July 2021
The Danish Property Federation’s Market Statistics – Consensus Forecast • In 2021, the professional investment property market expect that the total return decreases to 5.7 percent • Retail may be past the worst period • In 2020, retail had an average value increment of minus 2.8 percent • Higher expectations to Aalborg
The total return is expected to decrease In 2020, the total return is estimated at 6.0 percent, but the participants expect that the total return will decrease. In 2021, it is expected that the total return decreases to 5.7 percent while it will decrease to 5.2 percent in 2022. The expectation to the five-year period 2021-2025 is at 5.2 percent. For several years after the financial crisis, the value increment was mainly negative. This has not been the case overall during the Corona crisis, but of course, there have been segments and individual properties where the value increment has been negative. However, there is also optimism in this quarter’s survey. This mainly applies compared to the same time last year but also compared to last quarter. The expectation to 2021 has increased with 1.0 percent compared to the same time last year, which can probably be explained by reopening and implementation of vaccines. Retail is looking bright From January 2021 to April 2021, the occupied space for retail increased with 0.1 percentage points. The occupied space for retail is the parameter which increases the most compared to last quarter (+18.5 indicator points). There is still an expectation that the occupied space, capital value and market rent may decrease slightly for retail, but with the reopening, the participants have more faith in retail property.
As the total return must cover both risk, interest expenses and inflation, there will be properties which will have a deficit.
Compared to the same time last year, the expectations have increased.
Exactly one year ago, the worst expectations to investment properties were measured.
The expectations to industry is still best and it is at a stable level. Regarding office, there is some uncertainty about the occupied space based on Corona effects, but from January 2021 to April 2021, the occupied space for office increased with
The expectation to the total return in 2021 has increased Table 1 Total return
Historic 2020 6.0
2021
2022
2023
2021-2025
5.7
5.2
5.2
5.2
Quarterly change
0.3
0.0
0.6
0.0
Annual change
1.0
0.1
New
New
Source: The Danish Property Federation’s Market Statistics. See remarks on page 5.
1