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Ejendomsforeningen Danmarks markedsstatistik – forventninger

The Danish Property Federation Market Statistics – Consensus Forecast

april 2018

October 2018

• Lowest expectations measured on a five-year period since 2010 • Industry breaks records with expectations of increasing capital value • For the first time since 2010 increased vacancy is expected for the residential sector WEB REPORT CONSENSUS FORECAST

• Expectations for capital value shifts away from the larger cities

Total return has peaked The investment property sector expects the total return in 2018 to be 5.5 percent which is a decrease of 1.7 percent compared to 2017. Total return has increased since 2013 where it was only 1.5 percent. Compared to last quarter the expectations for 2018 has decreased by 0.1 percentage point. It is expected that the total return will decrease until 2020 ending at 5.2 percent. This is a decrease of 0.2 percentage point compared to last quarter.

A total return of 5.2 percent two years ahead is the lowest expectation measured since 2010.

The historical total return is 7.2 percent in 2017 Historic 2017

2018

2019

2020

2018-2022

5,5

5,3

5,2

5,3

Quarterly change

-0,1

-0,1

-0,2

-0,1

Annual change

0,0

-0,2

New

New

Total return

7.2

Source: The Danish Property Federation Market Statistics. Rem.: The average total return based on the replies 2018-2020 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. Total return is before any financial costs and before inflation. The historic total return in 2017 might change in the future, when new data is included in the market statistic.

The participants’ expectations For 2018

For the development in total return 2018-2020

14 % expect a total return of 5 percent or below.

11 % expect a total return of 7 percent or above.

50 % expect a decline

55 % expect a total return between and 5 and 6 percent.

Published by

20 % expect a total return between 6 to 7 percent.

11 % expect an increase in total return.

in total return.

39 % expect status quo in total return.

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The Danish Property Federation Market Statistics – Consensus Forecast, October 2018

The expectation for the next five years 2018-2022 is 5.3 percent, which is a decrease of 0.1 percentage point compared to last quarter. 5.3 percent is the lowest expectation for the coming five-year period which has been measured since 2010 where this forecast first started. A total return of 5.3 percent still leaves space for smaller increases in capital value. 5.3 percent in expected total return is still enough for the investors to believe that investment properties are a good alternative to traditional bonds that still yields very low returns. There is a record-breaking expectation of increased capital value for industry.

There is still an expectation of increased capital value in all sectors: Office, retail, industry, and residential, however at a slower pace.

In the Danish Property Federation Market Statistics – vacancy, an increase in economic vacancy of 0.8 percent within residential has been measured in a year.

Expectations for office and industry are positive while expectations for retail and residential are neutral. For the first time, expectations for next year show that the economic vacancy within residential will increase while expectations for capital value and market rent have a vague positive tendency. The expectation for capital value within industry keeps setting records. It is only residential that has experienced a higher expectation of capital value before. Expectations for office are almost at the same level as industry with regards to capital value and economic vacancy, while expectations for office market rent is marginally better than for industry. The expectation of increasing market rent for office and industry is observed despite an economic vacancy above 10 percent.

Occupied space for office and industry expected to increase (indicator values between -100 and 100) Capital Value

Office Retail

Occupied Space

Market Rent

October 2018

Quarterly change

Annual change

October 2018

Quarterly change

Annual change

October 2018

Quarterly change

Annual change

28,9

3,9

0,5

15,6

-8,2

-11,7

23,3

-0,4

-0,5

4,4

-9,3

-11,5

0,0

-10,0

-8,0

2,2

-6,5

-12,6

Industry

32,2

2,2

6,1

21,1

-2,6

4,1

22,2

2,2

8,6

Residential

8,9

1,4

-18,4

-6,7

-7,9

-11,2

5,6

-0,7

-11,5

Source: The Danish Property Federation Market Statistics. Rem.: The participants have answered: ‘very low’, ‘lower’, ‘unchanged’, ‘higher’, ‘much higher’ to the question: ’What are your expectations to the development within [sector]properties with prime location a year from today?’. 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 31.0 is feasible by 31.0 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 2018

In 2020, 50 percent expect a total return between 5.0 and 5.6 percent 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

2020

Source: The Danish Property Federation Market Statistics. Rem.: Total return for investment properties. From 2011 to 2017 total return from the Danish Property Federation Market Statistic is shown, while 2000 to 2010 shows own calculations based on data from IPD Denmark Annual Property Index. 2018 to 2020 shows the average of the replies from the Consensus Forecast. 50 percent of the replies lie within the blue lines.

Odense gains ground Overall, Copenhagen, Aarhus, and Aalborg still have the highest expectations of increasing capital value, but the support has diminished. Copenhagen, Aarhus, and Aalborg have never been measured that low before. This relates to the fact that Odense and the rest of the country never have scored better before. Expectations for development in capital value in Aalborg and Odense are almost equal. The fact that the rest of the country gains ground is a sign that capital values in the four largest cities and the triangle area have reached a level where investment properties in the rest of the country are becoming attractive.

All-time low total measurement for Copenhagen, Aarhus, and Aalborg Regional indicator Low regional growth Medium regional growth Anholt

High regional growth

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.

Rømø

Source: The Danish Property Federation Market Statistics.

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The Danish Property Federation Market Statistics – Consensus Forecast, October 2018

About the forecast This web report was published in October 2018. The next sceduled publication is January 2019. 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. 22 percent of the participants are property owners. Furthermore, 9 percent are commercial brokers, 2 percent are banks/mortgage providers, and 12 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, Copenhagen Capital, Cura Management, DADES, Danbolig erhverv Johnny Hallas, Danica Ejendomme, DEAS, EDC Erhverv Poul Erik Bech, EK-Ejendomsadministration A/S, EY, Focus Asset Management, Heimdal Nordic, Hosta Ejendomme, Jeudan, Karberghus, KLP ejendomme, Lokalebasen.dk A/S, Lægernes Pensionskasse, M7 Real Estate, M. Goldschmidt Ejendomme, Minova, NCC Construction Danmark A/S, Newsec Advisory, Newsec Datea, Nordea Ejendomme, Nybolig, Nykredit, P+, Patrizia, Pensam, PensionDanmark, PFA Ejendomme, PKA, Probus Ejendom og Investering, Prodomus, PwC, Realdania, Realkredit Danmark, Sadolin & Albæk, Sampension, SEB Pension, Sinding Gruppen, Spar Nord Bank, Taurus Ejendomsadministration, Thylander Gruppen, TLK, Topdanmark Ejendom, Wiborg & Partnere.

More 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

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The Danish Property Federation' Market Statistics - Consensus Forecast (October 2018)  

Lowest expectations measured on a five-year period since 2010 Industry breaks records with expectations of increasing capital value For the...

The Danish Property Federation' Market Statistics - Consensus Forecast (October 2018)  

Lowest expectations measured on a five-year period since 2010 Industry breaks records with expectations of increasing capital value For the...

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