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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The Danish Property Federations’ Market Statistics - consensus forecast, July 2017
INTERAKTIV WEBRAPPORT FORVENTNINGER
50 percent of the participants expect a total return in 2017 of between 5.3 and 6.5 percent 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.
Historic high expectations to market rent for office (indicator values between -100 and 100) Property value July 2017
Quarterly change
Office
26.8
Retail
14.6
Industry Residential
Rental percentage
Annual change
July 2017
Quarterly change
-1.7
-5.4
24.4
-9.2
-10.9
11.0
17.1
-6.7
-4.0
23.2
-6.6
-6.8
Market rental
Annual change
July 2017
Quarterly change
Annual change
-0.6
3.3
22.0
0.5
0.8
-4.5
13.2
15.9
-3.2
-0.8
15.9
-0.8
3.6
7.3
-7.0
-0.5
4.9
0.1
-10.7
18.3
-0.8
-2.8
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 Federations’ Market Statistics - consensus forecast, July 2017
INTERAKTIV WEBRAPPORT FORVENTNINGER
Aalborg and Odense continue progress Increased expectations for capital value in Aalborg and Odense compared to the rest of the country. It is fifth quarter in a row that there is progress in the two cities Aalborg and Odense and they have not been better since they were included in the forecast in 2014. Copenhagen and the Triangle Area has not been worse since 2014. Highest expectations to capital value in Copenhagen, followed by Aarhus, Aalborg, Odense, the Triangle Area and the rest of the country.
A Danish economy on the move Good times within investment properties improve the economic growth. The Danish Economic Councils expect an economic growth of 2.1 percent in 2017 increasing to 2.2 percent towards 2019. At the same time, net unemployment is expected to decrease by 1.000 – 2.000 people a year. Economic growth and activity give demand for leases of higher value, increasing occupied space, and increasing market rent. IPF’s (Investment Property Forum) latest Consensus Forecast shows that expectations for offices in Copenhagen with prime location will increase with 1.5 percent a year in average over the next three years regarding market rent.
Still highest expectations for capital value in Copenhagen Regional indikator Least regional growth Medium regional growth
Most 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 Federations’ Market Statistics - consensus forecast, July 2017
INTERAKTIV WEBRAPPORT FORVENTNINGER
About the forecast These are the expectations for July 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. 41 market players participated in this forecast. 39 percent of the participants are property owners. Furthermore, 24 percent are commercial brokers, 7 percent are banks/mortgage providers, and 29 percent are other players.
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
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, Danica Ejendomme, DATEA, 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, Nordea, Nordea Ejendomme, Nykredit, PensionDanmark, PFA Ejendomme, PKA, PostNord Real Estate, Prodomus, PwC, Realdania By & Byg A/S, 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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