The Danish all property total return for 2006 was 17.8%, the second highest total return since the start of the index in 2000. This strong result easily out-performed the Danish property equity return of -0.5% and the bond return of 0%, but under-performed the equity return for 2006 of 32.3%.
Capital growth remained steady at 12.0% whilst income growth slowed in 2006 to 5.2% from 5.5% in 2005. The main driver behind the strong capital return was the compression of valuation yields, which fell by approximately 60 basis points, despite a rise in Danish interest rates.
For a fourth consecutive year, residential properties were the strongest sector, with total returns of 24.2%, despite falling prices in the owner occupied housing market in the last half of the year. The second highest performing sector was offices, with signs of rental recovery seen in Copenhagen and rest of Denmark. The weakest two sectors were other commercial and retail properties, achieving total returns respectively of 15.1% and 15.4%.
Christina Gustafsson, Managing Director of IPD Norden said, "Once again Danish property has provided solid returns without the volatility associated with the equity market, demonstrating its attractiveness as an asset class for investors".