26. Februar 2013     Print Print 

Danish property market follows European trend

The IPD Denmark Annual Property Index, released today, showed that Danish property delivered a total return of 3.8% in 2012. This is a slight decrease of 1.0 percentage points compared with 2011, and is 4.6 percentage points lower than the 13-year historical annualised total return of 8.4%pa, which IPD has reported on since 2000.

Property underperformed slightly against bonds at 5.6% (JP Morgan 7-10 Year Danish Government Bond Index), but significantly against equities at 30% (MSCI Denmark Equities) in 2012.

Denmark is the eighth country that IPD has reported on for the year 2012, which includes the UK, US, Canada, Netherlands, Sweden, Ireland and Australia. Early indications suggest that European countries have underperformed compared with non-European regions, and Denmark is no exception. The spread in total returns for the five European countries reported on thus far is 1.1% to 6.4%.

Capital returns fell into slightly negative territory at -0.9%, against -0.1% in 2011. Income return of 4.8% is the lowest number IPD has recorded in Denmark since its start in 2000. This may be due in part, to gradually higher vacancy rates, which have doubled from 5.2% to 9.8% in the last three years.

“We see that all major commercial sectors have suffered from a decline in income return, partly as a consequence of gradually weaker tenant demand and higher vacancies,” said Christina Gustafsson, Managing Director, IPD Norden.
Across sectors, residential properties regained pole position at a 6.7% total return after five consecutive years at the bottom end of the sector league table. The major underperforming sector was Industrial, which recorded a 0.9% total return with capital return at near -6%. This performance across sectors is consistent with the long-term trend that holds Residential at the top, and Industrial at the bottom, during the 13-year average total return numbers.

Christina added, “On a more detailed level, Offices in Copenhagen’s Harbour area and the CBD are outperforming, together with Residential in Copenhagen.”