRE, Chr. Hjorth Erhvervsejendomme, Colliers international Danmark, Cura Management, DADES, Danbolig erhverv Johnny Hallas, DEAS, 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, Newsec Datea, Newsec Egeskov & Lindquist, Nordea, Nordea Ejendomme, Nykredit, PenSam, 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, Topdanmark Ejendom, Wiborg & Partnere.

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

- Investment properties are still a good investment - However, total return on investment properties are expected to peak in 2017 - Historic...

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

- Investment properties are still a good investment - However, total return on investment properties are expected to peak in 2017 - Historic...

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