RED Danish Investment Atlas 2019

Kære læser, Velkommen til ”RED – Danish Investment Atlas 2019” som samler en række af vores tidligere publikationer i én.

Vi bruger mange ressourcer på at indsamle og kvalitetssikre data om de enkelte transaktioner på det danske marked og på de kommende sider kan du - baseret på vores omfattende data og analyser - få et detaljeret indblik i det kommercielle danske ejendomsmarked - segment for segment. Alle data er ligeledes tilgængelige på vores hjemmeside, hvor du selv kan sammensætte dine grafer i vores ”dynamiske analyseværktøj”.

Rapporten er opbygget som et let tilgængeligt opslagsværk, hvor du enten hurtigt kan skabe dig et overblik over et enkelt segment eller fordybe dig i detaljerne.

Kontor-, retail-, bolig- og hotelsegmenterne har hvert sit afsnit, hvor du kan

† Få overblik over investeringsmarkedets udvikling i ”Investeringsmarkedet 2018”

† Se den geografiske fordeling og de største investorer i ”Volumen & Investorer 2018”

† Læse om de største transaktioner i ”Top 5 transaktioner”

† Få en status på segmentets lejesituation, lejeniveauer mv. i ”Lejemarkedet”

† Fordybe dig i vores valgte fokus for segmentet i ”Highlights”

† Læse om vores forventninger til segmentets udvikling i ”Forventninger til 2019”

† Se de 30 største transaktioner, afkast-niveauer mv. i ”Transaktioner og nøgletal”

God læselyst.

Nicholas Thurø Managing Partner

Dear reader,

Welcome to "RED - Danish Investment Atlas 2019" which brings together a number of our previous publications in one.

We use many resources to collect and quality assure data on the individual transactions in the Danish market, and on the coming pages - based on our extensive data and analyses - you can get detailed insight into the Danish market for commercial real estate - segment by segment. All data is also available on our website, where you can assemble your own charts in our "dynamic analysis tool".

The report is structured as an easily accessible reference work, where you can either get a quick overview of a single market or immerse yourself in the details.

The office, retail, residential and hotel segments each have their own sections where you can

† Get an overview of developments in the investment market in "The Investment market 2018"

† See the geographical distribution and the largest investors in "Volume and investors 2018"

† Read about the largest transactions in "Top 5 transactions"

† Get a status on the segment's occupier situation in "Occupier market"

† Immerse yourself in our chosen topic for the segment "Highlights"

† Read about our xpectations for the segment in "Outlook for 2019"

† See the 30 largest transactions, yield levels etc. in "Transactions and key figures"

Enjoy reading

Nicholas Thurø

Managing Partner

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

2018 sænkede tempoet // Slow-down in 2018

I 2018 faldt investeringsvolumen i det danske ejendomsmarked med 16% i forhold til rekordåret 2017.

Alle segmenter, med undtagelse af grundsalg, oplevede en reduktion af volumen. Størst var faldet i retailsegmentet, der næsten blev halveret. Dette dækker dog over, at 2017 indeholdt en meget stor transaktion med ATPs køb af 50% af Danicas centre. Ser vi bort fra denne handel, var faldet på 14%.

Bolig og kontor i hver sin geografiske retning i 2018 Boligsegmentet faldt 6% i transaktionsvolumen og kontorsegmentet faldt med beskedne 1%. Den geografiske fordeling af den investerede kapital ændrede sig dog markant for de to segmenter. Boligsegmentet oplevede en nedgang i transaktionsvolumen i Storkøbenhavn og Aarhus, hvor den samlede

volumen faldt 19% fra 30,1 mia. kr. i 2017 til 24,3 mia. kr. i 2018 – mens resten af landet oplevede en stigning på 39% fra 8,9 mia. kr. til 12,4 mia. kr. Anderledes udviklede det sig inden for kontorsegmentet – hvor Storkøbenhavn og Aarhus blev styrket med en fremgang på 11% til 15,7 mia. kr. i 2018 fra 14,2 mia. kr. i 2017 – mens resten af landet faldt 44% i volumen fra 4,1 mia. kr. til 2,3 mia. kr. i 2018.

Investorerne i kontorsegmentet har, i en tid med mere nervøsitet på de finansielle markeder, søgt tilbage til core assets i storbyerne, mens investorerne i boligsegmentet i højere grad har søgt investeringer uden for storbyerne for at opnå et højere direkte afkast og indkøbe boliger til en lavere pris per kvadratmeter end de historisk høje

priser, vi oplever i København og Aarhus.

En stigning på knap 50% i transaktionsvolumen for grunde i 2018, vidner om en fortsat stor tillid til det danske ejendomsmarked, hvor specielt ejendomsselskaberne og de institutionelle investorer køber grunde for at øge deres afkast ved at træde tidligere ind i fødekæden.

Total transaction volume 2018

In 2018, the investment volume in the Danish real estate market dropped by 16% compared to the record year 2017. All segments, with the exception of plot sales, experienced a reduction in volumes. The largest decrease was recorded in the retail segment, which was almost halved. This, however, covers the fact that 2017 contained a very large transaction with ATP's purchase of 50% of Danica's shopping centres. Disregarding this trade, the decline was 14%.

Residential and office in separate geographical directions in 2018

The residential transaction volume dropped 6% and the office segment declined by a modest 1%. However, the geographical distribution of the invested capital changed significantly for the two segments. The residential segment saw a decrease in transaction volume in Greater Copenhagen and Aarhus, where the total volume dropped 19% from DKK 30.1 bn in

2017 to DKK 24.3 bn in 2018 - while the rest of the country saw an increase of 39% from DKK 8.9 bn to DKK 12.4 bn. Development within the office segment was significantly different – here, Greater Copenhagen and Aarhus were strengthened with an increase of 11% from DKK 14.2 bn in 2017 to DKK 15.7 bn in 2018 - while the rest of the country dropped 44% in volume from DKK 4.1 bn to DKK 2.3 bn in2018.

Source: C&W | RED

In a time of more anxiety in the financial markets, office investors have searched for core assets in the cities, while investors in the residential segment have primarily sought investments outside the cities to achieve a higher direct return and acquire residential at a lower price per square meter than the historically high prices, we currently experience in Copenhagen and Aarhus.

An increase of almost 50% in transaction volume for plots in 2018 testifies to a continued high level of confidence in the Danish real estate market, where property companies and institutional investors, in particular, are acquiring plots to increase their returns by entering into the supply chain at an earlier stage.

RETAIL

Vores forventninger til 2019 // Expectations for 2019

KONTOR // OFFICE

God efterspørgsel, stabile lejeniveauer og uændret afkast // Positive demand, stable rents and unchanged yields

Vi oplever i øjeblikket en meget høj efterspørgsel efter kontorer i størstedelen af København med lav tomgang til følge. Vi forventer, at efterspørgslen efter velbeliggende kontorer vil fortsætte i 2019, mens der vil være et overudbud af kontorer i områderne langs Ring 3. Vi forventer svagt stigende lejeniveauer i København og uændrede niveauer i de øvrige områder.

Vi forventer uændrede afkast på kontorejendomme i 2019. Vi forventer ikke, at investorerne er villige til at acceptere en lavere risikopræmie på kontorejendomme – uagtet stor efterspørgsel - idet renten i øjeblikket må forventes at være på et lavpunkt og en øget rente vil medføre et opadgående pres på afkastkravet.

RETAIL // RETAIL

We are currently experiencing very high demand for office in the majority of Copenhagen, resulting in low vacancy rates. We expect demand of the well-located offices to continue in 2019, while there will be a surplus of offices in the areas around Ring 3. We expect vaguely increasing rents in Copenhagen and unchanged levels in the remaining areas.

We expect unchanged yields for office properties in 2019. We do not expect investors to accept a lower risk premium for office properties - in spite of high demand - seeing that the current interest rate is at a low and increased interest rates will lead to upward pressure on the yield demand.

Tomgang, søgning efter mindre enheder og pres på afkast // Vacancy, search for smaller entities and yield pressure

Vi forventer, at det fysiske retail marked fortsat vil være udfordret i 2019, hvilket vil medføre en stigende tomgang – også på gode placeringer. Men på trods heraf forventer vi, at vi i 2019 vil se:

† Størst efterspørgsel i København og Aarhus – hvor nye brands, som led i deres omnichannel-strategi, ønsker at etablere sig † Højere efterspørgsel efter mindre enheder † Shoppingcentre vil have fokus på at skabe flow gennem udvidelse af oplevelser, services og som distributionshub for omnichannel

Første års afkast på retail ejendommene vil være stigende og i løbet af 2019 ligge 20-30 basispoint over de laveste niveauer vi har set i 2017 og 2018.

BOLIG // RESIDENTIAL

We expect that the physical retail market will continue to be challenged in 2019, which will lead to an increase in vacancy rates - also in prime locations. In spite of this, we expect that in 2019 we will see:

† The greatest demand in Copenhagen and Aarhus

† Higher demand for smaller units

† Shopping centres will focus on creating flow through more experiences, services and as a distribution hub for omnichannel

The initial yield for retail properties will increase and during 2019 it will reach 20-30 basis points above the lowest levels of 2017 and 2018

Stor efterspørgsel, men stagnerende leje og fokus på driftsafkast // Great occupier demand, but stagnant rent and focus on operating return

Der vil fortsat være stor efterspørgsel efter boliger i København i 2019, men boliglejen har nået sit maksimum. Hovedparten af de boligsøgende har ikke mulighed for at betale den leje, som der estimeres i mange nye projekter og investorerne har svært ved at udleje de store boliger. Vi forventer, at lejen i de store udviklingsområder som Ørestad og Sydhavnen kommer under pres i 2019.

Investeringsmarkedet vil være præget af investorer med fokus på det løbende driftsafkast fremfor frasalgscases. Både København og de 15-20 største byer i Danmark vil være i fokus.

Demand in the residential sector will continue in Copenhagen in 2019, but the rent level has reached its maximum. The majority of residential demand are people who cannot afford the rent level currently estimated on several new projects, and investors are having difficulties letting the larger residences. We expect the rent level in the major development areas such as Ørestad and Sydhavnen to come under pressure in 2019.

The investment sector will be characterized by investors focusing on operating returns rather than divestments. Copenhagen and the 15-20 largest cities in Denmark will be in focus.

BOLIG // RESIDENTIAL

OVERBLIK - INVESTERINGSMARKEDET 2018

ANNUAL REVIEW - INVESTMENT MARKET 2018

Den samlede transaktionsvolumen for investeringsejendomme i Danmark er for 2018 opgjort til 77 mia. kr. og dermed reduceret med ca. 16% i forhold til rekordåret 2017, hvor der blev handlet ejendomme for 92 mia. kr ( figur 1)

Mindre, men fortsat stærk, aktivitet fra udenlandske investorer

Udenlandske investorer opkøbte for knap 34 mia. kr. i 2018 svarende til 45% af transaktionsvolumen i 2018, hvilket er en nedgang på knap 17 mia. kr. i forhold til 2017 ( figur 1). De danske investorer øgede deres investeringer med knap 2 mia. kr. i 2018 til et samlet niveau på ca. 43 mia. kr. – svarende til en dansk investeringsandel på samlet 55% af investeringsvolumen i 2018.

Investorerne opfatter fortsat det danske ejendomsmarked som attraktivt. Særligt det stabile politiske miljø, den generelle økonomiske vækst samt den lave finansieringsrente via det danske realkreditsystem er faktorer, som tiltaler investorerne.

Ejendomsfonde var de mest aktive

Ejendomsfondene – som primært dækker over udenlandsk kapital - var med 39% ( figur 2) af transaktionsvolumen de mest aktive investorer på det danske ejendomsmarked i 2018. Især bolig- og retailejendomme var i høj kurs hos ejendomsfondene, som stod for henholdsvis 52% og 42% af de respektive markeder.

København i høj kurs

Det er fortsat ejendomsmarkedet i København,

som med 42% af den samlede investeringsvolumen, dominerer markedet volumenmæssigt ( figur 3)

Især boligudlejningsejendomme i København er i høj kurs med en samlet transaktionsvolumen på 17,2 mia. kr. svarende til 22% af den samlede volumen i Danmark.

Figure 2: Danish transactions - Investor type breakdown 2018

The total transaction volume for investment properties in Denmark totaled DKK 77 bn in 2018 and was thus reduced by approx. 16% compared to the record year of 2017, when property transactions reached DKK 92 bn (figure 1)

Foreign investors cooling off but still warm Foreign investors acquired Danish properties for just below DKK 34 bn in 2018, corresponding to 45% of total transaction volume, which is a decrease of just below DKK 17 bn ( figure 1). Danish investors increased their investments by just below DKK 2 bn in 2018 to a total level of approx. DKK 43 bn - equivalent to a Danish investment share of 55% of the total investment volume in 2018.

Investors still consider the Danish real estate market attractive. In particular, the stable political environment, general economic growth and the low financing rate via the Danish mortgage system are factors that appeal to investors.

Source: C&W | RED

Property funds most active

With 39% ( figure 2) of the transaction volume, property funds - which primarily includes foreign capital - were the most active investors in the Danish real estate market in 2018. Residential and retail properties in particular were popular among the property funds, who accounted for 52% and 42% of the respective markets.

Copenhagen residential dominates the market

With 42% of the total investment volume, the Copenhagen market continues to dominate transactions. In particular, Copenhagen residential is popular with a total transaction volume of DKK 17.2 bn equivalent to 22% of the total volume in Denmark ( figure 3)

BN DKK

Tre investorer dominerer markedet

De tre mest aktive investorer på det danske ejendomsmarked var Heimstaden, Blackstone og NIAM, som tilsammen handlede for 16,2 mia. svarende til 21% af den samlede volumen. Heimstaden har i 2018 investeret massivt i danske boligejendomme, bl.a. med købet af Thylanders TG Partners III portefølje, dele af Grønttorvet i Valby fra FB gruppen og NREPs Nordic Living portefølje.

Den amerikanske kapitalfond Blackstone har de senere år købt og renoveret en lang række beboelsesejendomme i hovedstaden og gennemførte i 2018 imponerende 67 handler til en samlet værdi af 5,2 mia. kr. Også NIAM har fokuseret på boligejendomme og har bl.a. erhvervet en portefølje i de jyske byer Silkeborg, Randers, Vejle og Horsens, samt en række mindre ejendomme og porteføljer.

Færre af de helt store handler

Der blev i 2018 gennemført 2.261 handler med investeringsejendomme i Danmark, hvilket er knap 6% færre end i 2017 ( figur 4). Især antallet af de helt store ejendomshandler er reduceret i forhold til 2017, mens ejendomme og porteføljer med en værdi på 50-500 mio. kr. er steget.

Three investors dominate the market

The three most active investors in the Danish real estate market were Heimstaden, Blackstone and NIAM, which accounted for a combined DKK 16.2 bn, corresponding to 21% of total volume. In 2018, Heimstaden invested heavily in Danish residential properties, among other things, with the acquisition of Thylander's TG Partners III portfolio, parts of Grønttorvet in Valby from the FB group and NREP's Nordic Living portfolio. In recent years, American capital fund Blackstone has bought and renovated a large number of residential properties in the capital and in 2018 completed an impressive 67 transactions with a total value of DKK 5.2 bn. NIAM has also focused on residential properties and has, among other things, acquired a portfolio in the cities of Jutland Silkeborg, Randers, Vejle and Horsens, as well as a number of smaller properties and portfolios.

Fewer major transactions

In 2018, 2,261 transactions were completed in Denmark, which is almost 6% fewer than in 2017 ( figure 4) The number of very large real estate transactions in particular have been reduced compared to 2017, while properties and portfolios with a value of DKK 50-500 m has increased.

4: Breakdown in

OVERBLIK - VOLUMEN & INVESTORER 2018

ANNUAL REVIEW - VOLUME & INVESTORS 2018

(BN DKK)

Source: C&W | RED

Source: C&W | RED

NERVØSITET PÅ DE FINANSIELLE MARKEDER PÅVIRKER EJENDOMSMARKEDET

FINANCIAL MARKET ANXIETY AFFECTS THE PROPERTY MARKET

Fokus på amerikanske renter

Efter en lang årrække med stigende priser på markederne for alle aktivtyper – såvel aktier og obligationer som ejendomme - har den seneste periode været præget af nervøsitet på de finansielle markeder, hvilket blandt andet har sat sit præg på aktiemarkederne i 4. kvartal 2018.

De finansielle markeder følger udviklingen på en lang række nøgletal verden over, og et af de nøgletal, som alle analytikere har blikket rettet imod, er forskellen mellem den amerikanske tre måneders og 10 års rente ( figur 5). Er forskellen i den korte og lange rente lille, er rentekurven flad, hvilket er et udtryk for, at investorerne er bekymrede for økonomien og dermed accepterer at binde deres penge på langt sigt til en lav rente. Rentekurven følges tæt, fordi den forud for de sidste seks recessioner i USA har været negativ 6-24 måneder forud for recessionen.

Den amerikanske rentekurve er i øjeblikket meget flad og tæt på nul, hvilket bekræfter nervøsiteten på markederne. Perioder med recession påvirker ejendomsmarkederne, idet lejerne inden for kontor, retail og industri i disse perioder oplever nedgang, hvilket igen reducerer arealbehovet og presser markedslejen. Dette medfører, at investorerne stiller krav om større risikopræmie, hvilket påvirker prissætningen, uagtet at finansieringsrenten fortsat måtte være lav. Den amerikanske rentekurve er dog fortsat positiv og det danske ejendomsmarked har et godt fundament med en lav tomgang og lav gearing hos investorerne. Men vi har set toppen af priserne for denne omgang og markedet er ved at vænne sig til mere normale tilstande.

Høje ejendomspriser sænker tempoet På europæisk plan – såvel som i Danmark – faldt transaktionsvolumen i 2018. Er det udtryk for at der

ikke er kapital, der søger mod fast ejendom, men i stedet allokeres til andre aktivklasser? Nej, vi oplever faktisk det modsatte. Der er historisk meget kapital allokeret til investering i fast ejendom ( figur 6), men investorerne har svært ved at finde ejendomme, som de vurderer er fair prissat. Dette medfører, at kapitalen akkumuleres og investorerne afventer –hvilket vurderes at være en af de primære årsager til nedgangen i transaktionsvolumen på såvel dansk som europæisk plan.

Men aktivitetsniveauet er fortsat højt… På trods af en faldende transaktionsvolumen, i såvel Danmark som det øvrige Europa, er aktivitetsniveauet meget højt og den meget lave rente betyder, at det fortsat er attraktivt at investere i fast ejendom. Et aktiv, som til dels er inflationssikret og som genererer et løbende afkast i modsætning til de fleste øvrige aktivklasser.

Fokus on American interest rates

After a long period of increasing market prices for all asset types – equities, bonds and properties - the recent period has been characterized by financial market anxiety, which, among other things, left its mark on the equity markets in Q4 2018.

The financial markets follow developments on a large number of key figures worldwide, and one key figure that all analysts have focused on is the difference between the U.S. 3-month and 10 year interest. If the difference in short and long-term interest rates is small, the interest curve is flat, which indicates that investors are concerned about the economy and thus agree to bind their money in the long term at a low interest rate. The interest curve is closely monitored because, prior to the last six recessions in the US, it was negative 6-24 months ahead of the recession ( figure 5)

The US interest curve is currently flat and close to zero, confirming market anxiety. Periods of recession affect real estate markets, with office, retail and industry tenants experiencing a decline, which in turn reduces the space requirement and pushes market rent. This means that investors demand greater risk premium, which affects pricing, even though the funding rate remains low. However, the US yield curve is still positive and the Danish real estate market has a solid foundation with low vacancy rates and low degree of investor leverage. In addition, we have probably seen the top of the prices and the market is getting attuned to more normal conditions.

High property prices slows down the pace In Europe - as well as in Denmark - the transaction volume dropped in 2018. Does this mean that no capital is targeting real estate, but instead allocated to other asset classes? No, we actually experience

the opposite. There is a record amount of capital allocated to investing in real estate ( figure 6), but investors find it difficult to find properties that they estimate to be fairly priced. This means that the capital is accumulated and investors are waiting - which is considered to be one of the primary reasons for the decline in both Danish and European transaction volumes.

But activity remains high….

Despite a declining transaction volume, in Denmark as well as the rest of Europe, activity is high and the low interest rate means that it is still attractive to invest in real estate. An asset that is partly inflation-proof and which generates an ongoing return as opposed to most other asset classes.

Figure 5: U.S. 10-year treasury minus 3-month yield 1978-2019

Source: Federal Reserve, Cushman & Wakefield Research

10-year treasury minus 3-month yield

Figure 6: Global capital allocated for investment in commercial real estate 2012-2018

Source: Preqin, Cushman & Wakefield Research

BOLIGER OG KØBENHAVN HAR DREVET VÆKSTEN

RESIDENTIAL AND CPH HAS BEEN THE GROWTH DRIVER

På det danske ejendomsmarked udgør retail, kontor og boliger de tre store segmenter. I 3. kvartal 2015 udgjorde de tre segmenter stort set en lige stor andel af markedet med en transaktionsvolumen for hvert segment på ca. 11 mia. kr. – målt som et 12 måneders rullende gennemsnit ( figur 7)

Boligvolumen femdoblet på tre år

Siden 2015 har boligsegmentet taget fart og været den primære driver for væksten i den danske transaktionsvolumen. På mindre end tre år fra 2. kvartal 2015 til 1. kvartal 2018 steg transaktionsvolumen for boligejendomme med knap 500% fra 8,1 mia. kr. til 39,7 mia. kr. Det foreløbige højdepunkt for boligsegmentet lå således i 1. kvartal 2018 – men efter en høj transaktionsvolumen i 4. kvartal 2018 er kurven vendt og det bliver interessant at se, hvorvidt det høje niveau forsætter i 2019.

København tiltrækker investeringerne

Op til finanskrisen oplevede det danske marked en kraftig stigning i transaktionsvolumen på 300% i perioden 2002 - 2006. Tilsvarende har vi i perioden 2013

- 2017 ( figur 8) oplevet en kraftig vækst i volumen på 290%. Men perioderne dækker over forskellige karakteristika i forhold til, hvem, der investerer, og hvor.

I perioden 1992 - 2005 udgjorde Københavns andel af den samlede transaktionsvolumen i gennemsnit 38% årligt, mens vi i perioden 2012-2016 har oplevet at hele 58% af den samlede danske transaktionsvolumen er investeret i København ( figur 8). Hvorfor denne udvikling?

Investorsammensætningen og adgangen til fremmedkapital har ændret sig. I perioden 1992 - 2005 var det danske ejendomsmarked nærmest udelukkende båret af danske investorer og langt flere, mindre investorer, end vi ser i dag. I den periode var adgangen til fremmedkapital til belåning af fast ejendom i provinsen væsentligt nemmere, hvilket medførte en øget likviditet/omsættelighed.

Svær adgang til finansiering i provinsen I perioden efter finanskrisen er det danske ejendomsmarked præget af store danske og internationale investorer. Deres fokus har primært været rettet mod

København som det mest likvide og sikre marked. I samme periode er bankernes og realkreditinstitutternes udlånsvillighed og -evne til fast ejendom i provinsen skærpet, som følge af Basel-komiteens nye krav, der fordrer, at kreditinstitutter skal holde mere kapital i reserve, når de foretager mere risikobetonede udlån (provinsen), end når de udlåner til mere sikre projekter (København). Det er derfor blevet sværere for mindre investorer og privatpersoner at belåne investeringsejendomme i provinsen, hvilket er kommet til udtryk i lavere omsættelighed. Disse to faktorer er den primære årsag til, at København har tegnet sig for så stor en andel af transaktionsvolumen i perioden 2012 - 2016.

Investorerne tilbage til de største byer I 2017, hvor vi oplevede en rekordhøj transaktionsvolumen i Danmark, var stigningen båret af, at de store investorer søgte ud i landet for at investere i ejendomme, der gav et højere direkte afkast som alternativ til den store konkurrence blandt investorerne om ejendommene i København. Men i 2018, hvor de finansielle markeder oplevede øget nervøsitet, trak investorerne sig igen tilbage til de mere sikre markeder i de største byer.

In the Danish market, retail, office and residential constitute the three leading segments in commercial real estate. In the third quarter of 2015, the three segments accounted for almost equal proportions of the market with a transaction volume of approx. DKK 11 bn - measured as a 12-month rolling average ( figure 7)

Residential volume multiplied by five in three years

Since 2015, the residential segment has taken off as the primary driver for growth in the Danish transaction volume. In less than three years from Q2 2015 to Q1 2018, the transaction volume for residential properties increased by almost 500% from DKK 8.1 bn to DKK 39.7 bn. The preliminary peak for the residential segment was thus in Q1 2018 - but after a high transaction volume in the fourth quarter of 2018, the curve has reversed and it will be interesting to see whether the high level continues in 2019.

Copenhagen is attracting investments

In the period leading up to the financial crisis, the Danish market experienced a sharp increase in trans-

action volume of 300% in the period 2002 - 2006 ( figure 8). Similarly, in the period 2013 - 2017, we have experienced a sharp growth in volume of 290%. But the periods cover different characteristics in relation to investors and preferred areas.

In the period 1992 - 2005, Copenhagen's share of the total transaction volume averaged 38% annually, while in the period 2012-2016 a significant 58% of the total Danish transaction volume was invested in Copenhagen ( figure 8). Why this development?

Investor composition and access to foreign capital have changed. In the period 1992 - 2005, the Danish real estate market was almost entirely carried by Danish investors and far more, smaller investors than today. During that period, access to foreign capital for real estate in the province was significantly easier, resulting in increased liquidity/marketability.

Limited access to provincial financing

Subsequent to the financial crisis, the Danish real estate market is characterised by large Danish and international investors. Their focus has primarily been

Copenhagen as the most liquid and secure market. During the same period, lendability in the province has been tightened as a result of the Basel Committee's new requirements, requiring credit institutions to hold more capital in reserve when making more risky lending (provincial properties) than when they lend to more secure projects (Copenhagen properties). It has therefore become more difficult for smaller investors and individuals to obtain loans for investment properties in the province. These two factors are the primary reason why Copenhagen has subscribed for such a large share of the transaction volume in the period 2012 - 2016.

Investors return to the largest cities

In 2017, when we saw a record high transaction volume in Denmark, the increase was due to the large investors targeting secondary markets with higher direct yields as an alternative to the large competition among investors for Copenhagen assets. But in 2018, when the financial markets experienced increased anxiety, investors withdrew to the safer markets in the largest cities.

Figure 7: Transaction volume for retail, office and residential 2012-2018 (illustrated as 12-month rolling average)

Source: C&W | RED

Figure 8: Total transaction volume for Denmark 1992-2018 - Copenhagen share highlighted

Source: C&W | RED

INVESTORER VIL KØBE - IKKE SÆLGE

INVESTORS WANT TO BUY - NOT SELL

RED INVESTOR SURVEY

Fortsat investeringsappetit – trods afdæmpede forventninger

RED har spurgt de største og mest aktive investorer på det danske marked om deres forventninger til 2019. 60% af de adspurgte investorer forventer i 2019 at øge deres portefølje – mens 34% forventer uændret porteføljestørrelse. Kun 6% af respondenterne forventer at reducere deres portefølje og der er således ikke udsigt til, at det i 2019 bliver nemmere at få opkøbt investeringsejendomme ( figur 9)

Af investorundersøgelsen fremgår det, at investorerne vurderer, at markedsforholdene for udlejning af kontor, bolig og retail er blevet sværere over de seneste 12 måneder. På trods af dette vurderer hele 95% af de adspurgte investorer, at værdien af deres

portefølje vil stige eller være uændret i de kommende seks måneder ( figur 10). Investorerne vurderer således markedsforholdene så gunstige, at de som minimum kan opretholde deres værdier.

Direkte adspurgt om hvilke markedsforhold, de forventer vil påvirke markedsværdien af deres portefølje de kommende seks måneder, svarer 54%, at de forventer en reduktion af deres tomgang og 44% forventer en stigning i markedslejen for deres ejendomme. Tilsvarende forventer kun 10% af respondenterne, at de vil opleve øget tomgang og alene 6% forventer fald i markedslejen.

Investorerne forventer uændrede finansieringsvilkår Hele 80% af investorerne forventer uændrede vilkår for finansiering af fast ejendom. 9% af investorerne

forventer bedre finansieringsvilkår til finansiering af nye ejendomme eller refinansiering af eksisterende ejendomme, mens de resterende 11% forventer skærpede finansieringsvilkår ( figur 11)

For at få et dybere indblik i investorernes forventninger til henholdsvis retail-, kontor- og boligmarkedet i 2019 henvises til afsnittene om de enkelte segmenter, hvor resultaterne af forventningsundersøgelsen fremgår af afsnittet "Forventninger til 2019".

What is your objective with regard to the size of your portfolio in terms of acquisition/disposal during the next 6 months?

Increase: more acquisition than disposal

Stable: as much disposal as acquisition

Decrease: more disposal than acquisition

Figure 10: Investor Confidence Index - Portfolio value

How do you see the value of your portfolio developing during the next 6 months (aside from any acquisition/disposal)

Improving

Unchanged

Worsening

Figure 9: Investor Confidence Index - Portfolio size

RED INVESTOR SURVEY

Continued investment appetite – in spite of dampened expectations

RED has asked the largest and most active investors in the Danish market about their expectations for 2019. 60% of the respondents expect to increase their portfolio in 2019 - while 34% expect unchanged portfolio sizes. Only 6% of the respondents expect to reduce their portfolio and there is thus no prospect that it will be easier to acquire investment properties in 2019 ( figure 9)

The investor survey shows that investors consider that market conditions for letting office, residential and retail have become more difficult over the past 12 months. In spite of this, as many as 95% of respondents estimate that the value of their portfolio

will increase or remain unchanged for the next six months ( figure 10). Respondents thus judge the market conditions favorable enough to at least maintain values.

When asked which market conditions they expect to affect the market value of their portfolio over the next six months, 54% respond that they expect a reduction in vacancy and 44% expect an increase in market rent for their properties. Similarly, only 10% of respondents expect that they will experience increased vacancy and only 6% expect a decline in market rent.

Investors expect unchanged financing conditions

As many as 80% of respondents expect unchanged terms for real estate financing. 9% of the respond-

ents expect improved financing conditions for new properties or refinancing existing properties, while the remaining 11% expect stricter financing conditions ( figure 11)

For a deeper insight into investor expectations for the 2019 retail, office and residential markets respectively, we refer to the sections on the individual segments, where the results of the survey are shown in the section "Expectations for 2019".

Figure 11: Investor Confidence Index - Financing conditions

The Cushman & Wakefield | RED Investor Confidence Index

The Index for Denmark includes responses from 63 of the most active investors in Denmark in the years 2017 and 2018. The index monitors expectations from highly active investors in the Danish market for the next six months.

The broad coverage reflects the interest for non-biased objective analyses and increased transparency. Furthermore, the coverage ensures that the findings are representative reflections of the current investor confidence in the Danish CRE market.

We conduct the survey on a biannual basis, allowing us to track changes and interpret what they mean for the market and how to best respond when making investment decisions.

KONTOR - INVESTERINGSMARKEDET 2018

OFFICE - INVESTMENT MARKET 2018

Stor interesse for kontorinvesteringer blandt danske investorer

Investeringsvolumen toppede i Danmark i 2016. Sidenhen har der været tale om en relativt flad udvikling. I 2018 udgjorde den danske transaktionsvolumen for kontorer ca. 18 mia. kr., svarende til et marginalt fald på 2% mod et fald på knapt 4% fra 2016 til 2017 ( figur 12)

Uagtet et samlet fald har de danske investorer øget deres investeringer i kontorejendomme siden 2012 og stod for ca. 65% af transaktionsvolumen i 2018, svarende til investeringer for 11,8 mia. kr. Det svenske ejendomsselskab Klövern står dog for nogle af årets største transaktioner på kontormarkedet med købet af Codanhus og NIAMs Nordic Core Plus portefølje bestående af kontorejendomme i Ørestad, Vanløse, Holte og Albertslund.

Stadigt flere ejendomsselskaber køber kontor

Vi har i 2018 oplevet en stigende andel af ejendomsselskaber på det danske kontormarked ( figur 13)

hvilket primært er båret af nye aktører, bl.a. BankInvest, der med købet af 10% af PFAs ejendomsportefølje stod for årets største kontorhandel på 1,5 mia. kr. Klöverns køb af Codanhus til 1,44 mia. kr. er dermed årets næststørste handel.

Udenlandske investorer søger tilbage mod København

Kontorejendomme i de centrale dele af København betragtes som prime investeringer, hvilket fremgår af en stigende transaktionsvolumen i København.

Mens danske investorers andel af volumen i Køben-

havn er faldet fra 70% i 2017 til 58% i 2018, er andelen af udenlandske investorers transaktioner i København steget fra 30% til 42% i perioden ( figur 14)

De udenlandske investorers aktivitet uden for København og Aarhus faldt 41% fra 2017 og 2018 og understreger den klassiske ”flight to quality”. Efter at investorerne i opgangstider søgte mod sekundære markeder i jagt på højere afkast søger de i det nuværende marked tilbage mod sikker havn i de største byer.

Danish investors drawn to office properties

Danish office investment volumes peaked in 2016. Since then, development has been relatively flat, although with a slight downward trend. In 2018, the Danish transaction volume for offices amounted to approx. DKK 18 bn, corresponding to a marginal decline of 2% against a decrease of almost 4% from 2016 to 2017 ( figure 12).

In spite of a total decline, Danish investors have increased their investments in office properties since 2012 and accounted for approx. 65% of transaction volume in 2018, corresponding to investments at a total value of DKK 11.8 bn. However, Swedish property company Klövern is responsible for some of the largest office transactions of the year with the acquisition of Codanhus and NIAM's Nordic Core Plus I office property portfolio in Ørestad, Vanløse, Holte and Albertslund – all in Greater Copenhagen.

Still more property companies buy offices

In 2018, we have seen an increasing share of real estate companies on the Danish office market ( figure 13), which may primarily be ascribed to new players such as BankInvest, which with the purchase

C&W | RED

of 10% of PFA's property portfolio accounted for the largest office transaction of the year at DKK 1.5 bn. Klövern's purchase of Codanhus at DKK 1.44 bn was the second largest transaction of the year.

Foreign investors targeting Copenhagen Office properties in the central parts of Copenhagen is perceived as prime investments, which is illustrated by an increased transaction volume in Copenhagen.

While the Danish investor share of volume in Copenhagen has dropped from 70% in 2017 to 58% in 2018, the foreign investor transaction share in Copenhagen

has increased from 30% to 42% during this period ( figure 14)

Foreign investor activity outside Copenhagen and Aarhus dropped 41% from 2017 and 2018 and underlines the classic flight to quality. While investors targeted secondary markets in search of higher returns during the economic recovery, they now, in the current market, return to safe haven in the largest cities.

Figure 13: Office - Investor type breakdown 2018

Source:

BN DKK

KONTOR - VOLUMEN & INVESTORER 2018

OFFICE - VOLUME & INVESTORS 2018

Source: C&W | RED 3.0

Investorerne søger igen mod de største byer

Mens 2017 bød på store investeringer uden for de største byer (København og Aarhus), var fokus i 2018 igen rettet mod København og Aarhus, hvor der er stor tiltro til lejemarkedet og forventninger om lejestigninger for de bedste beliggenheder og mest moderne ejendomme.

I Aarhus steg transaktionsvolumen med 35% fra 2017 til 2018, mens stigningen udgjorde 9% for København. Mens investeringsaktiviteten var stabil i det storkøbenhavnske område, faldt aktiviteten i resten af landet på trods af en generel positiv konjunkturudvikling på landsplan.

Prime markets n the cities continue to attract investors

While 2017 offered major investments outside the largest cities (Copenhagen and Aarhus), in 2018 focus was yet again in Copenhagen and Aarhus, where confidence in the rental market is solid along with expectations of rental increases for the best locations and most modern properties.

In Aarhus, the volume of transactions increased by 35% in 2018, while the increase was 9% for Copenhagen. While investment activity was stable in the Greater Copenhagen area, activity in the rest of the country declined despite general positive development on a national level.

Source: C&W | RED

KONTOR - TOP 5 TRANSAKTIONER 2018

OFFICE - TOP 5 TRANSACTIONS 2018

10% of PFA's portfolio

PFA's investeringer i danske erhvervsejendomme nåede i 2018 et niveau, hvor der var behov for en rebalancering. I den forbindelse solgte PFA i maj 2018 10% af deres portefølje til BankInvests nyligt børsnoterede BI Erhvervsejendomme. Der er tale om en cross-borderportefølje bestående af kontor- og retailejendomme.

In 2018, the Danish pension fund PFA's investments in Danish commercial real estate reached a level that prompted a need for diversification. In this connection, PFA sold 10% of their portfolio to BankInvest's newly listed BI Erhvervsejendomme in May 2018. This is a cross-border portfolio consisting of office- and retail properties.

Investor: BankInvest

Vendor: PFA Ejendomme

Codanhus, Copenhagen

In February 2018, the Swedish property company Klövern AB bought Codanhus from DADES at a price of DKK 1.44 bn. When it was built in 1961, the 21-floor Codanhus in Frederiksberg was Denmark's tallest office building. The property has a total area of approx. 41,000 sqm, of which approx. 10,000 sqm is parking. In 2008, former owner DADES took over the property from Danish insurance company Codan, which named the property Codanhus.

Price DKK: 1,440,000,000 Price DKK: 1,500,000,000

Investor: Klövern

Vendor: DADES

Photo: Lokalebasen

Coop Portfolio - Sønderhøj

1,300,000,000

Novo Nordisk office

Investor: DADES

Vendor: Coop Invest

1,200,000,000 Price

South Korean AIP Asset Management bought one of Novo Nordisk's offices in Søborg shortly before Christmas 2018. The investment is AIP's first in Denmark and in the Nordic region. The property is fully let to Novo Nordisk. The sellers are the Danish institutional investors Velliv, Tryg, PBU and AP Pension. The first of the three properties was built in 2006, and subsequently the property was further developed with two adjoining buildings in 2009 and 2015, respectively.

Investor: AIP Asset Management

Vendor: Tryg, Velliv, PBU & AP Pension

Tietgens Have, Copenhagen

In June 2018, property investment company DADES entered into an agreement with Coop to take over the property complex Sønderhøj and Mega Syd in southern Aarhus. The investment comprises a total floor area of more than 81,000 sqm, which contains both office properties and educational campuses, as well as the possibility of developing new residential and office space. The area also includes approx. 10,000 sqm of parking areas under construction. Price

975,000,000 Price

The distinctive property complex Tietgens Have located directly opposite Nordhavn Station, changed hands in early autumn when PenSam bought it from NIAM. The property is mainly let to public tenants, including SKAT (Danish tax authorities), DIIS (Danish Institute for International Studies) and the City of Copenhagen. For PenSam, this is a strategic investment in an office property, which both now and in the future is expected to benefit from the central location in Copenhagen and the continued expansion of the Nordhavn district.

Investor: PenSam

Vendor: NIAM

Photo: Google Earth

Photo: Henning Larsen Architects

Photo: Berlingske

KONTOR - LEJEMARKEDET

OFFICE - OCCUPIER MARKET

Mindre kontorer og kortere bindingsperioder

Den primære driver for efterspørgslen på kontorlokaler er udviklingen i beskæftigelsen inden for de traditionelle kontor- og serviceerhverv. De senere års meget positive udvikling i konjunkturerne har resulteret i en stigende beskæftigelse, der nu manifesterer sig i en stærk efterspørgsel på kontorlokaler. Den stærke efterspørgsel kan aflæses direkte i tomgangstallene, der ifølge Ejendomstorvet primo 2019 udgør 5,8% for København og 7,5% for Storkøbenhavn, hvilket begge er historisk lave.

Den stigende beskæftigelse ses både hos de etablerede virksomheder, men også blandt det store antal nystartede virksomheder som, ifølge opgørelser fra Danmarks Statistik, er observeret siden 2011. Mange af disse nystartede virksomheder har oplevet høje vækstrater og dermed stigende antal medarbejdere, men er samtidig også bevidste om behovet for fleksible løsninger i forhold til deres arealforbrug. Dette ses tydeligt i markedet, hvor der efterspørges fleksibilitet i lejemålsstørrelsen og korte uopsigeligheder. Behovet for fleksibilitet og korte

uopsigeligheder fra de små og mellemstore virksomheder har resulteret i en stigende efterspørgsel på skalerbare lejemål i flerbrugerejendomme og deciderede kontorfællesskaber.

Høj efterspørgsel i City Stigende beskæftigelse og høj økonomisk vækst medfører, at virksomhederne på et strategisk plan forsøger at optimere deres mulighed for at tiltrække og fastholde talentfulde medarbejdere gennem valget af beliggenhed og kvaliteten af de fysiske rammer for arbejdspladsen.

De ændrede bosætningsmønstre de seneste årtier har medført at mange unge og nyetablerede børnefamilier vælger at bosætte sig i København og de nære omegnskommuner, hvor der er kort afstand til det store udbud af bylivsfunktioner og med lavt tidsforbrug på pendling.

Den primære efterspørgsel på kontorlokaler er, i tråd med denne udvikling, centreret omkring CBD og brokvartererne, men også områder som

Smaller offices and shorter lease contracts

The primary driver for office space demand is the level of employment in the traditional office and service industries. Recent years' very positive business and economic development has resulted in increased levels of employment, which is now manifesting itself in strong demand for office space. The strong demand can be seen directly in the vacancy figures, which at the beginning of 2019 amounted to 5.8% for Copenhagen and 7.5% for Greater Copenhagen, according to Danish property portal Ejendomstorvet.

Increasing employment is seen both among established companies, but also among the large number of start-ups which, according to Statistics Denmark, has been observed since 2011. Many of these startup companies have experienced high growth rates and thus an increasing number of employees, but are also aware of the need for flexible office solutions. This is clearly seen in the market, where size flexibility and short non-termination is in demand. The need for flexibility and short non-termination

from small and medium-sized businesses has resulted in an increasing demand for scalable leases in multi-user properties and co-working spaces.

High occupier demand in Copenhagen City

Increasing employment rates and high economic growth force companies to focus on optimising their recruitment capacity, including the ability to retain talented staff through the choice of location and quality of the physical environment for the workplace.

Altered settlement patterns over the past few decades have led to many young and newly established families with children settling in Copenhagen and the neighboring municipalities, with proximity to the wide range of city life functions and with a minimum commute.

Primary demand for office space is, in line with this development, centred around CBD and inner Copenhagen, but also areas such as Carlsberg Byen, Christianshavn, Nordhavn, Ørestad and Valby are in

Carlsberg Byen, Christianshavn, Nordhavn, Ørestad og Valby efterspørges. Som et af de få områder uden for København oplever Kgs. Lyngby ligeledes stærk efterspørgsel som følge af god infrastrukturel tilgængelighed og udbud af moderne ejendomme.

Stigende lejeniveau

Den stigende efterspørgsel på centralt beliggende kontorlokaler har, som nævnt, resulteret i faldende tomgang, og, sammen med et begrænset omfang af spekulativt nybyggeri, har det resulteret i stigende lejeniveauer både på primære og sekundære ejendomme. Markedslejen for prime kontorer er steget med ca. 10% siden ultimo 2015 og ligger nu på ca. 1.700 – 1.900 kr./m² ekskl. driftsomkostninger. For sekundære kontorer ligger markedslejen i niveauet 1.100 - 1.500 kr./m² ekskl. driftsomkostninger. Oven i de stigende markedslejeniveauer har der ligeledes været stigninger i de samlede driftsomkostninger, herunder ejendomsskatterne, hvilket har medført, at den samlede lejebetaling, set fra lejers side, er steget væsentligt.

demand. As one of a few areas outside Copenhagen, Kgs. Lyngby also has strong occupier demand as a result of good infrastructure accessibility and supply of modern properties.

Increasing rent levels

Increasing demand for centrally located office space has, as mentioned, resulted in declining vacancy rates coupled with a limited amount of speculative construction, resulted in rising rental levels on both primary and secondary properties. Market rent for prime offices has increased by approx. 10% since end-2015 and is now at approx. DKK 1,700 - DKK 1,900 per sq m excl. operating costs. For secondary offices, market rent is in the region of DKK 1,100 - DKK 1,500 per sqm excluding operating costs. In addition to increasing market rent levels, we have also seen increases in total operating costs, including property taxes, which means that total rent payment, from the tenant, has increased significantly.

KONTOR - HIGHLIGHTS

OFFICE - HIGHLIGHTS

Laveste risikopræmie i otte år

Gennem de seneste par år er der observeret faldende afkastkrav på prime-kontorejendomme i København samt stor interesse fra både danske og internationale investorer. På trods af, at udviklingen i afkastet for prime-kontorejendomme i København var relativt jævn i perioden 2010-2015 og derefter faldende ( figur 15), dækker afkastet over en relativt stor variation i risikopræmien ved investering i kontorsegmentet.

Ved at sammenholde forskellen mellem den ”risikofri rente” og ”prime-afkast tillagt inflation” kan udviklingen i risikopræmien belyses. Prime-afkastet tillægges inflation, idet ejendomsinvestering, som følger den løbende inflatoriske regulering af lejen, betragtes som inflationssikret investering, modsat eksempelvis obligationer og aktier.

Som det fremgår af figuren ( figur 16), er der store udsving i risiko-præmien, hvilket i de fleste tilfælde kan forklares ved anormale markedsforhold.

Lowest

risk premium in eight years

Over the past few years, decreasing yield requirements have been observed for prime office properties in Copenhagen, with great interest from both Danish and international investors. Despite the fact that the development in prime Copenhagen office yields was relatively even during 2010-2015 and then declining ( figure 15), the yield covers a relatively large variation in the risk premium when investing in the office segment.

The development in the risk premium is highlighted by comparing the difference between the "risk-free interest rate" and " prime-yield plus inflation". Prime yield is added to inflation, as property investment which follows the ongoing inflationary regulation of the rent, is regarded as inflation-proof investment, as opposed to, for example, bonds and shares.

I de tidlige 1980’ere fungerede ejendomsinvestering som investorernes sikring mod høje inflationsrater, hvilket betød, at der var negative risikopræmier på prime-kontor i denne periode. I nyere tid er der ligeledes eksempler på en lav risikopræmie, særligt i årene 2006 og 2007, hvilket var et resultat af den (over) optimisme, som på det tidspunkt dominerede de fleste aktivmarkeder, herunder ejendomsmarkedet. Denne optimisme, kombineret med rigelig og billig adgang til finansiering, affødte en - i nyere tid - historisk lav risikopræmie.

I perioden 2011 til 2015 var afkastet på prime-kontorejendomme flad, mens risikopræmien steg markant, hvilket var udtryk for en periode med faldende renter. Dermed opnåede ejendomsinvestorerne et væsentligt højere afkast på ejendomme i forhold til den risikofrie rente. De ejendomsinvestorer, som benyttede sig af fremmedkapital finansiering, opnåede et væsentligt højere direkte afkast på den investerede egenkapital.

As can be seen from the figure ( figure 16), there are historically large fluctuations in the risk premium, which in most cases can be explained by abnormal market conditions.

In the early 1980s, real estate investment functioned as hedges against high inflation rates for the investors, which meant that prime office experienced negative risk premiums during this period. In recent times, there are also examples of a low risk premium, particularly in the years 2006 and 2007, which was a result of the (over) optimism that dominated most asset markets at the time, including the real estate market. This optimism, coupled with ample and cheap access to finance, prompted a - in recent times - historically low risk premium.

In the period 2011 to 2015, prime office yields were flat, while the risk premium increased markedly which signified a period of declining interest rates.

Faldende afkast og risikopræmie

Siden 2015, hvor risikopræmien for prime-kontorejendomme toppede, er præmien nu faldet til det laveste niveau i otte år. Denne udvikling kan tilskrives kombinationen af faldende afkastkrav på ejendommene koblet med faldende inflation i en periode med en stabil risikofri rente.

Vi forventer ikke, at investorerne er villige til at acceptere en lavere risikopræmie på kontorejendomme – uagtet stor efterspørgsel - idet renten i øjeblikket må forventes at være på et lavpunkt og et øget rente vil medføre et opadgående pres på afkastkravet.

Thus, real estate investors achieved a significantly higher return on properties in relation to the risk-free interest rate. The real estate investors who made use of foreign capital financing achieved a substantially higher direct yield on invested equity.

Decreasing yields and risk premium

Since 2015, when the prime office risk premium peaked, the premium has now dropped to its lowest level in eight years. This development can be attributed to the combination of decreasing yield requirements on the properties coupled with decreasing inflation in a period with a stable risk-free interest rate.

We do no expect investors to accept a lower risk premium for office properties - in spite of high demand - seing that the current nterest rate is at a low and ncreased interes rates will lead to upward pressure on the yield demand.

Figure 15: Office - Prime yield Copenhagen 2000-2018

Figure 16: Office - Prime risk premium 1980 - 2018

KONTOR - FORVENTNINGER TIL 2019

OFFICE - EXPECTATIONS FOR 2019

New ways of woking I en tid med hastig teknologisk udvikling og ”new ways of working” sker der en kontinuerlig udvikling og redefinering af de fysiske rammer for arbejdspladsen og mulighederne for at arbejde hvor som helst og når som helst. Resultatet er en forventning om markante ændringer i det fysiske kontormiljø og virksomhederne genovervejer deres ejendomsstrategier.

Virksomhedernes udfordringer med at tiltrække og fastholde kvalificeret arbejdskraft kræver en flersidet strategi og ventes bl.a. at blive løst gennem den såkaldte "gig-økonomi", som kendetegnes ved høj grad af freelancearbejde, hvor arbejdstageren er uafhængig og sælger sin arbejdskraft fra opgave til opgave frem for at blive fastansat.

Samtidig søger virksomhederne løbende at reducere sine omkostninger gennem en reduktion af det gennemsnitlige arealforbrug pr. medarbejder. Den traditionelle kontorarbejdsplads står derfor over for store forandringer i bestæbelserne på at opnå besparelser og samtidig imødekomme de yngste generationer. De vigtigste trends, som vil påvirke fremtidens kontor, er:

† Projektorienterede arbejdsformer

† Fleksibilitet

† Fællesskab, co-working og videndeling

† Gig-økonomien og kortere ansættelsesforhold

Stigende efterspørgsel – også på utidssvarende kontorer

På baggrund af den stigende beskæftigelse, herunder en forbedret iværksætterkultur, forventes der en stigende efterspørgsel på kontorlokaler - også blandt de mindre og ældre ejendomme, der ikke nødvendigvis kan tilbyde samme arealeffektivitet og udbud af fælles faciliteter.

I forhold til eksempelvis Stockholm og Oslo, har København den fordel, at der er mulighed for at imødekomme et stigende behov for både bolig og erhvervsarealer i nær tilknytning til CBD i de kommende årtier. Det betyder, at en stigende efterspørgsel ikke automatisk resulterer i stigende lejeniveauer, men i højere grad en stabil lejeudvikling.

RED INVESTOR SURVEY

Investorerne forventer stabil efterspørgsel RED foretager to gange årligt en forventningsundersøgelse blandt de største og mest aktive investorer i Danmark. Over det seneste år er deres forventninger til kontorefterspørgslen blevet en smule mindre optimistisk. I 1. kvartal 2019 forventede 52% af investorerne stigende efterspørgsel mod hele 80% i 1. kvartal 2018. Næsten halvdelen (46%) af investorerne forventer i dag en flad udvikling i efterspørgslen på kontorlokaler ( figur 17)

With regard to the occupier market for office space during the next 6 months, the demand on the occupier market will:

Uændrede afkast for kontor

Størstedelen af investorerne (73%) forventer i 1. kvartal 2019 uændrede afkast i 2019 mens de resterende investorer er ligeligt delt mellem forventningen om respektive stingende og faldende afkast ( figur 18)

FORVENTNINGER TIL 2019

God efterspørgsel, stabile lejeniveauer og uændret afkast

Vi oplever i øjeblikket en meget høj efterspørgsel efter kontorer i størstedelen af København med lav tomgang til følge. Vi forventer, at efterspørgslen efter de velbeliggende kontorer vil fortsætte i 2019, mens der vil være et overudbud af kontorer i områderne langs ring 3. Vi forventer svagt stigende lejeniveauer i København og uændret niveauer i de øvrige områder.

Vi forventer uændrede afkast på kontorejendomme i 2019. Vi forventer ikke, at investorerne er villige til at acceptere en lavere risikopræmie på kontorejendomme – uagtet stor efterspørgsel - idet renten i øjeblikket må forventes at være på et lavpunkt og et øget rente vil medføre et opadgående pres på afkastkravet.

With regard to the development of yields for office properties during the next 6 months, market yields will:

Figure 18: Investor Confidence Index - Office yields

Figure 17: Investor Confidence Index - Office occupier demand

New ways of working

In a time of rapid technological development and new ways of working, there is continuous development and redefining of the physical framework for the workplace and the possibilities of working anywhere and anytime. The result is an expectation of significant changes in the physical office environment and companies are reconsidering their property strategies.

The corporate challenges in attracting qualified labour requires a multilateral strategy and is expected, among other things, to be solved through the so-called "gig economy", which is characterized by a high degree of freelance work, where the employee is independent and sells his/her labour from task to task rather than being permanently employed.

At the same time, companies are constantly seeking to reduce their property-related costs by focusing on efficiency through a reduction of the average square metre per workstation. Therefore, the traditional office workplace faces major changes and future offices are expected to be much more efficient to accommodate younger and future generations.

The most important trends that will affect future office space are:

† Project-oriented working methods

† Flexibility

† Community, co-working and knowledge sharing

† Gig economy and shorter employment

Increasing occupier demand –also for outdated offices

Due to rising employment, including an improved entrepreneurial culture, increasing demand for office space is expected - also among the smaller and older properties, which may not necessarily offer the same space efficiency and supply of common facilities.

In relation to e.g. Stockholm and Oslo, Copenhagen has the advantage that it is possible to meet an increasing need for both residential and commercial areas in close proximity to the CBD area in the coming decades. This means that increasing demand does not automatically result in rising rent levels, but to a greater extent a stable rental development.

RED INVESTOR SURVEY

Investors expect table occupier demand

Twice a year, RED conducts a survey of expectations among the largest and most active investors in Denmark. Over the past year, their expectations of office demand have become slightly less optimistic, albeit to a lesser extent. In Q1 2019, 52% of nvestors expected rising demand against a total of 80% in Q1 2018. Almost half (46%) of nvestors today expect development in demand for office space to be flat ( figure 17)

Unchanged office yields

The majority of respondents (73%) expect unchanged yields in Q1 2019. The share has increased from 65% in Q1 2018. While 28% in Q1 2018 expected

The Cushman & Wakefield | RED Investor Confidence index

decreasing returns, this share has dropped to 13% in Q1 2019 ( figure 18)

EXPECTATIONS FOR 2019

Solid demand, table rents and unchanged yields

We are currently experiencing very high demand for office in the majority of Copenhagen, resulting in low vacancy rates. We expect demand of the well-located offices to continue in 2019, while there will be a surplus of offices in the areas around ring 3. We expect vaguely increasing rents in Copenhagen and unchanged levels in the remaining areas.

We expect unchanged yields for office properties in 2019. We do not expect investors to accept a lower risk premium for office properties - in spite of high demand - seeing that the current interest rate is at a low and increased interest rates will lead to upwardpressure on the yield demand.

The Index for Denmark includes responses from 63 of the most active investors in Denmark in the years 2018 and 2019. The index monitors expectations from highly active investors in the Danish market for the next six months.

The broad coverage reflects the interest for non-biased objective analyses and increased transparency. Furthermore, the coverage ensures that the findings are representative reflections of the current investor confidence in the Danish CRE market.

We conduct the survey on a biannual basis, allowing us to track changes and interpret what they mean for the market and how to best respond when making investment decisions.

KONTOR - TRANSAKTIONER OG NØGLETAL

1

2

3

4

5

6

7

Office - prime rent and yield levels Q1 2019

RETAIL - INVESTERINGSMARKEDET 2018

RETAIL - INVESTMENT MARKET 2018

Transaktionsvolumen faldt 14%

I Danmark toppede investeringsvolumen i retailsegmentet i 2017. Den meget høje transaktionsvolumen i 2017 var præget af Danicas salg af 50% af sin centerportefølje til ATP til samlet 6,9 mia. kr. Fratrukket denne store handel lå transaktionsvolumen i 2017 dog fortsat over 10 mia. kr. I 2018 oplevede retailsegmentet på landsplan en transaktionsvolumen på ca. 8,6 mia. kr., svarende til en nedgang på ca. 14% i forhold til 2017, såfremt vi ekskluderer Danica/ ATP-handlen ( figur 19)

Danske investorer køber op – mens de udenlandske investorer har sænket tempoet Især den udenlandske kapital havde mindre appetit på retail i 2018, idet deres investeringsvolumen faldt fra 7,7 mia. kr. i 2017 til 3,5 mia. kr. i 2018. Danske investorer øgede derimod deres volumen i retailsegmentet fra 2,4 mia. kr. i 2017 (ekskl. Danica/ATP) til 5,1 mia. kr. i 2018. Ser vi på de udenlandske inve-

storers aktivitet i 2018, er investeringerne uden for Storkøbenhavn faldet markant fra 5,1 mia. kr. i 2017 til lige under 1 mia. kr. i 2018 ( figur 20)

Ejendomsfonde fortsat de mest aktive inden for retail

Overordnet set er investeringerne i retailmarkedet fortsat præget af ejendomsfonde, som tegner sig for 42% af den samlede volumen, efterfulgt af de institutionelle investorer med 23% ( figur 21). De

institutionelle investorer har investeret sparsomt i retailsegmentet i de seneste mange år (med undtagelse af ATP/Danica i 2017), men med Danske Shoppingcentres køb af herningCentret er de igen synlige på retailmarkedet. Ejendomsselskaber, som Dades og Pears, stod for 19% af volumen, hvilket er den højeste andel for ejendomsselskaber i de seneste fem år.

Figure 20: Retail - Investor type breakdown 2018

Transaction volume droped by 14%

In Denmark, retail investment volumes peaked in 2017. The high Danish transaction volume in 2017 was characterized by Danica's sale of 50% of its shopping centre portfolio to ATP at a total DKK 6.9 bn. However, deducting this large single deal, the transaction volume in 2017 remained above DKK 10 bn. In 2018, the national retail segment experienced a transaction volume of approx. DKK 8.6 bn, corresponding to a decrease of approx. 14% compared to 2017, if we exclude the Danica/ATP deal ( figure 19)

Danish investors are buying – while foreign investors have slowed down Foreign capital in particular demonstrated less appetite for retail in 2018, as their investment volume

Source: C&W | RED

dropped from DKK 7.7 bn in 2017 to DKK 3.5 bn in 2018. In contrast, Danish investors increased their volume in the retail segment from DKK 2.4 bn in 2017 (excluding Danica/ATP) to DKK 5.1 bn in 2018. If we look at the activity of foreign investors in 2018, investments outside the Greater Copenhagen area dropped significantly from DKK 5.1 bn in 2017 to just below DKK 1 bn in 2018 ( figure 20)

Property funds remain the most active in retail Overall, investments in the retail market are still char-

acterized by property funds, accounting for 42% of the total volume, followed by institutional investors at 23% ( figure 21). Institutional investors have invested sparingly in the retail segment over the past many years (with the exception of ATP/Danica in 2017). However, with Danske Shoppingcentre's purchase of the herningCenter, they are visible on the retail market again. Real estate companies, such as DADES and Pears, accounted for 19% of total retail volume, which is the highest share for real estate companies over the past five years..

RETAIL - VOLUMEN & INVESTORER 2018

Source: C&W | RED

København dominerer retailinvesteringerne

Med 39% af den samlede volumen, er Københavns Kommune det geografiske område med højest aktivitet, mens Fyn og den øvrige del af Jylland (ekskl. Aarhus) står for imponerende 32% af volumen (knap 2,7 mia. kr.). Denne meget store andel skal dog ses i lyset af Danske Shoppingcentres køb af herningCentret til over 1 mia. kr.

Copenhagen dominates retail investment

With 39% of total retail volume, Copenhagen Municipality is the geographical area with the highest activity, while Funen and the rest of Jutland (excluding Aarhus) accounts for an impressive 32% of the investment volume (almost DKK 2.7 bn). However, this substantial proportion must be seen in the light of Danske Shoppingcentre's purchase of the herningCenter for more than DKK 1 bn.

Source: C&W | RED

RETAIL - TOP 5 TRANSAKTIONER 2018

RETAIL - TOP 5 TRANSACTIONS 2018

herningCentret

Årets største retail transaktion er Danske Shoppingcentres køb af herningCentret i sommeren 2018. Med 80 millioner besøgende gennem tiden, er herningCentret et af midtjyllands dominerende shoppincentre og er af flere omgange, senest i 2017, kåret som årets shoppingcenter med Danmarks bedste aktiviteter. Den nye ejer overtog centret den 1. oktober efter godkendelse fra konkurrencemyndighederne. Danske Shoppingcentre ejes af ATP Ejendomme og Danica Ejendomme, som med herningCentret nu ejer 17 shoppingcentre i Danmark og dermed cementerede deres position som Danmarks største shopping centerejer.

The largest retail transaction of the year is Danske Shoppingcentre's (Danish Shopping Centres’) purchase of the herningCenter in the summer of 2018. With 80 million visitors over the years, the herningCenter is one of Central Jutland's dominant shopping centres and has been voted shopping centre of the year several times, most recently in 2017, with Denmark's best activities. The new owner took over the centre on October 1 after competition authority approval. Danske Shoppingcentre is owned by pension funds ATP Ejendomme and Danica Ejendomme. With the acquisition of the herningCenter, Danske Shoppingcentre now owns 17 shopping centres in Denmark. Thus, rendering the real estate company the largest shopping centre owner in Denmark.

Investor: Danske Shoppingcentre

Vendor: Private Investors

Coop Portfolio - Mega Syd

In June 2018, the private property investment company DADES bought the large area Sønderhøj and Mega Syd near Aarhus. The investment comprises a total property area of over 120,000 sqm, includes both offices, educational campuses and 36,698 sqm retail, as well as the possibility of developing residential and office space. The area also includes approximately 10,000 square metres of parking areas in construction.

Investor: DADES

Vendor: Coop Invest

Photo:Coop

Freja Portfolio

The international investor Hines, has acquired Købmagergade 44-46 and 50 in Copenhagen City from property company Freja Ejendomme, that sells former government buildings. With the acquisition of the properties, previously home of the University of Copenhagen, the ambition is to restore the properties and establish high-quality retail, hotel and residential accommodation.

Price DKK: 845,000,000

Investor: Hines

Vendor: Freja Ejendomme

Købmagergade 45-47, Copenhagen

The property on the corner of Købmagergade and Skindergade in Copenhagen City was sold in February 2018 to German investor Aachener Grundvermögen, who since 1973 has acquired centrally located properties in major cities of Germany, Austria, Switzerland and the Netherlands. It is a newly refurbished combined retail and residential property, fully developed and let to e.g. Calvin Klein, size? and H & M’s Weekday.

Price DKK: 565,000,000

Sq m: 6,250 Sq m: 20,200

10% of PFA's property portfolio

Investor: Aachener Grundvermögen

Vendor: Aberdeen Standard Investments

Pension fund PFA's investments in Danish commercial real estate in recent years reached a level in 2018, which made PFA rebalance their investments. In this connection, in May 2018, PFA sold 10% of their portfolio to BankInvest's newly listed BI Erhvervsejendomme. This is a cross-border portfolio consisting of office and retail properties.

Price DKK: 500,000,000

Investor: BankInvest

Vendor: PFA Ejendomme

RETAIL - LEJEMARKEDET

RETAIL - OCCUPIER MARKET

Fortsat god lejerinteresse på prime beliggenheder

I Danmark er prime retail koncentreret omkring strøgområderne ved Amagertorv, Østergade og Købmagergade i København.

Golden Goose Deluxe Brand og Jimmy Choo har begge i 2018 sikret sig en placering på Købmagergade tæt på Amagertorv i hjertet af København. Derudover har velkendte mærker, som Daniel Wellington, Axel Arigato og Paustian, placeret flagskibsforretninger i sidegaderne omkring Købmagergade. Efter mange års søgning efter det perfekte sted har det japanske tøjmærke Uniqlo endelig etableret sin flagskibsbutik i Louises Hus på Vimmelskaftet 38 og forventer at åbne i foråret 2019.

Varierende tomgang på Københavns strøggader

Generelt ser vi store variationer i lejeefterspørgsel omkring Strøget. Nogle dele af Strøget oplever stigende tomgang, mens andre oplever stærk lejeefterspørgsel og lav tomgang.

Tomgangsprocenten er et udtryk for den observerede tomgang i strøgejendommenes stueetage, hvilke normalvis betragtes som absolutte butiksarealer. Tomgangsprocenten tager således ikke højde for, at eksempelvis Georg Jensens butik på Amagertorv 4 omfatter både ejendommens stueetage samt 1. sal. På Amagertorv har vi således på udgivelsestidspunktet observeret samlet 690 m² ledigt i stuen, hvilket i forhold til en samlet arealmasse på 10.611 m² udgør en tomgangsprocent på 6,5%.

Den lave udlejningsaktivitet fra Gammeltorv til Rådhuspladsen fortsætter, og tomgangen for dette område er steget siden 1. kvartal 2016. Det er endnu ikke kendt, hvilken form for indflydelse åbningen af den nye Metro Cityring i 2019 vil have på området. I 2018 så vi en stigning i lejeniveauet, der især er koncentreret omkring de primære dele af Strøget. Endvidere har Købmagergade oplevet en højere stigning i forhold til Strøget i løbet af de seneste år.

Still solid occupier demand for prime locations

In Denmark, prime retail is centred in the high streets around Amagertorv, Østergade and Købmagergade in Copenhagen.

Golden Goose Deluxe Brand and Jimmy Choo have both secured a location on Købmagergade close to Amagertorv and have therefore become part of the highly luxurious high street pitch. Moreover, wellknown brands such as Daniel Wellington, Axel Arigato, and Paustian are locating flagship stores in the streets surrounding Købmagergade. After years of searching for the perfect location, Japanese clothing brand Uniqlo has finally found the ideal location for their new flagship store in Denmark in Louises Hus on Vimmelskaftet 38 and are expected to open in spring 2019.

Varied vacancy levels for Copenhagen high streets

In general, we see large variations in occupier demand for Copenhagen high streets. Some parts of Strøget are experiencing rising vacancy while others experience strong occupier demand and low vacancy levels.

The vacancy rate is an expression of observed vacancy in the ground floor of the buildings, which are normally regarded as pure store areas. The vacancy rate does not take into account, for instance, that Georg Jensen's store on Amagertorv 4 comprises both the property's ground floor and the 1st floor. At Amagertorv, at the time of publication, we have observed a total 690 sqm vacancy in he ground floor, which, with a total area of 10,611 sqm, constitutes a vacancy rate of 6.5%.

The low leasing activity from Gammeltorv to City Hall Square continues as vacancy in this area has been rising since Q1 2016. It is yet uncertain what impact the opening of the new Metro City line in 2019 will have on the area. In 2018, we saw an increase in the rent level, which is mainly concentrated around the primary parts of Strøget. In addition to this, Købmagergade has seen a higher increase compared to Strøget in recent years.

Retail - Prime rent and vacancy Q1 2019

11,000 N/A

Berlingske block 9,000 N/A

Grønnegade 8,000 N/A

Østerbrogade 5,000 N/A

Gammel Kongevej 4,000 N/A

Nørrebrogade 4,000 N/A

Lyngby 8,500 N/A

Source: C&W | RED

Methodology

Zone A - Prime rent is estimated on the basis of ITZA guidelines and in this case indicates the value of the most expensive area in the model. However, properties in Denmark are rarely comparable 1:1, hence the depth of zone A (the area subject to generate the prime rent) may vary, but the value is typically determined to be between 6 m (20 ft) and 9 m (30 ft).

The vacancy rate is given by an observed amount of vacant square metres in the ground floor of high street properties relative to the total amount of square metres in the ground floor of properties in the respective street. Hence, retail areas on any other levels are not included in this assessment.

RETAIL - STRØGTÆLLING

RETAIL - HIGH STREET FOOTFALL

FREDERIKSBERGGADE

3

4

KULTORVET

5

KØBMAGERGADE/LØVSTRÆDE RUNDETÅRN

FREDERIKSBORGGADE/KØBMAGERGADE NYGADE

PILESTRÆDE/KRONPRINSENSGADE

10

9

KØBMAGERGADE/KRONPRINSENSGADE

8

KØBMAGERGADE/SILKEGADE

6

AMAGERTORV

VIMMELSKAFTET/AMAGER TORV

7

2019 opening

1

Kronprinsensgade-effekten

På trods af stigende konkurrence fra online-salg samt fortsat omfattende anlægsbyggeri i indre by, som forstyrrer trafikken, oplevede Københavns strøggader et fortsat stærkt footfall i 2018.

Alle områder omkring Amagertorv og Købmagergade oplevede i 2018 et footfall på ca. 5.000 forbipasserende pr. time, hvilket er med til at gøre

The effect of Kronprinsensgade

Despite growing competition from online sales and ongoing extensive construction in central Copenhagen disrupting traffic, Copenhagen’s high streets experienced a continued strong footfall in 2018.

In 2018, all areas surrounding Amagertorv and Købmagergade experienced a footfall of approx. 5,000 passengers per hour, which has a significant effect

disse gader til nogle af de mest interessante retail-lokationer i Danmark. En overraskende tendens er dog det meget stærke footfall, der ses på hjørnet af Købmagergade og Kronprinsensgade (tællepunkt 8) med hele 6.200 forbipasserende i gennemsnit pr. time, hvilket er mere end 20% højere end de nærliggende tællepunkter på Købmagergade (tællepunkt 6 og 9). Årsagen til dette skal findes i den trafik, som skabes via Kronprinsensgade og Pilestræde (tællepunkt 10), der med knap 3.200 forbipasserende i timen har et - for en sidegade - meget høj flow. Dette vidner dels om attraktiviteten af Købmagergade omkring den nyudviklede ”Postgården” mv., men vidner ligeledes om attraktiviteten af sidegaderne i området, særligt båret af Kronprinsensgade, men også af Berlingske-Karréen, Galleri K mv., som i de senere år har skabt et stærkt alternativ til high street retail-beliggenhederne.

in rendering these streets some of the most interesting retail locations in Denmark. One surprising trend, however, is the strong footfall on the corner of Købmagergade and Kronprisensgade (count 8) with an average 6,200 passing by per hour, which is more than 20% higher than the nearby counts on Købmagergade (count 6 and 9). This is based on the high traffic in Kronprinsensgade and Pilestræde (count 10), which with just below 3,200 passing by

per hour has a distinctly high flow for a side street.

This demonstrates the attractiveness of Købmagergade around the newly developed “Postgården” etc., but also shows the attractiveness of the side streets in the area, particularly by Kronprinsensgade, but also by the Berlingske block, Galleri K etc., which in recent years have become strong alternatives to high street retail locations.

ØSTERGADE 2

Methodology

RED carries out the counts on Fridays at 4 pm with the purpose of registering a development and conclude a level of footfall at different locations on Strøget and Købmagergade. The footfall is counted manually from both directions.

Source: C&W | RED

RETAIL - HIGHLIGHTS

RETAIL - HIGHLIGHTS

Forbrugeren er online

Vi lever i en stadigt mere digitaliseret verden, hvor en stor del af vores færden er virtuel. Hvert minut afsendes eksempelvis 187 millioner e-mails og 1,1 millioner mennesker får enten et højre- eller venstre-swipe på Tinder.

Denne aktivitet og digitale virkelighed påvirker den traditionelle detailhandel, som udfordres af vores færden i den virtuelle verden. Det mest oplagte eksempel er de 266.000 timers Netflix, som verdens befolkning ser hvert minut! Denne udvikling udfordrer traditionelt flow-TV og har for flere år siden udkonkurreret Blockbuster og salget af DVD´er.

Danskerne købte stort ind på nettet i 2018 I 2018 beløb det samlede forbrug for dansk e-handel, ifølge betalingssystemet DIBS, sig til hele 133,5 mia. kr.

Danskernes køb af rejser udgør hele 50% af det samlede e-handelsforbrug i 2018, mens varer og tjenester udgør henholdsvis 35% og 15%. Danskerne shopper fysiske varer i stor stil online, hvor særligt beklædning, elektronik samt varer inden for krop og helse ligger højt på listen. Også tjenester som TVog musikstreaming er populære, såvel som abonnementsbaserede ydelser. Blandt andet abonnerede 37% af danskerne på transport, herunder metro og tog, i 2018, mens 13% købte dagligvarer.

Traditionel tankegang truet Retailmarkedet har altid været drevet af, hvor mange fodgængere, der passerer en given beliggenhed. Jo mere trafik, jo højere potentiel omsætning og jo bedre betalingsevne havde detailhandleren, hvilket i sidste ende betød højere lejeniveau for beliggenheden. Denne markedsanskuelse er stærkt udfordret, idet stor trafik i dag ikke er ensbetydende med

høj omsætning i butikken. I nogle situationer fordi kunden alene bruger butikken som showroom og køber produktet på nettet – eller i værste fald hos en konkurrent - og i andre situationer fordi den enkelte butik ikke formår at gøre indkøbet til en oplevelse gennem eksempelvis digital integration, caféhjørne eller lignende. Endelig kan et uinteressant butiksmiks betyde, at kunden fortsætter til et mere interessant og appellerende retail-område.

Som retailer i dag, er beliggenhed, naboer, såvel som en digital strategi afgørende for overlevelse og en succesfuld forretning. Samtidig ændrer behovet for retail-arealer sig som følge af ændrede handelsmønstre.

The consumer is online

We live in an increasingly digitalised world, where a large part of our activities is virtual. Every minute, 187 million emails are sent and 1.1 million people are swiped left or right on Tinder..

This activity and digital reality affects traditional retail industry, which is challenged by our virtual world activities. The most obvious example is the 266,000 hours of Netflix that the world's population watch every minute! This development challenges traditional flow TV and has - several years ago - outperformed Blockbuster and the sale of DVDs.

The Danes shopped heavily online in 2018

According to the payment system DIBS, total Danish e-commerce consumption amounted to DKK 133.5 bn in 2018.

Danish travel purchases accounts for as much as 50% of total e-commerce consumption in 2018, while goods and services account for 35% and 15%, respectively. The Danes are prone to shop largescale physical goods online, where special clothing, electronics as well as body and health goods are high on the list. Also services, such as TV and music streaming are popular, as well as subscription-based services. Among other things, 37% of Danes subscribed to transportation, including metro and train, in 2018, while 13% shopped for groceries.

Traditional thinking is challenged

The retail market has always been driven by footfall. The more traffic, the higher the potential turnover and the better the ability to pay, which ultimately meant higher rental levels for the location. This market view is highly challenged, however, as high foot-

fall does not necessarily mean high shop turnover today. In some cases, the customer merely uses the store as a showroom and performs the purchase online - or in the worst case from a competitor - and in other cases, the individual store is unable to make the purchase an experience through, for example, digital integration, a corner café or similar experience-based initiatives. Finally, an uninteresting blend of shops can make the customer continue to a more interesting and appealing retail area.

For a retailer today, location, neighbouring shops, as well as a digital strategy are crucial for survival and a successful business. At the same time, the need for retail space changes as a result of changing shopping patterns.

Butiksmønstret ændrer sig

Historisk skulle detailhandlende (kæder) være repræsenteret i alle handelsområder for at ”ramme kunden” og optimere deres omsætning. I dag oplever vi to tendenser:

† Landsdækkende detailhandlere går fra mange mindre enheder til færre større enheder på de mere regionale/centrale beliggenheder kombineret med digital tilstedeværelse.

† Strøggadernes detailhandlere søger mindre enheder på op til 300 m² eller samler flere enheder i store flagskibsbutikker.

De to tendenser reducerer det samlede behov for retail-arealer i Danmark og presser især handelslivet i de mindre byer/handelsområder og de mindre shoppingcentre. Her ventes butikkerne at opleve et pres på omsætningen i den fysiske butik, hvilket

afføder et nedadrettet lejepres hos udlejer. På strøggaderne i de største byer ventes overudbudet af retaillejemål over 500 m² at opleve et nedadgående lejepres, mens de helt små og bedst placerede retaillejemål vil opleve størst interesse.

Omniexperience bliver afgørende

Den fysiske butik er ikke død – men den skal være mere end en butik. Samspillet mellem digitale platforme og den fysiske forretning er en afgørende faktor for butikkens succes – et begreb, som omtales som "phytigal reality." Det skal være muligt at “sælge online” offline. Eksempelvis skal kunden i butikken med det samme kunne få overblik over lager, farver og leveringstid på et produkt, som ikke er i butikken. Eller modtage et tilbud på produktet, som er præsenteret i butikken, direkte på mail med alle specifikationer og herefter acceptere og betale online, som eksempelvis møbelkæden Bolia.com praktiserer.

Det kræver stort arbejde at trække kunderne til butikken og fastholde dem. En vej til kunderne er via de sociale medier, hvor der forbindes med kunden, produkter præsenteres og kunderne trækkes til den fysiske og/eller digitale butik. Butikkerne skal levere meget høj personlig service og professionel vejledning for at adskille sig fra de rene digitale handelsplatforme.

Et af de bedste beviser på, at den fysiske butik overlever er det forhold, at nogle af de mest succesfulde digitale detailhandlere, som Amazon og Boozt, åbner fysiske butikker. Magasinet Insider-Trends. com har lavet en liste over 45 top-brands, som er startet som online-butikker og i dag har åbnet fysiske butikker*.

* Læs den på www.insider-trends.com/top-45-online-retailers-who-went-offline

Lots of shops in many locations

One flagship store in a dominant centre

”Physical retail isn´t dead. Boring retail is”

Steve Dennis, Forbes.com

The shopping patterne is changing Historically, retailers (chains) was represented in all trading areas to "reach the customer" and optimise revenue. Today we experience two trends:

† Nationwide retailers go from numerous smaller units to a few large units at the more regional/ central locations combined with digital presence.

† High street retailers are looking for smaller units of up to 300 sq m or gather several units in large flagship stores.

The two tendencies reduce the overall need for retail space in Denmark, and particularly pressurise commercial life in the smaller towns/trading areas and the smaller shopping centres. Here, the stores are expected to experience downward pressure on sales in the physical store, which causes a contin-

uous lease pressure on the landlord. On the high streets of the largest cities, the excess supply of retail leases over 500 sq m is expected to experience downward lease pressure, while the small and best placed retail leases will experience the greatest interest.

Omniexperience is essential

The physical store is not dead - but it must be more than a store. The interaction between digital platforms and the physical business is a crucial factor in the success of the store - a concept that is referred to as "phytigal reality." It must be possible to "sell online" offline. For example, the customer in the store must be able to get an immediate overview of stock, colours and delivery time of a product that is not in the store. Or receive an offer for the product, which is presented in the store, directly by mail with all specifications and then accept and pay online.

This is something that, for instance, the furniture chain Bolia.com practices.

It takes much work to pull the customers to the store and keep them there. A gateway to the customer is social media, where the retailer may connect with the customer, present products and draw the customer to the physical and/or digital store. The stores need to provide high personal service and professional guidance to distinguish themselves from the purely digital trading platforms.

One of the best pieces of evidence that the physical store will survive is the fact that some of the most successful digital retailers, such as Amazon and Boozt, now open physical stores. The magazine Insider-Trends.com has made a list of 45 top brands that have started as online stores and now have opened physical stores*.

* Read it at www.insider-trends.com/top-45-online-retailers-who-went-offline

RETAIL - FORVENTNINGER TIL 2019

RETAIL - EXPECTATIONS FOR 2019

Færre retailarealer på sigt

Retail har altid været en dynamisk sektor, og det vil den fortsat være. Hvor detailhandlerne igennem mange år kæmpede om de bedste placeringer, står kampen fremover ligeledes på at få skabt den bedste omnichannel-strategi, da de fysiske placeringer ikke kan stå alene.

I udlandet oplever man mange steder alt for mange retail-kvadratmeter i forhold til efterspørgslen. Det har i USA medført tomme shoppingcentre og at op imod 30% af alle shopping centre vurderes lukningstruede.

I Danmark har opførelsen af nye shoppingcentre været begrænset som følge af en restriktiv planlov, hvis formål er at bevare detailhandlen i bymidten. I Danmark har vi således alene 368 m² shoppingcenter pr. 1.000 indbyggere, hvilket er det laveste i Norden. I Finland er tallet 433 m², i Sverige 455 m² og i Norge hele 921 m², hvilket er den højeste tæthed i Europa.

Det danske detailmarked vil således ikke opleve samme ekstreme pres på de fysiske butikker, som man oplever i USA eller Storbritannien, men også

i Danmark har vi for mange retail-kvadratmeter i forhold til behov og efterspørgsel.

Specialiserede investorer

Køb af retailejendomme er ikke kun investering i fast ejendom. Det er investering i en aktivklasse, som fremover vil kræve endnu mere aktiv forvaltning, erfaring og løbende investeringer. Vi forventer derfor færre retailinvestorer, men at de bliver mere professionelle og specialiserede.

RED INVESTOR SURVEY

Markant holdningsskifte blandt investorerne RED foretager to gange årligt en forventningsundersøgelse blandt de største og mest aktive investorer i Danmark. Over det seneste år er deres syn på retailsektoren blevet markant mere pessimistisk – både for så vidt angår den forventede efterspørgsel fra lejernes side og prisudviklingen. Primo 2018 forventede kun 4% af investorerne lavere lejeefterspørgsel og ringere udlejningsvilkår. Nu forventer 50% af investorerne en forværring af vilkår og lejeefterspørgsel 2019 ( figur 22). På investeringssiden forventede 79% af respondenterne primo 2018 uændret afkast-

With regard to the occupier market for retail space during the next 6 months, the demand on the occupier market will:

krav på retailejendomme, hvilket primo 2019 er afløst af en forventning til stigende afkast (faldende priser) fra knap 50% af respondenterne ( figur 23). Et markant holdningsskifte.

FORVENTNINGER TIL 2019

Vi forventer, at det fysiske retailmarked fortsat vil være udfordret i 2019, hvilket vil medføre en stigende tomgang – også på gode placeringer. I 2019 forventer vi at se:

† Størst efterspørgsel i København og Aarhus – hvor nye brands, som led i deres omnichannel-strategi, ønsker at etablere sig

† Højere efterspørgsel efter mindre enheder

† Shoppingcentre vil have fokus på at skabe flow gennem udvidelse af oplevelser, services og som distributionshub for omnichannel

† Første års afkast på retail ejendommene vil være stigende og i løbet af 2019 ligge 20-30 basispoint over de laveste niveauer vi har set i 2017 og 2018.

With regard to the development of yields for retail properties during the next 6 months, market yields will:

Figure 23: Investor Confidence Index - retail yields

Figure 22: Investor Confidence Index - retail occupier demand

Less retail space over time

Retail has always been, and will continue to be, a dynamic sector. For several years, retailers have been struggling for the best locations, the battle now stands on creating the best omnichannel strategy since the physical locations cannot stand alone.

Abroad, many places experience excess retail square metres in relation to demand. In the US, it has led to empty shopping centres and the fact that up to 30% of all shopping centres are considered to be closure-threatened.

In Denmark, construction of new shopping centres has been limited due to a restrictive district planning which is meant to preserve city centre retail trade. In Denmark, we have only 368 sq m shopping centre per 1,000 inhabitants, which is the lowest in the Nordic region. In Finland, the figure is 433 sq m, in Sweden 455 sq m and in Norway a total of 921 sq m, which is the highest density in Europe.

Thus, the Danish retail market will not experience the same extreme pressure on the physical stores as experienced in the US or UK, but we also have

surplus of retail square metres in relation to need and demand.

Specialized investors

Buying retail properties is not just real estate investment. It is an asset class investment that will require even more active management, experience and investments in the future.

RED INVESTOR SURVEY

Significant shift in sentiment among investors

RED performs a biannual expectation survey among the largest and most active investors in Denmark. Over the past year, their view of the retail sector has become significantly more pessimistic - both in terms of expected occupier demand and yield development. At the beginning of 2018, only 4% of investors expected lower occupier demand and worse letting terms. Now, 50% of investors expect worse terms and occupier demand in 2019 ( figure 22). On the investment side, 79% of investors at the beginning of 2018 expected unchanged yields on retail properties, which in early 2019 was replaced

by an expectation of increasing yields (lower prices) from just under 50% of investors ( figure 23). A significant change in attitude.

EXPECTATIONS FOR 2019

We expect that the physical retail market will continue to be challenged in 2019, which will lead to an increase in vacancy rates - also in prime locations. In 2019 we expect that we will see:

† The greatest demand in Copenhagen and Aarhus

† Higher demand for smaller units

† Shopping centres will focus on creating flow through more experiences, services and as a distribution hub for omnichannel

† Initial yield for retail properties will increase and during 2019 it will reach 20-30 basis points above the lowest levels of 2017 and 2018

The Cushman & Wakefield | RED Investor Confidence index

The Index for Denmark includes responses from 63 of the most active investors in Denmark in the years 2018 and 2019. The index monitors expectations from highly active investors in the Danish market for the next six months.

The broad coverage reflects the interest for non-biased objective analyses and increased transparency. Furthermore, the coverage ensures that the findings are representative reflections of the current investor confidence in the Danish CRE market.

We conduct the survey on a biannual basis, allowing us to track changes and interpret what they mean for the market and how to best respond when making investment decisions.

RETAIL - TRANSAKTIONER OG NØGLETAL

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Methodology

Retail - Prime rent and vacancy levels Q1 2019

Street name

Rent level DKK - Zone A Vacancy

Amagertorv 33,000 6.5%

Østergade 30,000 2.1% Købmagergade 26,000 7.4% Vimmelskaftet

Frederiksberggade 18,000 19.9%

Frederiksborggade 18,000 6.3%

Kronprinsensgade 11,000 N/A

Berlingske 9,000 N/A

Grønnegade 8,000 N/A

Østerbrogade 5,000 N/A

Gammel Kongevej 4,000 N/A

Nørrebrogade 4,000 N/A

Lyngby 8,500 N/A

Retail - Yield levels Q1 2019

Street name Yield level*

Copenhagen - Prime high street (Amagertorv, Købmagergade and Østergade) 3,00%

Copenhagen - High street (Vimmelskaftet, Nygade and Frederiskborggade) 3.25%

Copenhagen - Secondary high street (Frederiksberggade) 3.75%

Copenhagen - High street area (Kronprinsensgade) 4.00%

- Østerbrogade

- Gl. Kongevej

- Nørrebrogade

area - Lyngby

Source: C&W | RED

*In case of share transactions, this will impact yields, due to defered taxees.

Zone A - Prime rent is estimated on the basis of ITZA guidelines and in this case indicates the value of the most expensive area in the model. However, properties in Denmark are rarely comparable 1:1, hence the depth of zone A (the area subject to generate the prime rent) may vary, but the value is typically determined to be between 6 m (20 ft) and 9 m (30 ft).

The vacancy rate is given by an observed amount of vacant square metres in the ground floor of high street properties relative to the total amount of square metres in the ground floor of properties in the respective street. Hence, retail areas on any other levels are not included in this assessment.

BOLIG - INVESTERINGSMARKEDET 2018

RESIDENTIAL - INVESTMENT MARKET 2018

Boligsegmentet, der siden 2015 har udgjort det største segment, var med en transaktionsvolumen på 36,7 mia. kr. i 2018 igen det mest handlede aktiv. Det er et marginalt fald fra de 39 mia. kr., der blev handlet for i 2017 ( figur 24)

Udenlandske investorer

stadig mest aktive trods nedgang

De udenlandske investorer har gennem de seneste seks år gradvist investeret mere og mere i boligudlejningsejendomme. I 2012 investerede udlændinge for 1,9 mia. kr. i danske boligudlejningsejendomme –hvilket i 2017 var mangedoblet til 24,3 mia. kr. Denne opadgående kurve er dog knækket i 2018, hvor de udenlandske investorer ”kun” investerede for 20,1 mia. kr. i boligudlejningsejendomme, svarende til en nedgang på godt 17%, om end de fortsat står for 55% af den samlede volumen i segmentet ( figur 25)

Omvendt har de danske investorer med en volumen på 16,6 mia. kr. investeret for knap 14% mere i boligudlejningsejendomme end i 2017.

Danske investorer øger investeringerne uden for København København har i de senere år været det foretrukne område for investeringer i boligsegmentet. I perio-

den 2012 til 2017 har boliginvesteringerne i København og Storkøbenhavn udgjort samlet 76 mia. kr., svarende til knap 50% af den samlede volumen. I 2018 faldt Københavns andel til 47% fra 54% i 2017. Ser man på København og Storkøbenhavn som et samlet marked, er andelen faldet fra 61% til 53% fra 2017 til 2018. Denne udvikling skyldes, at de danske investorer har øget deres investeringer udenfor København fra 10,4 mia. kr. i 2017 til 13 mia. kr. i 2018 (

figur 26) – mens de udenlandske investorer i samme periode har reduceret deres investeringer i samme område fra 10,6 mia. kr. til 9 mia. kr.

Hvor er de institutionelle investorer?

I 2018 udgjorde de institutionelle investorer alene 5% af den samlede investeringsvolumen i boligudlejningsejendomme og i 2017 var andelen endnu lavere. De institutionelle investorer ses ikke tydeligt

Figure 25: Residential - Investor type breakdown 2018

36.7

BN DKK

The residential segment has been the most popular segment since 2015. With a transaction volume of DKK 36.7 bn in 2018, the residential market was once again the most traded segment. This is a marginal decline from the DKK 39 bn that was traded in 2017 ( figure 24)

Foreign investors cooling off but still the most active

Over the past six years, foreign investors have gradually invested more and more in Danish residential properties. In 2012, foreign investments totaled DKK 1.9 bn in Danish residential properties. In 2017, this number was multiplied by thirteen to DKK 24.3 bn. However, this upward trend was broken in 2018, when foreign investors "only" invested DKK 20.1 bn in Danish residential properties, corresponding to a decrease of just over 17%. Foreign investors, however, still account for 55% of the total volume in 2018 ( figure 25). Conversely, with a volume of DKK 16.6 bn, Danish investors invested for almost 14% more in

Source: C&W | RED

Danish residential properties than in 2017.

Danish investors increase investments outside of Copenhagen

In recent years, Copenhagen has been the preferred area for residential investments. During the period 2012 - 2017, residential investments in Copenhagen and Greater Copenhagen totaled almost DKK 76 bn corresponding to just under 50% of the total volume. From 2017 to 2018, the share dropped from 61% to 53% ( figure 26). If we isolate Copenhagen, the share of total residential investment volume dropped from 54% to 47% during the same period.

This development is caused by Danish investors having increased their investments outside Copenhagen from DKK 10.4 bn in 2017 to DKK 13 bn in 2018 - while foreign investors have reduced their investments

Copenhagen from DKK

to DKK 9 bn in the same period.

Where are the institutional investors?

In 2018, institutional investors accounted for only 5% of total investment volume in the residential market, and in 2017 the share was even lower. The institutional investors are not visible in the transaction volume, however they are investing, but they primarily do so through self-development or project financing of major urban development areas, such as Grønttorvet and Carlsberg Byen.

Over the past four years, Danish institutional investors have acquired residential plots for more than DKK 5 bn - corresponding to approx. 30% of the total volume of plots for construction - which testifies to the appetite for developing their own projects.

outside

10.6 bn

i transaktionsvolumen, idet de i langt højere grad gennem egenudvikling eller projektfinansiering af større byudviklingsområder, såsom Grønttorvet og Carlsberg Byen.

I de seneste fire år har danske Institutionelle investorer købt for mere end 5 mia. kr. byggegrunde – svarende til ca. 30% af den samlede volumen indenfor byggejord, hvilket vidner om appetitten på egen udvikling.

PensionDanmark og Danica har været de mest aktive institutionelle investorer med opførelse af egne boliger til både salg og udlejning, mens PenSam, PKA og AP Pension i højere grad har projektfinansieret og indgået i partnerskaber om opførelse af nye boliger udviklet af developere.

Figure 24: Residential - Transaction volume 2012-2018

PensionDanmark and Danica have been the most active institutional investors with the construction of their own residential projects for both sale and letting, while PenSam, PKA and AP Pension have to a greater financed projects and entered into partnerships with developers for the construction of new residential projects.

Source: C&W | RED

Source: C&W | RED

Figure 26: Residential - Investments outside of Copenhagen 2012-2018

BOLIG - VOLUMEN & INVESTORER 2018

RESIDENTIAL - VOLUME & INVESTORS 2018

Årets mest aktive investorer

De mest aktive investorer i 2018 var Heimstaden, Blackstone og Koncenton, som med 15,4 mia. kr. tilsammen tegnede sig for 42% af den samlede transaktionsvolumen fordelt på imponerende 141 transaktioner. De tre markante investorer har begrænset indbyrdes konkurrence om ejendommene, da de fokuserer på hver sit segment. Heimstaden har primært fokus på nyopførte ejendomme i Storkøbenhavn, mens Blackstone køber op i den gamle boligmasse i København, og Koncenton har fokus på alle de større byer i Danmark, hvor de erhverver nyopførte boligejendomme, der leverer et stabilt afkast.

Most active investors of the year

The most active investors of 2018 was Heimstaden, Blackstone and Koncenton. At a total of DKK 15,4 bn, the three investors accounted for 42% of total transaction volume and an impressive 141 total transactions. The three significant investors have limited competition for the properties as they focus on different segments. Heimstaden is primarily targeting newly constructed properties in Greater Copenhagen, while Blackstone is aquiring historic residential in Copenhagen. Koncenton is focusing on all the major cities in Denmark, where they acquire newly built residential properties that deliver a stable operating return

BOLIG - TOP 5 TRANSAKTIONER 2018

RESIDENTIAL - TOP 5 TRANSACTIONS 2018

TG Partners III

I december 2018 solgte Thylander Gruppen fonden TG Partners III til norske Heimstaden for en pris på 1,520 mia. kr. Porteføljen omfatter 25 ejendomme, fordelt på 1.400 boliger, 50 erhvervslejemål og knap 1.000 parkeringspladser.

Investor: Heimstaden

Vendor: Thylander Gruppen

Grønttorvet, Valby & Teglholmen

In February 2018, FB Gruppen sold three properties to Heimstaden at just below DKK 1.2 bn. Two of the properties are part of a project on Grønttorvet (Copenhagen’s vegetable market), while the other is located on The Copenhagen harbour area Teglholmen. The properties on Grønttorvet comprise a property with 189 student flats, a building with 195 traditional flats and the property at Teglholmen comprises 105 flats. In total, FB Gruppen has sold 489 flats to Heimstaden and they are ready for occupancy at the end of 2019.

In December 2018, Thylander Gruppen sold the fund TG Partners III to the Norwegian company Heimstaden with a price of DKK 1.520 bn. The portfolio comprises 25 properties, divided into 1,400 flats, 50 commercial leases and almost 1,000 parking spaces. Price DKK: 1,185,000,000 Price DKK: 1,520,000,000

Investor: Heimstaden

Vendor: FB Gruppen

Visual: Polyform Arkitekter

Nordic Living

In October 2018, NREP sold portfolio to Heimstaden at a total of DKK 1.1 bn. The portfolio consists of eight residential properties with 377 flats and five commercial leases at a total of approx. 38,000 sqm. The properties are located across the country (Copenhagen, Aarhus, Vejle, Lyngby, Måløv and Frederiksberg).

Price DKK: 1,128,000,000

Investor: Heimstaden

Vendor: NREP

Frederiksberg Boligfond

In December 2018, Frederiksberg Boligfond sold "Peter Bangs Hus", "Svalegården" and "Den Sønderjyske City" with a total of 424 flats and 15 commercial leases to Blackstone. The selling price for the three properties in Frederiksberg was just under DKK 1 bn.

Price DKK: 950,000,000

Sq m: 41,400 Sq m: 37,800

AP Pension Portfolio

Investor: Blackstone

Vendor: Frederiksberg Boligfond

In the beginning of 2018, Heimstaden acquired a portfolio of 275 flats divided into two new developed properties, "Schades Have", Amager and "Kløverbladsparken", Valby. Heimstaden acquired the properties from Danish pension fund, AP Pension.

Price DKK: 900,000,000

Investor: Heimstaden

Vendor: AP Pension

Visual: Schades Have, Arkitema

BOLIG - LEJEMARKEDET

RESIDENTIAL - OCCUPIER MARKET

Storbyen tiltrækker folk

De større byer har gennem de seneste mange år oplevet en positiv befolkningsvækst drevet af jobmuligheder, bedre infrastruktur, uddannelsesinstitutioner, og byliv. Specielt København har formået holde på nuværende indbyggere selv efter de har stiftet familie. Alt i alt en nettotilflytning skabt af tiltrækning af nye indbyggere såvel som fastholdelse. Befolkningsvæksten har i en lang årrække sat ejerboligpriser såvel som lejeboligpriserne i København under et opadgående pres, som har skabt en enorm byggeaktivitet.

Fortsat mange udviklingsområder

Sydhavnen og Ørestaden er ved at være færdigudviklet med henholdsvis 275.000 m² og 125.000 m² bolig, hvorimod der i Nordhavn kun er udviklet 10% af den samlede kapacitet på 40.000 boliger. Det er

ikke alene Københavns kommune, der tilbyder en lang række udviklingsområder, men ligeledes flere omkringliggende kommuner langs den kommende letbane fra Ishøj til Lyngby, hvor der forventes at blive udviklet flere hundrede tusinde kvadratmeter bolig.

Fortsætter prisstigningerne?

Investorerne betragter lejen per m², hvorimod lejerne fokuserer på en samlet leje per måned. Det, som lejerne er villige til at betale i husleje, kaldes boligbyrden og for udlejningsboliger oplever investorerne, at familieboliger til en månedlig husleje på kr. 15.500 + forbrug er svære at udleje.

Nye boligudlejningsejendomme har oplevet en stor stigning i lejeniveauer de seneste par år, primært drevet af en enorm efterspørgsel. Derfor estimeres

der for mange nye projekter en højere leje end de boligsøgende er villige til at betale. Efterspørgslen afdæmpes i takt med øget udbud af nye lejligheder både i København, men også i omegnskommunerne, hvor nye projekter skyder op med lavere månedlig husleje. I de boligområder i København hvor der pt. opføres rigtig mange lejligheder som eksempelvis i Ørestad og Sydhavnen, forventer vi et lejepres i 2019. Men idet vi vurderer, at folk finder det mere attraktivt at bosætte sig i København fremfor udkantsområderne, vil investorerne forholdsvist let kunne få udlejet ledige boliger ved en moderat reduktion af lejen.

The large cities attract people

Over the past many years, the large cities have experienced a positive population growth driven by job opportunities, educational institutions, and the much sought-after city life. Copenhagen, in particular, has managed to maintain residents even after marriage and children. All in all, a migration created by attraction as well as retention of residents. For a number of years, population growth has contributed to increasing owner-occupied as well as rental housing prices in Copenhagen, which has created an enormous construction activity.

Large number of development areas

Sydhavnen and Ørestaden are being developed with 275,000 sqm and 125,000 sqm respectively, whereas in Nordhavn only 10% of the total capacity has been developed. While the city of Copenha-

gen has a large number of development areas to offer, several hundred thousand square metres of residential properties are expected to be developed in neighboring municipalities, along the upcoming light rail.

Will prices rise indefinitely?

Investors consider the market through rent per sqm whereas tenants focus on total monthly expenses. What people are willing to pay in rent may be referred to as the rental burden. This is the percentage of disposable income (income after tax) people allocate to rental expenditure. Investors find apartments at a monthly rent of DKK 15,500 (excluding heat, water, etc.) difficult to let.

New rental properties have experienced a large increase in rental levels over the past few years,

primarily driven by enormous demand. Therefore, several new projects are estimated to have a higher rental level than what people are able to pay. This demand is subdued as the supply of new flats increases in Copenhagen but also in the surrounding municipalities, where new projects arise with lower monthly rent levels. In certain areas in Copenhagen where development activity of residential properties is high, such as Ørestad and Sydhavnen, we expect a downward pressure on the rent in 2019. However, in our assessment that people find it more attractive to settle in Copenhagen rather than the outskirts, investors will be able to let available flats relatively easy by reducing the rent.

BOLIG - HIGHLIGHTS

RESIDENTIAL - HIGHLIGHTS

Skal investorerne frygte de nye offentlige vurderinger?

Et forhold, der har haft meget stor bevågenhed i medierne og har skabt usikkerhed på boligmarkedet, er de nye offentlige vurderinger. Medierne har brugt meget spalteplads på beretninger om, at især grundværdierne for etageboligerne i København er alt for lave og vil blive fire gange så høje i det nye system. Skatteministeriet har offentliggjort eksempler på, hvor meget de forventer, at de samlede ejendomsskatter (grundskyld og ejendomsværdiskat) vil stige for ejerboliger. Heraf fremgår det, at de største stigninger forventes i Storkøbenhavn og Aarhus. Men vil det også ramme boligudlejningsejendommene?

I forliget ”Tryghed om boligbeskatning” af 2. maj 2017 mellem regeringen og Socialdemokraterne, Dansk Folkeparti og Radikale Venstre, er anført følgende;

”Den gennemsnitlige grundskyldspromille forventes at falde fra 26 promille til knap 16 promille. Samtidig reduceres loftet over grundskyldspromillen fra 34 til 30 promille, mens undergrænsen på 16 promille afskaffes. Promillerne vil blive fastsat kommunespecifikt, så de højere vurderinger ikke øger grundskyldsprovenuet i kommunen.”

Grundskyldsprovenuet er maksimeret For en ejerlejlighed eller et hus, der bebos af ejeren, udgør ejendomsskatten grundskyld og ejendomsværdiskat, mens en ejer af en udlejningsejendom alene betaler grundskyld. Boligudlejnings-investoren er derfor kun interesseret i den forventede stigning i grundskylden under det nye vurderingssystem.

Københavns kommunes grundskyldsprovenu må således ikke øges, men alene omfordeles. Det er korrekt, at grundværdierne for etageboliger er lave i forhold til de reelle værdier og vil blive højere med de nye vurderinger. Grundværdierne for kontor- og retail-ejendomme er dog ligeledes for lave i København.

Should investors fear the new public assessments?

One factor that has caught massive media and public attention and prompted uncertainty in the residential market is the new public assessments. The media has reported that, in particular, site values for Copenhagen multi-storey housing are too low and will be multiplied by four under the new system. The Ministry of Taxation has published the expected increase of total property taxes (site taxation and taxable value) of owner-occupied homes. According to this, the largest increases are expected in Greater Copenhagen and Aarhus. But will it also affect rental properties?

Site taxation proceeds are maximised For a freehold flat or a house inhabited by the owner, the property tax is constituted by site taxation and taxable value, while an owner of a rental property only pays site taxation. The residential investor is therefore only interested in the expected increase in the site taxation under the new assessment system.

The settlement "Security in housing taxation" of 2 May 2017 between the Danish Government and the Social Democrats, the Danish People's Party and Radical Liberals, states the following;

“The average site taxation premium is expected to decrease from 26 per mille to just under 16 per mille. At the same time, the site taxation premium cap is reduced from 34 to 30 per mille, while the lower limit of 16 per mille is abolished. The levels will be determined by the municipality, so that the higher assessments will not increase the site taxation premium in the municipality. "

The municipality of Copenhagen’s site taxation premium thus cannot be increased, but only redistributed. It is true that site values of multi-storey housing are low in relation to real values and will incease with the new assessments. However, site

Alle ejendomstyper i København vil opleve en stigning i grundværdierne, og grundskyldssatsen skal således nedsættes for København, således at provenuet er uændret. Såfremt alle ejendomstypers grundværdier stiger lige meget, vil alle ejendomme, efter indførelse af det nye vurderingssystem, fortsat skulle betale samme grundskyld som i dag. Såfremt en ejendomstype oplever en øget grundskyld, medfører dette, at en anden ejendomstype har fået reduceret sin grundskyldsudgift.

Vi forventer derfor ikke at boligudlejningsejendommene vil komme til at opleve en nævneværdig stigning i grundskyldsudgiften med de nye offentlige vurderinger, da alle grunde i København generelt er vurderet for lavt og det samlede provenu for kommunen ikke må stige.

values for office and retail properties in Copenhagen are also too low. All property types in Copenhagen will experience an increase in site values, and site taxation rate must thus be reduced for Copenhagen to maintain proceeds unchanged. If site values of all property types increase at the same rate, all properties will have the same site taxation as today, after the introduction of the new assessment system. If one property type experiences increased site taxation, this means that another type of property has reduced its site taxation expense.

Therefore, we do not expect that residential rental properties will experience a significant increase in site taxation expenditure under the new public assessments, since all Copenhagen sites are generally valued too low and total revenue for the municipality cannot increase.

10 FUTURE RESIDENTIAL TRENDS

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SERVICES AND FACILITIES

There is a growing tendency to prioritize additional services and facilities that may be booked and used as needed. It may be anything from fitness room, orangery, small gardens, pool, tennis court, sauna and guest apartment to caretaker or concierge services.

CITY FACILITIES

In the cities, facilities such as own parking space, boat space, garden, roof terrace or extra storage space are increasingly in demand.

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CONSTRUCTIONAL SUSTAINABILITY

Many municipalities demand that housing and neighborhoods must be sustainable. DGNB certifi cation, the UN world goals, recycled materials, biodiversity and less CO2 emissions are increasingly becoming regulatory requirements.

LIFE STYLE

In the future, we will place greater emphasis on adapting accommodation to a particular lifestyles or life needs, such as senior housing, community housing, youth housing, sustainable housing, micro-housing, town houses etc. To a larger and larger extent, we wish to identify with the places and homes in which we live.

COMMUNITIES

Many home buyers will demand community-based homes. Obligating communities for which you pay through work effort or slightly higher running costs are welcome. The community thought is attractive as long as participation in the joint activities is voluntary.

Key factors for future residential projects and areas

UN GLOBAL GOALS

The UN Global Goals for Sustainable Development are 17 goals, which point us towards a more sustainable future, where no one is left behind. These goals are increasingly aff ecting housing construction – e.g. item 11 focuses on "Sustainable cities and communities".

PROP TECH

PropTech, a contraction of Property and Technology, is a term predicted to have a signifi cant impact on the property market in the future, particularly through optimization of sustainable building operation. An example of a global company that has already combined new technology with the real estate sector is Airbnb.

SPEED

AND PROXIMITY

Proximity to public transport as well as fast transportation to traffi c and business hubs is gaining value as cities grow and become increasingly crowded.

SUSTAINABILITY FOR THE HOME OWNER

Increasing numbers of home buyers prioritize a sustainable home, particularly when recently constructed. It is of higher and higher value that the home is certifi ed – e.g. DNGBand consists of healthy and environmentally viable materials. Younger buyers will demand sustainable and responsible construction.

CLIMATE FRIENDLYNESS

Green outdoor areas surrounding homes and the inclusion of the landscape in the residential area is a growing value. Climate-friendly solutions in the outdoor environments, such as rainwater collection, bee and insect hotels that promote biodiversity will also be increasingly valuable.

BOLIG - FORVENTNINGER TIL 2019

RESIDENTIAL - EXPECTATIONS FOR 2019

Strammere udlånsregler til ejerboliger har holdt hånden under boliglejen Ejerboligmarkedet i København har oplevet næsten en fordobling af priserne siden lavpunktet i 2012 ( figur 27). Denne kraftige prisstigning er dog afløst af stagnerende og let faldende priser siden maj 2018.

Opbremsningen i boligmarkedet skyldes især Finanstilsynets stramning af udlånsreglerne i 2016 til boligkøbere i vækstområderne København og Aarhus. Her blev der indført en udlånsbegrænsning på fire gange husstandsindkomsten, hvilket har gjort det svært for især førstegangskøbere at komme ind på boligmarkedet. De nye reglers effekt kan også måles på antallet af boligsalg i København, som faldt fra ca. 1.700 ejerlejlighedssalg i København i 3. kvartal 2017 til 1.300 i 3. kvartal 2018 – et fald i antal handler på ca. 25%.

Stramningerne på ejerboligmarkedet har medført, at flere bliver nødt til at leje en bolig i København og Århus, hvilket igen har opretholdt en høj efterspørgsel og leje på udlejningsboliger.

Boliglejen kommer under pres Der er bred enighed om, at efterspørgslen efter boliger i København overstiger udbuddet trods en stor pipeline af nye boliger de kommende år. Det er ikke ensbetydende med, at de boligsøgende kan eller er villige til at betale den markedsleje som forventes i de enkelte projekter.

Dertil kommer, at der i omegnskommunerne langs den nye letbane planlægges en lang række nye boligområder som kan tilføre hovedstadsområdet flere tusinde nye boliger.

I de store udviklingsområder, som Sydhavnen og

Ørestaden, opføres i øjeblikket rigtig mange lejligheder med samme karakteristika, og vi forventer, at boliglejen i disse områder kommer under pres med en svagt faldende leje i 2019 til følge.

Investorer og boligmæglere forventer faldende ejerlejlighedspriser

I DEs tendensundersøgelse fra 4. kvartal 2018, forventer 76% af boligmæglerne i København og Frederiksberg prisfald i 2019. Tilsvarende forventer hovedparten af de aktive investorer på det danske marked at ejerlejlighedspriserne vil falde. I RED Investor Survey har vi spurgt til forventningen til udviklingen i ejerlejlighedspriserne. I 1. kvartal 2018 forventede 70% af investorerne prisstigningerhvilket pr. 1. kvartal 2019 er afløst af kun 10%, som forventer prisstigninger. Til gengæld forventer over 50% af investorerne prisfald på ejerboliger ( figur 28)

Tighter lending rules or freehold flats has sustained residential rent levels

The owner-occupied housing market in Copenhagen has experienced almost a doubling of prices since the 2012 low ( figure 27). However, this sharp price increase has been replaced by stagnant and slightly decreasing prices since May 2018.

The slowdown of the housing market is mainly due to the Danish Financial Supervisory Authority's 2016 tightening on lending rules for home buyers in the growth areas of Copenhagen and Aarhus. Here, a loan limitation of four times the household income was introduced, which has made it difficult for especially first-time buyers to enter the housing market.

The impact of the new rules can also be measured on the number of housing sales in Copenhagen, which fell from approx. 1,700 flat sales in Copenhagen in Q3 2017 to 1,300 in Q3 2018 - a transaction decrease of approx. 25%.

The tightening of the owner-occupied housing market has led more people to rent a home in Copenhagen and Aarhus, which in turn has maintained high demand and rent for rental housing.

Residential rents will be pressured There is broad consensus that demand for housing in Copenhagen exceeds supply despite the large new housing pipeline in the coming years. However, this does not mean that homeowners can pay the expected market rent on the individual projects.

In addition, in the surrounding municipalities along the new light rail, a large number of new residential areas are planned which may add many thousands of new residential properties to the metropolitan area.

In the major development areas, such as Sydhavnen and Ørestaden, numerous flats are currently being built with the same characteristics, and we expect

the residential rent in these areas to come under pressure and we will experience a slight decline in rent levels in 2019.

Investors and estate agents expect decreasing property prices

In DE’s (Danish Association of Real Estate Agents) trend survey from Q4 2018, 76% of Copenhagen and Frederiksberg estate agents expect decreasing prices in 2019. Similarly, the majority of active investors in the Danish market expect freehold flat prices to decrease. In RED Investor Survey, we have asked for the expectation for the freehold flat prices. In Q1 2018, 70% of the investors expected price increases. ( figure 28)

In Q1 2019, this has been replaced by only 10% expecting price increases. Conversely, over 50% of investors expect price declines in freehold flat prices.

27: Residential - Development of sqm prices for freehold flats, index 100 = 2010

Source: Boligsiden & Realkredit Danmark

Figure 28: Investor Confidence Index - Residential prices

With regard to the development of sqm prices for owner occupied freehold flats during the next 6 months, prices will:

least 5%

Source: C&W | RED

Figure

Hvordan påvirkes investeringsejendommene – hvis ejerboligpriserne falder i værdi?

Prisen på de nyopførte boligudlejningsejendomme afhænger af en kombination af beliggenhed, leje, drift, afkast samt m² prisen for ejerlejligheder i området. Jo større rabat man kan få til ejerlejlighedsmarkedet, jo lavere afkast kan investorerne acceptere, da der er udsigt til en fremtidig fortjeneste ved salg af de enkelte lejligheder (alt andet lige).

I de senere år har vi oplevet kraftigt stigende priser på boligudlejningsejendomme i takt med at huslejeniveauet, såvel som ejerlejlighedspriserne, er steget. I det opadgående marked med stor efterspørgsel har investorerne accepteret en mindre og mindre rabat i forhold til ejerlejlighedspriserne.

Vi forventer fortsat stor efterspørgsel efter boligudlejningsejendomme i 2019 uagtet udsigt til svagt faldende ejerlejlighedspriser og lejepres. Vores forventning er, at investorerne fortsat er indstillet på at erhverve nye boligejendomme til relativt lave afkast som følge af den fortsat lave rente. Investorerne vil i højere grad end tidligere have sikkerhed for lejeniveauet, enten i form af verifikation af lejeniveauer i nærområdet eller i form af lejegarantier fra sælger.

Hvem køber i 2019?

For første gang i mange år så vi i 2018, at de danske investorer var mere aktive end de udenlandske investorer, og at de samtidig øgede deres investeringer udenfor København. De danske investorer, som

har drevet den fremgang, er investorer som køber boliger for at opnå et stabilt afkast, frem for fokus på fortjeneste ved løbende frasalg af ejerlejligheder. I et marked med stagnerende ejerlejlighedspriser, kan det være svært for den investor, som investerer med henblik på løbende frasalg, at opnå det ønskede afkast på egenkapitalen, som ofte er højere end kravet fra en core investor, der alene fokuserer på driftsafkast. Vi forventer, at de mest aktive boliginvestorer i 2019 bliver de danske og udenlandske investorer, som fokuserer på driftsafkast fremfor frasalgscases.

RED INVESTOR SURVEY

Flere investorer forventer faldende lejerefterspørgsel RED foretager to gange årligt en forventningsundersøgelse blandt de største og mest aktive investorer i Danmark. Over det seneste år er deres syn på boligsektoren ændret, både hvad angår lejeefterspørgsel og prisudvikling. Primo 2018 forventede ingen investorer lavere lejeefterspørgsel. Nu forventer 21% af investorerne lavere lejeefterspørgsel i 2019 ( figur 29)

Flere investorer forventer stigende afkast På investeringssiden forventede 79% af investorerne primo 2018 uændret afkastkrav på boligudlejningsejendomme, hvilket primo 2019 er afløst af en forventning om stigende afkast (faldende priser) fra knap 48% af investorerne og kun 48%, som forventer uændrede afkast ( figur 30).

With regard to the occupier market for residential space during the next 6 months, the demand on the occupier market will:

FORVENTNINGER TIL 2019

Der vil fortsat være stor efterspørgsel efter boliger i København i 2019, men boliglejen har formentlig nået sit maksimum. Hovedparten af de boligsøgende har ikke mulighed for at betale den leje som der estimeres i mange nye projekter og investorerne har svært ved at udleje de store boliger. Vi forventer at lejen i de store udviklingsområder som Ørestad og Sydhavnen kommer under pres i 2019.

Investeringsmarkedet vil være præget af investorer med fokus på det løbende driftsafkast fremfor frasalgscases. Både København og de 15-20 største byer i Danmark vil være i fokus.

With regard to the development of yields for residential properties during the next 6 months, market yields will:

Figure 30: Investor Confidence Index - Residential yields

Figure 29: Investor Confidence Index - Residential occupier demand

How would a decrease in freehold flat prices affect residential properties?

The price of newly constructed rental properties depends on the yield and the value of the underlying flat value in the case of independent freehold flat sales. The greater "discount" per sqm in relation to freehold flat prices, the lower expected return for investor, as there is potential for future profit on the sale of the individual flats (everything else being equal).

In recent years, we have seen sharp increases residential property prices as rent levels, as well as freehold flat prices, have increased. In the ascending market with high demand, investors have accepted smaller and smaller discounts compared to freehold flat prices.

We expect continued high demand for residential rental properties in 2019 despite the potential for declining freehold flat prices and rental pressure. We expect investors to still be prepared to acquire new housing properties at a relatively low yield as a result of the continued low interest rates, but they will, to a greater extent than before, demand rental level security - either in the form of a convincing underwriting of comparable rentals in the immediate area or in the form of rent guarantees from the seller.

Who will buy 2019?

In 2018, we saw Danish investors being more active than foreign investors for the first time in many years

while also increasing their investments outside Copenhagen. The Danish investors behind this growth invest in residential properties to achieve a stable and secure direct cash flow, rather than focusing on profits through ongoing divestment of freehold flats

In a market with stagnant freehold flat prices, it may be difficult for the investor investing with the purpose of ongoing divestment to achieve the desired return on equity, which is often higher than the requirement of a core investor focusing solely on operating returns. In 2019, we expect the most active residential investors to be the Danish and foreign investors focusing on operating returns rather than divestments.

RED INVESTOR SURVEY

Investors expect decreasing occupier demand

Twice a year, RED conducts an expectation survey among the largest and most active investors in Denmark. Over the past year, their view of the residential sector has changed significantly, both in terms of occupier demand and price development. At the beginning of 2018, no respondents expected lower occupier demand. Now, 21% of investors expect lower occupier demand in 2019 ( figure 29)

More investors expect increasing yields

On the investment side, 79% of investors expected unchanged return on residential properties at the

The Cushman & Wakefield | RED Investor Confidence index

beginning of 2018, which was replaced by an expectation of rising returns (price reductions) in early 2019 from just under 48% of investors and only 48%, expecting unchanged returns ( figure 30)

EXPECTATIONS FOR 2019

Demand in the residential sector will continue in Copenhagen in 2019, but the rent level has reached its maximum. The majority of residential demand are people who cannot afford the rent level currently estimated on several new projects, and investors are having difficulties letting the larger residences. We expect the rent level in the major development areas such as Ørestad and Sydhavnen to come under pressure in 2019.

The investment sector will be characterised by investors focusing on operating returns rather than divestments. Copenhagen and the 15-20 largest cities in Denmark will be in focus.

The Index for Denmark includes responses from 63 of the most active investors in Denmark in the years 2018 and 2019. The index monitors expectations from highly active investors in the Danish market for the next six months.

The broad coverage reflects the interest for non-biased objective analyses and increased transparency. Furthermore, the coverage ensures that the findings are representative reflections of the current investor confidence in the Danish CRE market.

We conduct the survey on a biannual basis, allowing us to track changes and interpret what they mean for the market and how to best respond when making investment decisions.

BOLIG - NØGLETAL OG TRANSAKTIONER

Residential - Top 30 transactions 2018

1

2

3

4

5

6

7

8

9

10

Residential - Rent and yield levels Q1 2019

Source: C&W | RED

*In case of share transactions, this will impact yields, due to defered taxees.

HOTEL - INVESTERINGSMARKEDET 2018

HOTEL - INVESTMENT MARKET 2018

Nedgang i transaktionsvolumen, men høj byggeaktivitet Året 2018 bød på en markant nedgang i transaktionsvolumen for hotelejendomme, som samlet set udgjorde i underkanten af 2 mia. kr. i 2018 mod godt 5 mia. kr. i 2017 ( figur 31). Nedgangen vurderes dog ikke at kunne tilskrives manglende interesse fra investorerne, men snarere manglende udbud, især af prime hotelejendomme.

Det bemærkes ligeledes, at 2017 var præget af en række store handler, herunder norske Wenaasgruppens køb af Hotel Bella Sky for 1,6 mia. kr., norske Strawberry Fields' (nu Nordic Choice Hotels) overtagelse af det femstjernede Hilton-hotel ved Københavns Lufthavn for ca. 800 mio. kr. og svenske Balders køb af fire københavnske hoteller – Copenhagen Plaza, Richmond Hotel, Mercur Hotel og Star Hotel - for i alt ca. 700 mio. kr..

Hertil bemærkes det, at den angivne transaktionsvolumen ikke indeholder handler med ejendomme, der efterfølgende konverteres til hotel, hvorfor volumen for hotelorienterede handler som helhed reelt er noget større.

Lower transaction volume, but high construction actvity

The year 2018 saw a significant decrease in transaction volume for hotel properties, which in total amounted to just under DKK 2 bn in 2018 against more than DKK 5 bn in 2017 ( figure 31). However, the decline is not considered to signify lack of interest, but rather lack of supply, especially of prime hotel properties.

It is also crucial to acknowledge the fact that 2017 was characterised by a number of major trades, including the Norwegian Wenaasgruppen’s acquisition of Hotel Bella Sky at DKK 1.6 bn, Norwegian Strawberry Fields’ (now Nordic Choice Hotels) acquisition of the five-star Hilton hotel at Copenhagen Airport for approx. DKK 800 m and Swedish Balder's acquisition of four Copenhagen hotels - Copenhagen Plaza, Richmond Hotel, Mercur Hotel and Star Hotel - at a total of approx. DKK 700 m.

Added to this, it should be noted that the stated transaction volume does not include any transactions of properties that are subsequently converted to hotel, meaning that the volume of hotel-oriented

I 2018, var Pareto Securities køb af det nye Scandic hotelprojekt beliggende i Scanport tæt på Københavns lufthavn til omkring 720 mio. kr., klart den største hoteltransaktion, og udgjorde 37% af volumen for 2018. Årets næststørste handel var PFA og Topdanmarks køb af Carlsberg Byens Hotel Ottilia, som drives af Brøchner Hotels, for 495 mio. kr. Samlet set vurderes den markante nedgang i transaktionsvolumen således ikke at være udtryk for et svagt marked i 2018. Snarere er det udtryk for, at 2017 var et meget stærkt år, og 2018 ikke bød på samme omfang af mulige hotelinvesteringer. Investeringslysten indenfor hotelsegmentet vurderes således fortsat stærk.

Store danske operatører udvikler selv

At volumen i hotelsegmentet er relativt begrænset skal også ses i lyset af, at de største hoteloperatører i Danmark såsom Arp-Hansen og Cabinn som udgangspunkt selv udvikler og ejer deres egne hoteller. Dette holder i sagens natur transaktionsvolumen nede, men ændrer ikke på, at Cabinn mv. i disse år er særdeles aktive med at udvikle nye hoteller i særligt København. I det hele taget er byggeaktivitetenuagtet den lave transaktionsvolumen - høj indenfor

trades as a whole is actually somewhat higher.

In 2018, Pareto Securities’ acquisition of the new Scandic hotel project, located in Scanport close to Copenhagen Airport, at around DKK 720 m, was the largest hotel transaction, and represented 37% of the 2018 volume. This year's second largest transaction was PFA and Topdanmark's purchase of Carlsberg Byen’s Hotel Ottilia, which is run by Brøchner Hotel at DKK 495 m. The transaction volume decrease is thus not considered to signify a weak market in 2018. Rather, it indicates that 2017 was a very strong year, and 2018 did not offer the same scope of possible hotel investments. Investor interest within the hotel segment is still considered strong.

Large Danish operators develop own projects

The fact that the volume in the hotel segment is relatively limited must also bake into consideration the fact that the largest hotel operators in Denmark, such as Arp-Hansen and Cabinn, generally develop and own their hotels. This naturally keeps transaction volume low, regardless of e.g. Cabinn's developing new hotels in Copenhagen in particular. As a whole, building activity - despite low transaction volume - is

hotel-segmentet i disse år.

Ejendomsfonde og institutionelle investorer køber hoteller

Af den samlede transaktionsvolumen i 2018 stod ejendomsfonde og institutionelle investorer for 79% af handlerne, fordelt med 40% til ejendomsfonde og 39% til institutionelle investorer ( figur 32). Det skal her bemærkes, at hoteltransaktioner udgør et væsentligt mindre marked end eksempelvis kontor, residential og retail, fordelt på få, men store ejendomme, hvorfor datagrundlaget ikke bør tolkes som udtryk for en tendens, men snarere et øjebliksbillede af hotelmarkedet i 2018.

København og Storkøbenhavn driver markedet

Af den samlede transaktionsvolumen ligger 76% af investeringerne i København og Storkøbenhavn ( figur 33). Dog er PensionDanmarks køb af Hotel Comwell i Kolding den tredjestørste handel og E. Bank Lauridsens køb af Hotel Britannia i Esbjerg ligger som nummer fem i tabellen. Igen bemærkes, at opgørelsen er baseret på ganske få transaktioner.

currently high within the hotel segment.

Property funds and institutional investors are targeting hotels

Of the total transaction volume, property funds and institutional investors account for 79% of transactions, with 40% for institutional investors and 39% for real estate funds ( figure 32). It should be noted here that hotel transactions constitute a significantly smaller market than, for example, office, residential and retail, spread over a few, but relatively large properties. For this reason, the data basis should not be interpreted as expressing a trend, but rather a snapshot of the hotel market in 2018.

Copenhagen and Greater Copenhagen rule the market

Of the total transaction volume, 92% of the investments were made in Copenhagen ( figure 33) However, PensionDanmark's acquisition of Hotel Comwell in Kolding is the third largest transaction and E. Bank Lauridsen's acquisition of Hotel Britannia in Esbjerg is number five in the table. Again, it is noted that the market is based on very few transactions.

Figure 32:

C&W | RED

Source:

HOTEL - VOLUMEN & INVESTORER 2018

HOTEL - VOLUME & INVESTORS 2018

2.0

Source: C&W | RED

HOTEL - TOP 5 TRANSAKTIONER 2018

HOTEL - TOP 5 TRANSACTIONS 2018

Scandic Scanport

Årest største hotelhandel var den norske investeringsbank Pareto Securities køb af Skanskas hotelprojekt Scandic Scanport i december 2018 for 720 mio. kr. gennem selskabet City Danmark, som Pareto har etableret.

Når hotellet står klar i december 2020 vil det rumme 357 værelser fordelt på 25.200 m² Heraf vil de 19.000 m² indeholde hotel- og konferencefaciliteter og de resterende 6.200 m² vil være kælder og parkeringskælder. Pareto Securities overtager 1. februar 2021 og Scandic har underskrevet en 20-årig lejekontrakt.

The largest hotel transaction of the year was Norwegian investment bank Pareto Securities' acquisition of Skanska's hotel project Scandic Scanport in December 2018 at DKK 720 m through the company City Denmark, which Pareto has established.

When the hotel is ready in December 2020, it will accommodate 357 rooms spread over 25,200 sq m of which the 19,000 sqm will contain hotel and conference facilities and the remaining 6,200 sqm are marked for basement and underground parking. On February 1, 2021, Pareto Securities takes over and Scandic has signed a 20-year lease.

DKK: 720,000,000

Hotel Ottilia

Investor: Pareto Securities

Vendor: Skanska

In the summer of 2018, pension funds PFA and TopDanmark bought the four-star Hotel Ottilia in Carlsberg Byen at DKK 495 m. Both companies are co-owners of the development company Carlsberg Byen. In addition to the exclusive boutique hotel of 10,455 sqm, to be run by Brøchner Hotels, there are also restaurant, retail, spa and café areas in the three properties that total 14,287 sqm, which are included in the deal with Carlsberg Byen P/S. The investment is also part of the work to diversify PFA's Danish commercial property portfolio.

DKK: 495,000,000

Investor: PFA Ejendomme & Topdanmark

Vendor: Carlsberg Byen P/S

Photo: Skanska

Photo: Arkitema

Comwell Kolding

With an investment of DKK 225 m in Comwell Kolding, PensionDanmark added its third Comwell hotel property to the portfolio. PensionDanmark has already invested in the Comwell hotels in Roskilde and Holte. Comwell in Kolding has 180 rooms and is planning an extension of 120 rooms in a 15-storey hotel tower, in order to keep up with demand of both conference guests and individual hotel guests. The existing rooms will also be refurbished, the restaurant and conference facilities are being expanded, and a new auditorium is expected to be built. The expansion is expected to become DGNB Gold certified.

Price DKK: 225,000,000

Best Western Plus Hotel City

Investor: PensionDanmark

Vendor: Comwell

The well-known and popular Best Western Plus Hotel City Copenhagen changed owners in the spring of 2018. Eva Grimsehl and Claus Hegelund Bruun took over the operation of the award-winning hotel, which will continue to be part of Best Western after more than 60 years as a family-owned hotel. Former owner, John Mortensen, sold the hotel to a company, which has entered into a long-term operation agreement with Eva Grimsehl and Claus Hegelund Bruun. Both have solid operational and commercial experience from a number of management positions in the hotel industry, and Claus Hegelund Bruun has been responsible for Best Western Plus Hotel City Copenhagen for the past five years.

Price DKK: 129,600,000

Investor: Secure Fondsmæglerselskab

Vendor: Private investor

Hotel Britannia Esbjerg

Esbjerg's iconic hotel at the town square, Hotel Britannia, also known as "the town hotel", changed ownership in the summer of 2018 from the Dam Jensen family to another local family, Bank Lauridsen. Thus, the town's leading hotel remains on local hands as it has been since its construction in 1965. Previously, the Nyborg family also owned the hotel, while Bangs Gård A/S, which is owned by Mads Dam Jensen and Mia Dam Karkov, children of the well-known real estate agent, Eivind Dam Jensen, has owned the hotel since 2000.

Price DKK: 90,000,000

Investor: E. Bank Lauridsen

Vendor: Private investor

Photo: Comwell

Photo: Best Western

Photo: Hotel Britannia

HOTEL - HIGHLIGHTS

HOTEL - HIGHLIGHTS

Hotelejendomme stadigt mere efterspurgte blandt investorerne I takt med, at priserne stiger på bolig-, kontor og retail-ejendomme, har både danske og udenlandske investorer søgt mod alternative ejendomsinvesteringer og i de senere år har der været stigende fokus på hotelejendomme. Dette skal især ses i lyset af de relativt lange lejekontrakter med solide lejere, de fortsat lidt højere afkast på hotelejendomme, samt den høje belægningsgrad, især i Københavnsområdet, hvor belægningsprocenten nærmer sig 90% i de gode kvartaler og flere steder ligger over 80% beregnet på årsbasis ( figur 34)

Hertil kommer, at både Københavns lufthavn og Københavns krydstogtsterminal aktuelt er i gang med at udvide for at imødekomme det øgede antal af turist- samt forretningsrejsende, hvorfor den positive udvikling i antal besøgende forventes at fortsætte. Investorinteressen ligger således i god tråd med den generelle udvikling i turismen og efterspørgslen efter hotelværelser i København.

København er verdens bedste København blev i oktober 2018 kåret som verdens bedste by-destination af den internationale rejseguide, Lonely Planet. En kåring som denne kan føre til endnu flere turister i 2019 og 2020, hvilket vil bidrage positivt til en allerede opadgående kurve. Ikke blot hoteller vil få gavn af øget turisme – også restauranter

og butikker i hovedstaden vil kunne øge deres omsætning, såfremt de formår at tiltrække turisterne.

Milliardoverskud i hotelbranchen for tredje år i træk Hotelbranchens omsætning opgøres hvert år af Danske Brancheanalyse. Opgørelsen for 2018 ventes at foreligge efter sommeren 2019. Tal fra Danmarks Statistik viser dog allerede nu en kontinuerlig, sæsonkorrigeret stigning i antallet af hotelovernatninger fra juni til november 2018, som er senest opgjorte tal ( figur 35). Antallet af overnatninger er steget med over 20% de sidste fem år i København.

For tredje år i træk kunne hotelbranchen, ifølge Dansk Brancheanalyses gennemgang af landets 233 største hotelselskaber, i 2017 fejre et samlet årligt overskud på over 1 mia. kr. Hotelbranchens overskud i 2017 blev på 1,5 mia. kr. Det er faktisk kun branchens næstbedste resultat, da der blev tjent 2,1 mia. kr. i 2016. En mindre del af branchens overskud blev dog tjent på opskrivninger af hotelejendommenes værdi, og hvis vi skærer ned til hotelbranchens driftsresultat før afskrivninger, også kaldet EBITDA, blev 2017, som aktuelt er seneste opgørelse, et rekordår med en EBITDA på 2,5 mia. kr., hvilket er en stigning på 5% i forhold til 2,4 mia. kr. i 2016, der var det tidligere

rekordår. 2016 var ligeledes første år, hvor hotelbranchens EBITDA kom over 2 mia. kr.

Hotelbranchen blev samlet set meget hårdt ramt af finanskrisen, og tabte penge hvert eneste af årene i perioden 2008-2013, hvor branchen tilsammen tabte 1,7 mia kr..

Branchens største overskud blandt hoteloperatørerne tilfaldt Arp-Hansen Hotel Group, der tjente 286,3 mio. kr. i 2017. Det næststørste overskud fik Cabinn med 92,7 mio. kr., Scandic lander på en tredjeplads med 65,6 mio. kr. og det enkeltstående Copenhagen Admiral Hotel, der tjente 58,5 mio. kr. ligger på tabellens nummer fire.

Hotel - Top 4 operators 2017

Hotels increasingly in demand among investors

Concurrently with increasing prices on residential, office and retail properties, both Danish and foreign investors have sought alternative real estate investments and recent years have seen increasing focus on hotel properties. This should be seen particularly in the light of the relatively long lease contracts with solid tenants, the still slightly higher return on hotel properties, and high occupancy rates, especially in the Copenhagen area, where the rate approaches 90% in the good quarters and in many places is more than 80% calculated on an annual basis ( figure 34)

In addition, both Copenhagen Airport and the Copenhagen cruise terminal are currently expanding to meet the increased number of tourist and business travelers, which is why the positive trend in the num-

Source: Dansk Brancheanalyse

ber of visitors is expected to continue. Thus, investor interest is in line with the general development in tourism and demand for hotel rooms in Copenhagen.

Copenhagen is best in the world

In October 2018, Copenhagen was named the world's best city destination by the international travel guide, Lonely Planet. An election of this kind may lead to even more tourists in 2019 and 2020, which will contribute positively to an already upward-sloping curve. Not only hotels will benefit from increased tourism - also restaurants and shops in the capital will be able to increase turnover if they manage to attract the tourists.

Third year with billion kroner turnover

The turnover of the hotel industry is calculated each year by Dansk Brancheanalyse (Danish Industry Analysis). The 2018 review is expected to be availa-

ble after the summer of 2018. Figures from Statistics Denmark already show a continuous, seasonally adjusted increase in the number of bednights from June to November 2018, which are the most recent figures ( figur 35). The number of Copenhagen bednights has increased by more than 20% over the past five years.

For the third consecutive year, according to Dansk Brancheanalyse’s analysis of the country's 233 largest hotel companies, the hotel industry celebrated an annual profit of more than DKK 1 bn in 2017, which is the most recent report. In 2017, hotel industry profit was DKK 1,5 bn. In fact, this is only the second best result, since DKK 2.1 bn was reached in 2016. However, a small part of the industry's profit was based on revaluations of the hotel properties. If we only include the operating profit before depreciation, also known as EBITDA, 2017 was a record year with an EBITDA

of DKK 2,5 bn, which is a 5% increase to the DKK 2,4 bn in 2016, which was the previous record year. 2016 was also the first year that the hotel industry EBITDA exceeded DKK 2 bn.

Overall, the hotel industry was severely affected by the financial crisis and reported losses every single year in the period 2008-2013, when the industry as a whole lost DKK 1.7 bn. The largest hotel operator profit was attributed to the Arp-Hansen Hotel Group, which earned DKK 286.3 m in 2017. The second largest profit was Cabinn with DKK 92,7 m, Scandic comes in at third place with DKK 65,6 m, and the Copenhagen Admiral Hotel, which earned DKK 58,5 m, takes spot number four.

Source: Statistics Denmark

Tendency Occupied rooms

Source: Statistics Denmark

Figure 34: Hotel - Occupancy rate – Copenhagen City 2015-2018

Figure 35: Hotel - Copenhagen City bednights 2013-2018

HOTEL - FORVENTNINGER TIL 2019

HOTEL - EXPECTATIONS FOR 2019

Stærk konkurrence og høj belægningsgrad

Hotelmarkedet i København er generelt et meget konkurrencepræget marked, hvor vi ser et stort antal operatører i alle prisklasser, og hvor nogle af de største aktører har valgt selv at eje deres egne hoteller, bl.a. Arp-Hansen Group og Cabinn (Niels Fennet).

Det stigende antal af turister og forretningsrejsende har, sammen med det hidtidige værelsesudbud, presset belægningsgraden op i et historisk højt niveau, hvilket, alt andet lige, har en positiv effekt på både hotellernes omsætning og interessen fra investorerne.

Flere værelser på vej, men også stigende efterspørgsel

Kapaciteten af hotelværelser i København er, ifølge Danmarks Statistik ( figur 36) steget med over 30% siden 2008, og det forventes, at der fremadrettet fortsat vil være en markant høj efterspørgsel på hotelværelser til trods for den høje aktivitet med nyopførelser indenfor hotelsegmentet. I perioden 2020-2022 hvor der tilføres ca. 6.600 nye værelser til det københavnske hotelmarked - hvilket udgør en stigning på yderligere knap 30% i værelseskapaciteten i hovedstadsområdet frem til udgangen af 2021 ( figur 36) - vil vi forventeligt opleve en nedgang i

Strong competition and high occupancy rates

The Copenhagen hotel market is generally a competitive market, where we see countless players in all price ranges, and where some of the largest players have chosen to own their own hotels, amongst others Arp-Hansen Group and Niels Fennet (Cabinn). The increasing number of tourists and business travelers, coupled with the somewhat limited room supply, has pushed up occupancy rates to a historically high level, which, all things being equal, has a positive effect on both hotel turnover and investor interest.

More rooms on the way, but also increasing demand

According to Statistics Denmark, Copenhagen hotel room capacity has increased by more than 30% since 2008 ( figure 36), and continued markedly high demand for hotel rooms is expected in the future , despite high activity in new construction within the hotel segment. In the period 2020-2022 approx. 6,600 new rooms for the Copenhagen hotel market, which represents an increase of just under 30% in the room capacity ( figure 36). We thus expect to experience a decline in occupancy rates.

belægningsprocenterne. Dette vurderes dog som et overgangsfænomen, da netop øget kapacitet erfaringsmæssigt tiltrækker endnu flere kunder på lidt længere sigt, eksempelvis fordi branchen i ydersæsoner bliver bedre i stand til at modtage de helt store konferencer i København. Også den store indsats for at tiltrække flere nye direkte flyruter til København vil medvirke til en stigning i antallet af besøgende.

Aktuelt står hotelbranchen fortsat for den største andel af antal overnatninger i Danmark, men brugen af Airbnb er steget markant over de seneste par år, hvor både private og forretningsfolk flittigt benytter den private indlogeringstjeneste. Den markante vækst i antallet af Airbnb-brugere indikerer en forholdsvist stor efterspørgsel efter billige overnatningsmuligheder; noget som langt de fleste hoteller har svært ved at imødekomme. Dette er således også én af årsagerne til, at der aktuelt opføres adskillige budgethoteller i København.

Stærk investorinteresse

Investeringer i hotelejendomme har, med undtagelse af 2018, været stigende siden 2014, i takt med et stigende antal turister, forretningsrejsende og dermed belægningsgrader. Som tidligere beskrevet, vurderes nedgangen i transaktionsvolumen i 2018 som et

However, this is considered a transitional phenomenon, since increased capacity is known to attract even more visitors in the slightly longer term, for example because the industry is able to receive the large conferences in Copenhagen during the off-season. Also, the great effort to attract more new direct flights to Copenhagen will contribute to an increase in the number of visitors.

Currently, the hotel industry continues to account for the largest proportion of bednights in Denmark, but the use of Airbnb has increased significantly over the past couple of years, where both private and business people are using the private accommodation service frequently. The marked growth in the number of Airbnb users indicates relatively high demand for cheap accommodation, something that most hotels find difficult to meet. Hence, this is one reason that there is currently being built several budget hotels in Copenhagen.

Strong investor interest

With the exception of 2018, Investments in hotels, have been increasing since 2014, concurrently with an increasing number of tourists, business travelers

udtryk for manglende udbud af hotelejendomme til salg, frem for manglende efterspørgsel. Tværtimod oplever vi hos RED stigende efterspørgsel efter hotelejendomme, typisk fra udenlandske investorer, men også fra de store danske ejendomsselskaber og pensionskasser, som søger risikospredning.

Forventninger til 2019

Med en forventet kapacitetsstigning på 30% over de næste tre år, forventer vi, at der er grundlag for en stabil til stigende transaktionsvolumen, da flere både danske og internationale investorer kommer på banen i disse år. Vi forventer som udgangspunkt stabile afkast, men det kan med erfaringer fra de øvrige nordiske lande ikke udelukkes, at det merafkast i niveauet +0,5% som investorer historisk har krævet ved investeringer i hotelejendomme, i forhold til tilsvarende investeringer i kontorejendomme med lange lejekontrakter, vil blive reduceret på sigt. Dette vil således være en potentiel upside for hotelinvestorerne. Omvendt må man på den korte bane forvente visse udsving i belægningsgaden, som følge af de mange nye værelser som tilføres det københavnske marked i de kommende år.

and thus occupancy rates. As previously described, the decline in transaction volume in 2018 is assessed as an expression of a lack of supply of hotel properties for sale, rather than a lack of demand. On the contrary, at RED, we are experiencing increasing demand for hotel rental properties, typically from foreign investors, but also from the large Danish property companies and pension funds seeking risk diversification.

Expectations for 2019

We generally expect stable yields, but, drawing on experience from the other Nordic countries, it cannot be ruled out that the surplus yield of around + 0.5% that investors have historically demanded for hotel properties, compared to similar investments in office properties with long leases, will be reduced over time. This will thus represent a potential upside for the hotel investors. On the other hand, in the short run certain fluctuations in the ccupancy rate must be expected, as a result of the many new rooms that will be supplied to the Copenhagen market in the coming years.

Figure 36: Hotel - Copenhagen City rooms 2008-2021

Source: Statistics Denmark Number of rooms Expected rooms inclusive pipeline

5

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Hotel - New developments in Copenhagen 2018-2021

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