Ejendomsforeningen Danmarks markedsstatistik – forventninger, juli 2017
The Danish Property Federation - consensus forecast
July 2017
WEB REPORT CONSENSUS FORECAST
Resultater • The expected total return for the period 2017-2021 is 5.6 percent • Declining expectations for capital value • Historic high expectations for increasing market rent within office • Fine progress in Aalborg and Odense
Good times on hold
Increasing market rent
Times continues to be good for investment properties. Increasing capital value, decreasing vacancy rates and increasing rent is expected, which results in an expected total return at 5.9 percent in 2017. As the current earnings usually lie around five percent, it gives an expectation of an increase in capital value of one percent in 2017. A total return of 5.6 percent is expected for the period 2017-2021. Three out of four participants expect the total return in 2017 to be at the same level or above the average for the period 2017-2021. It is the fifth quarter in a row that the participants expect that the current year lies above the coming five-year period, meaning that the participants are aware of present prosperity.
The participants have the highest expectations for increasing market rent within office for the second quarter in a row. This quarter, the expectations for market rent within office is the highest ever seen since the start of the Consensus Forecast in January 2011. We still see expectations of increasing market rent for residential, but since October 2015, where the expectations for market rent for residential peaked, the expectations have decreased. We also see expectations of increasing market rent for retail and industry.
The participants are also convinced that things can change in the years to come. Compared to last quarter, the expectations for total return in 2018 decreases with 0.1 percentage points, while the expectations for 2019 and the five-year period 2017-2021 decreases with 0.2 percentage points. Compared to last year, the expectations for total return in 2017 decreased with 0.1 percentage point, while the expectations for 2018 decreased with 0.2 percentage points. Expectations for 2018 are now 5.8 percent, which is the lowest in all six quarters where the participants have been asked about expectations for 2018.
Highest expectations of increase in occupied space and thereby decrease in vacancies within office. Since April 2013 we have seen expectations of decrease in vacancy for office. The participants have been right in this development over the last year as the Consensus Forecast in April 2017 showed a decrease of 0.6 percentage point within the economic vacancy for office. The participants have the most faith in positive development within capital value. However, expectations are declining compared to last quarter and last year. For the fifth quarter in a row, there is higher expectations for capital value within office compared to residential, industry, and retail.
A total return of 5.9 percent is expected in 2017 2017
2018
2019
2017-2021
Total return
5.9
5.8
5.7
5.6
Quarterly change
0.0
-0.1
-0.2
-0.2
Annual change
-0.1
-0.2
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.
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