January 2020
The Danish Property Federation’s Market Statistics – Consensus Forecast • The property business expects a total return on investment properties of 5.4 percent in 2019 – lower than in 2018 • Good expectations to office, especially the capital value • Historically low expectations to retail property • Copenhagen, Aarhus and Aalborg gain a little lost ground
The total return decreases In the last 19 years, the average return on properties has been 6.7 percent. Thereby, the total return in 2018 was right above average with 7.1 percent. In the next five years, the property business expects that total return decreases to 5.0 percent in average for the period of 2019-2023. This is a decrease of 0.1 percentage points compared to the expectations in the last quarter. From 2019, the business expects that the total return decreases from 5.4 in 2019, 5.2 in 2020, 5.0 in 2021 and thus below 5.0 percent in 2022-2023. In 2019, a majority of 69 percent of the participants expect that the total return is below 6 percent. If we look at the expectations for 2021, a total of 79 percent share this evaluation. 58 percent of the participants expect that the total return is decreasing from 2019 to 2021, and only 15 percent believe in an increasing total return in the same period.
The total return is expected to decrease to below 5 percent in 2022-2023
Table 1 Total return
Historic 2018
2019
2020
2021
2019-2023
7.1
5.4
5.2
5.0
5.0
Quarterly change
0.0
0.0
-0.2
-0.1
Annual change
0.3
0.1
New
New
Source: The Danish Property Federation’s market statistics. See remarks on page 5.
Figure 1. The expectations of the participants For 2019
13 % expect a total return below
Development in total return from 2019 to 2021
8% of 7 percent or above.
5 percent.
56 % expect a total return between 6
15 %
expect a total return
23 % expect a total return between 7 and 6 percent.
58 %
expect an increase in total return.
expect a decrease in total return.
27 % expect unchanged total return.
and 5 percent.
1