October 2022
The Danish Property Federation’s Market Statistics – Consensus Forecast • The expectation to the total return in 2022 is a record low • Negative measurement for the value of office property • Aalborg advances in the expectations • The total return in 2021 was 8.7 percent.
The expectations for total return are still decreasing The expectations to the total return still decreases after the historical decrease last quarter. However, the expectations have decreased less than in the last quarter. Yet, there is an expected total return of 4.5 percent in 2022, which is the lowest that has been measured in the last three years, where 11 surveys have been asking about the expectations to 2022. The decrease in expectations to 2022 is at 0.3 percentage points compared to last quarter and 0.6 percentage points compared to the same time last year. In 2021, the total return was 8.7 percent, so a decrease in the total return of almost 50% is expected, corresponding to a decrease in the total return of approx. DKK 45bn.
/ The total return must cover inflation, financing costs and the risk of investing in properties. /
It appears from figure 1 that it is especially the expectations to the capital value that has decreased in the last two quarters, while there is a smaller decrease in the expectations to occupied space and market rent. The latter is still slightly 50.0 positive. Thus, there is still faith in the properties’ finances through rental and leasing, whereas the payment of interest requirement on50.0 the properties is under 40.0 pressure.
40.0
Capital value
-30.0
20.0
Capital value
Occupied space
-30.0 Capital value
Occupied space
Market rent
322
122
321
121
320
120
319
119
318
118
317
117
316
116
315
115
314
114
113
313
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312
311
111
0.0
-20.0
315
116 319
117
115
119
322
320
314
318
122
316
114
118
120
313
317
121
321
119
113
120
320
Capital value
Occupied sp
Occupied space
Market re
Market rent
10.0
-10.0
117
116
-30.0
319
116
315
115
114
113
314
-20.0
-30.0
-20.0
30.0
313
-10.0
312
112
50.0
311
111
-20.0 -10.0 has decreased 0.0 Figure 1. The expectations to capital value the most
316
112
312
315
111 318
311
114
118
115
313
113 117
317
312
316
112
311
111
Largest decrease in expectations to office 6 months ago, the largest faith was in the largest sector 30.0 i.e. office. But especially20.0 40.0 the expectations to capital value for office has gone from positive to negative. For the last 7 years, office has30.0 had a positive value increment, 10.0 20.0 but the participants in this survey expect that contrary to today, they will experience a negative development in one year from now.20.0 The expectations to occupied 10.0 space for office are 0.0 almost neutral after office, in July 2022, was measured at the highest occupied 0.0 space in 13 years. The market 10.0 rent for office is expected to be slightly positive. -10.0
314
30.0
40.0
50.0
/ In 2023, the total return is expected to decrease to 4.4 percent. /