The Danish Property Federation's market statistics - consensus forecast (July 2019)

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July 2019

The Danish Property Federation’s market statistics – Consensus Forecast • A total return on 5.4% is expected in 2019 • Uncertainty in the expectations for retail • Regression in Copenhagen, Aarhus, Odense and Aalborg • The market rent for office in Copenhagen is expected to increase with 2.6% in 2019

Expectations of lower total return of up to DKK 20bn The total return in 2018 was 7.1% and the expected total return in 2019 is 5.4%. It corresponds to a decrease in total return of up to DKK 20bn. In 2018, properties yielded a return of about DKK 70bn. After a major decline in expectations beginning in 2017, the last two quarters have been largely positive. The total return is expected to be 5.4% in 2019, which is an increase of 0.1 percentage points compared to the last quarter. In 2020 and 2021, the total return is expected to decrease to 5.2% and 5.1% There is a large difference between the expectations of the participants. 50% of the participants expect a return in 2019 between 5.1% and 6.0%. Only 5% of the participants expect a total return of or over 7%, while 14% expect a total return below 5% in 2019.

The fundamentally healthy Danish economy supports the positive total return.

5.2% is still the most negative measurement for a future five-year period measured since 2011.

The total return of 7.1% in 2018 is expected to decrease in the future Table 1

Historic 2018










Quarterly change





Annual change





Total return

Source: The Danish Property Federation’s market statistics. See remarks on page 4.

Figure 1. The participants’ expectations For 2019

For the development in total return 2019-2021




expect a total return

expect a total

of 7% or above.

return of less


than 5%

expect a total


return between

expect a total return between

6 to 7%


expect an increase in total return.

expect a decline in total return.

35% expect status quo in total return.

6 to 5%.


The Danish Property Federation’s Market Statistics – Consensus Forecast, July 2019

The fundamentally healthy Danish economy supports the positive total return. On the other hand, political unrest about drastic renovations in property rental and possible cutbacks in generational inheritance tax and property gains tax, is negative for Danish economy and for the faith in the property business. Retail is facing uncertain times Although retail has the worst total measurement since 2011, the percentage of rental is on 94.0% with a drop of 0.4%. Thereby, the percentage of rental for retail is higher than both office and industrial. There is no doubt that the participants in the course of the last year have turned their views on retail to a negative one: Decreasing property value, rental percentage and market rent. Within retail, the annual change is a negative indicator value above 33. Housing also has negative expectations, which can be attributed to political uncertainty about radical improvements and an already high rental percentage of 96.3%. The continued expectation of decrease in the market rent may be an indication that new construction is able to keep up with demand in the major cities right now.

An indicator value of -26.1 for retail market rent is the lowest measured since 2011.

Positive indicator values can be found in office and industry. Both have had a growing rental percentage in relation to the last quarter so that 91.4% of office and 90.1% of industrial is rented. It is still high for both sectors and it is therefore gratifying that the participants expect increasing rental for office and industry. That a growing market rent can occur is an indication that the Danish economy remains healthy and that companies are ready to pay for the square metres. Although we see increasing rental rates and market rent for office, it may still mean a greater supply of office from the business estate agents, as rental and prices are perfect for it. It is positive for the office market which should preferably grow in rental percentage if there is a new economic crisis. The four large cities decline The Triangle area and the rest of the country has had the best measurement in five years. On the other hand, the measurement of the expected development in the property value for Aalborg, Odense, Aarhus and Copenhagen is worse. Copenhagen and Aalborg are witnessing historically bad measurements. There is still greatest faith in property value development in Copenhagen, but Copenhagen is now only slightly better than Aarhus. The third largest expectations are now for the Triangle area while Odense has declined slightly. Aalborg has declined most, especially in the last two measurements, while the rest of the country is now seriously on the road away from last place. Increasing market rent for office The last time, expectations for the market rent for office was negative was five years ago in 2014. But from 2015 and onwards, expectations have been positive. For offices in Copenhagen, the market rent is expected to increase with an annual 2.1% for the next three years. This is shown by

Positive expectations for office and industry (indicator values between -100 and 100) Property value

Table 2

Rental percentage

Market rental

July 2019

Quarterly change

Annual change

July 2019

Quarterly change

Annual change

July 2019

Quarterly change

Annual change









































Source: The Danish Property Federation’s market statistics. The participants have answered: ”Much lower”, ”lower”, ”unchanged”, ”higher” and ”much higher” on the question: ”What are your expectations for the development of [sector] buildings with prime location in a year compared to today?” The answers are given a value in order to achieve an indicator between -100 and 100. An indicator of 100 means that everybody has answered “much higher”, and -100 means that everybody has answered “much lower”. Indicator zero states expectations of unchanged conditions. An indicator of 20,5 may for example be obtained by 41.0 percent of the participants corresponding ”higher” and the remaining corresponding ”unchanged”.


The Danish Property Federation’s market statistics – Consensus Forecast, July 2019

the IPF (Investment Property Forum), European Consensus Forecast, May 2019. The expectation of the IPF for the next three years is 2.6% in 2019, 2.2% in 2020 and 1.6% in 2021. This is an increase of 0.4 percentage points for 2019 and 0.3 percentage points for 2020 compared to the survey in November 2018. It is positive that the market rent for office can continue to rise, although the vacancy for office is still a little too high with 8.6% in Denmark. However, the vacancy for office is down to 3.9% in Copenhagen Centre.

Five years ago in 2014, the office vacancy in central Copenhagen Centre was 12.1%.

Figure 2. Half of the participants expect total return in 2021 between 4.9% and 5.7% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 2000






















Source: The Danish Property Federation’s market statistics. Total return of investment properties. From 2011 to 2018, the total return from the Danish Property Federation’s market statistics is shown, while 2000 to 2010 is own calculations based on data from the IPD Danish Property Index. 2019 to 2021 shows the average of the answers in the Danish Property Federation’s market statistics – expectations. 50 percent of the answers are within the blue lines.

Figure 3. Best measured expectations for the rest of the country Regional indicator Low regional growth

Medium regional growth Anholt


High regional growth

The map shows the areas in Denmark where the property value of investment properties are expected to increase the most compared to the other areas. We have asked about the Triangle area, Copenhagen, Aarhus, Aalborg, Odense and the rest of Denmark. The answers have formed an indicator. If an area is light blue, at least 70% of the respondents have agreed that this area is doing better than the others.







Triangle Area

Remaining country

July 2014







April 2019







July 2019







Table 3

Source: The Danish Property Federation’s market statistics.


The Danish Property Federation’s market statistics – Consensus Forecast, July 2019

About the survey These are the expectations for July 2019 from the Danish Property Federation’s market statistics. The aim is to create information for a more transparent property market. The survey is published every quarter and is completely and utterly dependent on the participating companies being willing to report data every quarter. Without these companies, the survey would never become a reality. 44 market players have participated in this survey. 55% of the participants are the owners of buildings. In addition, 16% are commercial brokers, 5% are banks/mortgage providers and 25% are other players.

The following companies have contributed Aberdeen Asset Management, ATP Ejendomme, BBN Consult, Bertélco Ejendomme A/S, BRF Kredit, Carlsberg Byen, CBRE, Chr. Hjorth Erhvervsejendomme, Colliers, 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, Industriens Pension, Jeudan, Karberghus, KLP ejendomme, A/S, Lundsgaard Erhverv, Lægernes Pensionskasse, M7 Real Estate, M. Goldschmidt Ejendomme, Minova, NCC Construction Danmark A/S, Newsec Advisory, Newsec Property Asset Management Denmark, Niam, Nordea Ejendomme, Nybolig, Nykredit, P+, Patrizia, PBU – Pædagogernes Pension, Pensam, PensionDanmark, PFA Ejendomme, PKA, Probus Ejendom og Investering, Prodomus, PwC, Realdania, Realkredit Danmark, Sampension, SEB Pension, Sinding Gruppen, Spar Nord Bank, Taurus Ejendomsadministration, Thylander Gruppen, TK Development, TLK, Topdanmark Ejendom, Valdal Advokatfirma, Wiborg & Partnere, Øens Advokatfirma og Ejendomsadministration.

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

Morten Marott Larsen Phone: +45 28 45 56 51

Remarks for table 1

Table indicates the average total return based on the replies for the years 2019-2023. The total return is in percent and measures the return investment properties in relation to the size of the investment in a given period. The total return includes two types of return: Direct return return on value. The direct return is the period’s ongoing net operating results divided by the investment size in the beginning of the period. Return on value is the value increment in the given period divided by the size of the investment at the beginning of the period. The total return is before any financial costs and inflation. The historic total return in 2018 may change slightly in the future when new data is added to the market statistics.