October 2021
The Danish Property Federation’s Market Statistics – Consensus Forecast • The property business is no longer shocked by Corona • However, the total return still decreases. • Largest expectations to industry • The Triangle Area experiences progress
The Corona shock is over After the Corona shock hit in 2020, it is now the fifth quarterly survey in a row, where the expectations have either progressed - or has stabilised on an overall national level for all sectors. There are still negative expectations to retail properties, but the expectations to retail properties were even more negative before Corona than they are now. However, the total return is still expected to decrease compared to 2020, when it was 6.0 percent. In 2021, the total return is expected to be 5.6 percent. That is a decrease of 0.1 percentage points compared to last quarter but an improvement of 0.9 percentage points compared to the same time last year. In 2021 and 2022, the total return is expected to be 5.1 percent. Over the whole period 2000-2020, properties have given 7.1 percent in average total return. Highest expectations to industrial Among the four sectors, there are highest expectations to industrial and that applies to both capital value, occupied space and market rent. It is only five years ago, that there were lowest expectations to industrial. It is probably especially the expectations to logistics properties that drive the expectations to industrial upwards. In 2020, the direct return on industrial was the highest with 4.9 percent, while the value increment was a modest 0.1 percent.
/ In the entire period from 20212025, we expect an annual total return of 5.1 percent. /
/ The total return must cover financial costs, inflation and risk. /
Figure 1. The participants’ expectations For 2021
30 %
Development in total yield from 2021 to 2023
12 %
expect a total yield of 5 percent or
21 %
below.eller
expect a total yield between 7 and 6 percent.
37 %
21 %
expect a total yield of 7 percent or more.
51 %
expect an increase in total yield.
expect a decrease in total yield.
28 %
expect an unchanged total yield.
expect a total yield between 6 and 5 percent.
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The Danish Property Federation’s Market Statistics - Consensus Forecast, October 2021
/ Still negative expectations to retail - but increasing./
Retail has the largest progress since last quarter and last year, but there are still negative expectations to this sector. In 2020, the total return on retail was 0.4 percent. It is especially the expectations to capital value and market rent that are negative for retail. Office properties have the second highest expectations, while the expectations to residential are slightly positive. Increasing expectations to the Triangle Area The expectations to the Triangle Area have not been better since right before the Corona crisis started. Compared to the last quarter, the Triangle Area and the rest of the country have slightly better expectations. Overall, there are still highest expectations to Copenhagen and Aarhus, but the Triangle Area is third in front of Odense, Aalborg and the rest of the country.
In 2021, the total return is expected to be 5.6 percent Table 1
Historic 2020
Totalt return
6.0
2021
2022
2023
2021-2025
5.6
5.1
5.1
5.1
Quarterly change
-0.1
-0.1
-0.2
0.0
Annual change
0.9
0.1
New
New
Source: The Danish Property Federation’s Market Statistics. See remarks on page 4.
The most positive expectations are to the capital value of industrial (indicator values between -100 og 100) Capital value
Occupied space
Market rent
Table 2
Oct. 2021
Quarterly change
Annual change
Oct. 2021
Quarterly change
Annual change
Oct. 2021
Quarterly change
Annual change
Office
25.6
4.5
27.7
4.7
4.7
22.4
19.8
7.5
19.8
Retail
-18.6
9.2
26.2
-11.6
2.8
25.9
-18.6
10.3
27.2
Industry
27.9
2.4
17.5
18.6
4.2
12.4
24.4
2.2
18.2
Residential
22.1
3.2
17.9
4.7
3.5
5.7
3.5
-3.2
6.6
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 to 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 to unchanged conditions. An indicator of 25.6 may for example be obtained by 25.6 percent of the participants corresponding ”much higher” and the remaining corresponding ”unchanged”.
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The Danish Property Federation’s Market Statistics - Consensus Forecast, October 2021
Figure 2. The total return has been decreasing since 2019 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 2020 2021 2022 2023 Source: The Danish Property Federation’s Market Statistics. Total return of investment properties. From 2011 to 2020, the total yield 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. 2021 to 2023 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. The Triangle Area has the third highest expectations to the development in capital value Regional indikator
Regional indicator
Mindst regional vækst
Least regional growth
Middel regional vækst
Medium regional growth Anholt
The map shows the areas in Denmark where the capital 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 green, at least 70% of the respondents have agreed that this area is doing better than the others.
Anholt
Størst regional vækst
Largest regional growth
Rømø
Rømø
Source: The Danish Property Federation’s Market Statistics.
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The Danish Property Federation’s Market Statistics - Consensus Forecast, October 2021
About the survey These are the expectations for October 2021 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.
43 market players have participated in this survey. 53 percent of the participants are property owners. In addition, 12 percent are property administrators, 16 percent are commercial brokers, 7 percent are banks/mortgage providers and 12 percent are other players.
The following companies have contributed Agat ejendomme, ATP Ejendomme, Bertélco Ejendomme A/S, CBRE, Chr. Hjorth Erhvervsejen-domme, Colliers, Copenhagen Capital, Cura Management, DADES, Danbolig erhverv Johnny Hallas, Danica Ejendomme, DEAS, EDC Erhverv Poul Erik Bech, Ejendomsselskabet Norden, EK-Ejendomsadministration A/S, Elf Development, EY, Fokus Asset Management, Heimdal Nordic, Heimstaden, Hosta Ejendomme, Jeudan, Jorcks Ejendomsselskab, Jyske Bank, Karberghus, Keystone, KFI Erhvervsdrivende Fond, KLP ejendomme, Lintrup & Norgart, Lokalebasen.dk A/S, Lundsgaard Erhverv, Lægernes Pensionskasse, M7 Real Estate, M. Goldschmidt Ejendomme, NCC Construction Danmark A/S, Newsec Advisory, Newsec Property Asset Management Denmark, Niam, Nordea, Nordicals, Nykredit, P+, Patrizia, PBU – Pædagogernes Pension, Pensam, PensionDanmark, PFA Ejendomme, PKA, Probus Ejendom og Investering, Prodomus, PwC, Qvortrup Administration, Realdania, Realkredit Danmark, Rosenkæret, Sampension, Sinding Gruppen, STAD Erhverv, Taurus Ejendomsadministration, Thor Stevnss Real Estate, Thylander Gruppen, TLK, Topdanmark Ejendom, Wiborg & Partnere, Øens Advokatfirma og Ejendomsadministration.
Further information If you wish to know more about this publication please contact Director in the Danish Property Federation
Morten Marott Larsen mml@ejd.dk Phone +45 28 45 56 51
Remarks for table 1 The table indicates the average total return based on the replies for the years 2021-2025. The total return is in percent and measures the return on investment on investment properties in relation to the size of the investment in a given period. The total yield includes two types of yield: Direct return and 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 yield may change slightly in the future when new data is added to the Market Statistics.
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