IPD today published the IPD Denmark Annual Property Index for 2008. According to the index, investment in Danish commercial real estate returned 3.1% last year, compared to 10.1% over 2007.
Property significantly outperformed the equity market, which returned -50.3%1, but lagged behind the bonds markets, which returned 9.5%2.
The best performing sector of the four principal markets was Retail for the second year in succession, returning 7.6%, while the poorest performer was residential which, at -6.5%, was the only market to record a negative return. Total return for offices and industrials were similar, at 3.6% and 4.1%, respectively.
Income return for 2008 was 5.2%, marginally up from the previous year's 4.9% which was the lowest level on record. Consistent with the story across Europe, rising yields across the sectors drove capital values down by -2.0% in 2008. This was especially marked in the residential sector, where capital values fell by -9.2%.
Yields moved out by 30 basis points over the 12 months to end of December 2008, ending the year at 5.6%. This effect was partly offset by a strong market rental value growth of 4.3% year-on-year.
Christina Gustafsson, Managing Director IPD Norden said: "The Danish residential market continues its slump from 2007 with capital values dropping 9.2%. Overall, yields rose across each of the main property sectors, but this was mitigated to some extent by a robust rental market. The commercial property market showed remarkable stability in capital values over period which saw significant falls in other major European countries."