Deflation og lavvækst. Steen Bocian, Chief economist

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5 Deflation og lavvækst Steen Bocian, Chief economist december 2014

6 Rekordlav inflation 6

7 Eller er det nu også en rekord? 7

8 Deflation og hvad så? Nominelle stivheder => For høj realløn Realrente højere end nominel rente => For høj real rente Højere real gæld Købsudskydelse 8

9 Realrenten er ikke høj (Nationalbankrenten) 9

10 Reallønsvæksten er ikke høj men måske for høj 10

11 Inflation spiser gælden! deflation gør ikke % 2% 4%

12 Er deflation et nyt fænomen? ikke i relation til forbruget 12

13 Hvorfor snakker vi så meget om deflation, så?

14 Vi har været i krise 14

15 Der er dog formildende omstændigheder i Danmark 15

16 Beskæftigelsen er faldet voldsomt 16

17 Men den er ikke lav 17

18 Den lave inflation/deflation skyldes -En uhørt økonomisk krise -Et boligmarked i krise -Et banksystem i krise -En statsgældskrise -Øget udbud af olie -Øget udbud af fødevarer 18

19 Japan Deflationen og de tabte årtier

20 Japan har haft deflation siden 2000 ikke før! 20

21 Det har gjort ondt i det finansielle system i Japan 21

22 Eller hvor ondt har det egentlig gjort i perioden med deflation? 22

23 Det har også gjort ondt i boligmarkedet 23

24 Og jo boligpriserne i Japan har faktisk haft det svært men var deflation det bagvedliggende problem? 24

25 Væksten har ikke været så ringe endda 25

26 Ledigheden i Japan har ikke været høj på noget tidspunkt 26

27 Befolkningsudviklingen har været/er en udfordring 27

28 Vækst! høj eller lav

29 To perspektiver på økonomisk vækst 29

30 To perspektiver på økonomisk vækst Konjunktur - Finanskrise, gældskrise, forbrugskrise, arbejdsløshed, boligmarkedskrise - Overophedning, lønfremgang, boligfest, flaskehalsproblemer, mangel på kvalificeret arbejdskraft. - Eksportmarkedsvækst, sektorforskydninger Struktur - Produktionsressourcerne : Indbyggerne - Uddannelse, skattesystem, produktivitetsvækst, konkurrencelovgivning, kapitalanvendelse - GRUNDTESE: MARKEDET STÅR FOR TILPASNINGEN 30

31 Vækst på langt sigt

32 Der er blevet flere og flere af os! 32

33 Det gælder også i fremtiden 33

34 Men det gælder ikke kernearbejdsstyrken 34

35 Vi skal blive bedre til at udnytte ressourcerne 35

36 Betydelige regionale forskelle (20-64 årige) Vækst Vækst i % København ,5 Frederiksberg ,9 Aarhus ,2 Tårnby ,8 Vallensbæk ,7 Horsens ,2 Gladsaxe ,9 Hvidovre ,8 Ishøj ,5 Glostrup ,4 Rødovre ,3 Aalborg ,9 Herlev ,2 Lyngby-Taarbæk ,1 Gentofte ,6 Brøndby ,5 Høje-Taastrup ,2 Odense ,3 Randers ,2 Dragør ,7 36

37 Her vil vi ikke bo (20-64 årige) Vækst Vækst i % Læsø ,9 Bornholm ,5 Lolland ,2 Langeland ,9 Ærø ,4 Lemvig ,8 Struer ,7 Samsø ,7 Morsø ,1 Odsherred ,9 Vordingborg ,8 Tønder ,6 Guldborgsund ,4 Kalundborg ,4 Skive ,7 37

38 Hvor skal væksten så komme fra? Væksten kommer ikke fra befolkningsvækst Væksten må enten komme fra: - Flere arbejdsår (her er man gået i gang) - Flere arbejdstimer (vil nok snarere falde) - Produktivitetsvækst (produktivitetskommissionen) Husk: Det er ingen kunst at blive rig ved at arbejde 38

39 Opsummering - Langvarig og blivende deflation er et stort økonomisk problem - Deflation bliver ofte blandet med meget andet - Finanskrise/gældskrise/omstillingsevne er nok et større problem - Befolkningsudviklingen vil trykke væksten ned - Befolkningsudviklingen vil presse lønvæksten og inflationen op - Jeg tror ikke på deflation som vedvarende fænomen 39

40 Danskerne tror heller ikke på deflation 40

41 Disclosure This presentation has been prepared by Danske Research, a division of Danske Bank A/S ( Danske Bank ). Analyst certification Each research analyst responsible for the content of this presentation certifies that the views expressed in the presentation accurately reflect the research analyst s personal view about the financial instruments and issuers covered by the presentation. Each responsible research analyst further certifies that no part of the compensation of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed in this presentation. Regulation Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. Danske Bank is subject to limited regulation by the Financial Services Authority (UK). Details on the extent of the regulation by the Financial Services Authority are available from Danske Bank upon request. The research reports of Danske Bank are prepared in accordance with the Danish Society of Financial Analysts rules of ethics and the recommendations of the Danish Securities Dealers Association. Conflicts of interest Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high-quality research based on research objectivity and independence. These procedures are documented in the research policies of Danske Bank. Employees within the Danske Bank Research Departments have been instructed that any request that might impair the objectivity and independence of research shall be referred to the Research Management and the Compliance Department. Danske Bank Research Departments are organised independently from and do not report to other business areas within Danske Bank. Research analysts are remunerated in part based on the overall profitability of Danske Bank, which includes investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance or debt capital transactions. Financial models and/or methodology used in this research report Calculations and presentations in this research report are based on standard econometric tools and methodology as well as publicly available statistics for each individual security, issuer and/or country. Documentation can be obtained from the authors upon request. Risk warning Major risks connected with recommendations or opinions in this research report, including as sensitivity analysis of relevant assumptions, are stated throughout the text. Date of first publication See the front page of this research report for the date of first publication.

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48 Estate Media konference: Deflation Chefstrateg Henrik Henriksen, PFA Asset Management Side 48

49 Historisk lave europæiske renter Side 49

50 USA: Værdi af 50/50 portefølje Obligationer har historisk ydet en god beskyttelse under aktienedture Side 50

51 Japan: Værdi af 50/50 portefølje Obligationer har ydet ringe beskyttelse under aktienedture Side 51

52 Hvad er deflation? Den gænge definition: Faldende prisniveau i en økonomi Den ødelæggende deflation: Varigt fald i lønninger og ejendomspriser kombineret med høj gæld Side 52

53 Danmark og delation Side 53

54 Deflation når prisfald rammer indtjeningen i en branche med høj gæld Side 54

55 Andel af lande med negativ inflation høj under guldfoden. Da seddelpressen fik sit eget liv, forsvandt problemet Side 55

56 Renter og gæld i G7 landene Side 56

57 Den største deflationære boble i vore levetid: Japan Kæmpe boble, der brast Formuetab i fast ejendom og aktier på 400% af BNP BNP i løbende priser faldet med 8% siden 1997 I samme periode har der været en vækst i Danmark og USA på % Japanske banker reelt insolvente indtil under Koizumi regeringen Meget vanskeligt at fyre medarbejdere i Japan Japanerne har 55% af opsparing i kontanter Side 57

58 Investeringer under deflation Aktier møder modvind Bank og ejendomssektor navnlig udsat Stabile sektorer som telecom, pharma, fødevareproducenter foretrækkes Virksomhedsobligationer et bedre valg end aktier Traditionelle obligationer og kontanter de foretrukne valg Side 58

59 Virksomhedsobligationer: effektiv rente har kun været lavere i 20% af tiden de seneste 100 år Side 59

60 Lønninger: Europa versus Japan Side 60

61 Arbejdsmarkeder mere fleksible i Europa end i Japan Side 61

62 Ejendomspriser i Europa Side 62

63 Hvad koster en Starbucks latte? Side 63

64 Eurozonen: Styrkelsen af Euro siden 2012 har påvirket væksten negativt Side 64

65 Centralbankernes nye kamp - for mere inflation Side 65

66 Fed har ført en langt mere aggressiv pengepolitik end ECB Side 66

67 Deflation i oliepriser Jeg vil ikke anbefale køb af fast ejendom i Norge, Canada og Australien Side 67

68 Boligpriser i forhold til indkomster og huslejer Side 68

69 Hvad kan skabe deflationære tendenser? Succes kan skabe overmod ejendomsbobler Høj gæld! Overvurderede valutakurser Uhensigtsmæssig økonomisk politik Strukturelle problemer manglende dynamik Svag befolkningsudvikling Side 69

70 Udsigter for den globale økonomi og de finansielle markeder Side 70

71 Globale vækstscenarier for 2015 Hovedscenarium (60%): Moderat vækstopsving Global vækst stiger beskedent fra 3,1/3,3% til 3,3%. Et selvbærende opsving er undervejs i USA. Europa er ude af recession, pengepolitikken vil forblive lempelig så langt øjet rækker, men væksten vil stadig være svag. I Kina stagnerer væksten under omstilling til mere forbrugsdrevet og mindre kreditdrevet økonomi. Fed hæver renten første gang i Globale pengepolitik forbliver meget lempelig Upside scenarium (15%): Opsving Global vækst overrasker positivt og når op på 3,8% trukket af stærkere end ventet opsving i USA ledsaget af opsving i Japan og Europa. Robust kinesisk vækst. Pengepolitikken strammes hurtigere end ventet i USA, mens ECB taler om at stramme pengepolitikken sidst i %: Største trussel for finansielle markeder: Hastig stramning af Fed s pengepolitik Risikoscenarium (25%): Væksten falder Global vækst skuffer og falder til under 3%. Opsvinget i USA har svært ved at vinde styrke, væksten i Europa ligger tæt på 0 og de strukturelle problemer i Kina påvirker væksten negativt. Pengepolitikken forbliver meget lempelig eller lempes yderligere. 5%: Største trussel for realøkonomien: Hård landing i Kina 5%: Eurokrisen blusser atter op Side 71

72 Meget lempelig global pengepolitik også i Nye Fed-medlemmer er slappere Side 72

73 Vækstdrivere i USA Lave renteudgifter Solid beskæftigelsesvækst Banker lemper kreditvilkår Behov for stigende boligbyggeri Balancer styrket Færre finanspolitiske stramninger Stadig ledig kapacitet Modvind: Gældsnedbringelse Usikkerhed Side 73

74 Europa på vippen den mest sårbare region Positive faktorer: Globale økonomi Lavere renter Svagere Euro Konkurrenceevne Banksektor styrket Negative faktorer: Uharmonisk valutazone Manglende vækstdynamik Høj offentlig gæld Ukraine/Rusland Kan EZ holde til et tredje dyk? Side 74

75 Kina: Lavere vækstrater Side 75

76 Side 76 Risici

77 De største risici for væksten Geopolitisk uro Konflikt mellem Rusland og Vesten Islamisk Stat og Mellemøsten Kina og Hong Kong Eurozonen Hård landing i Kina Nedtur på boligmarkedet Side 77

78 Renteniveauet vil forblive lavt i hvad kan potentielt få obligationsrenten op? Stigende lønpres i USA Stigende aktivitet på det amerikanske boligmarked Bedre europæiske vækstudsigter Løsning af konflikten med Rusland Side 78

79 Investeringstemaer 2015 Fortsat lave renter globalt Risikofyldte aktiver forventes at give højere afkast end traditionelle obligationer Aktier over kreditobligationer Europæiske statsobligationer Fortsat stærk dollar svagere Euro US aktier stærke op til første renteforhøjelse svagere derefter Emerging market aktiver har historisk været positive efter første Fed stramning Hold et skarpt øje med den amerikanske pengepolitiks effekt på de finansielle markeder Side 79

80 Prissætning aktier på develop markets: K/I Side 80

81 Disclaimer Dette materiale er udarbejdet af PFA alene til orientering. PFA kan have positioner og handle de i finansielle instrumenter, der er omtalt i materialet. Indholdet i denne præsentation er ikke et tilbud om eller en opfordring til at købe eller sælge finansielle instrumenter eller foretage omlægninger eller lignende. Præsentationen erstatter ikke kundens eget skøn over, hvilke dispositioner, der skal foretages. Efter PFA's opfattelse er præsentationens informationer korrekte og retvisende, men påtager sig ikke ansvar for dens fuldkommenhed eller nøjagtighed. PFA påtager sig intet ansvar for dispositioner som måtte foretages på baggrund af præsentationen. Det historiske afkast er ikke en pålidelig indikator på fremtidige afkast. Alle rettigheder til den viste information tilhører PFA og enhver videredistribution eller gengivelse er ikke tilladt uden forudgående tilladelse. Side 81

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84 PROPERTY ASSETS IN EUROPEAN PERSPECTIVE Inflation, Disinflation or Deflation and its consequences Dr. Marcus Cieleback Copenhagen, December 9 th 2014 PATRIZIA Immobilien AG PATRIZIA Bürohaus Fuggerstraße Augsburg T F immobilien@patrizia.ag

85 The great hope! PATRIZIA Immobilien AG

86 Government bond yields: Convergence returns 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% DK FI FR DE IE NL SE BE Convergence Turbulence Stability Introduction of the Euro Lehman Brothers crash LOW RETURN ENVIRONMENT DRIVES INVESTORS TOWARDS ALTERNATIVE INVESTMENTS, BRINGING REAL ESTATE YIELDS UNDER PRESSURE. Source: PATRIZIA, Reuters PATRIZIA Immobilien AG

87 Maastricht criterion Government debt and deficit of European countries as % of GDP Governmental debt in % IT PT IE DE AU BE Euro Area FR UK ES NL 60 Maastricht criterion FI DK 40 SE Norway 20 LX Source: PATRIZIA, Reuters, all values in % of current GDP in constant prices. PATRIZIA Immobilien AG Public deficit in %

88 The financial crisis will have lasting consequences! ACCELERATED GROWTH STEADY DEVELOPMENT LOSING MOMENTUM S E DE F R 190 DK NO FI NL UK Source: PATRIZIA own calulations, Reuters PATRIZIA Immobilien AG

89 Will this be the solution? PATRIZIA Immobilien AG

90 We can not be sure! PATRIZIA Immobilien AG

91 Or is it more like this? PATRIZIA Immobilien AG

92 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q What history in Japan tells us and what not! 20,0% 15,0% Inflation yoy % (RHS) Rental price change Tokyo CBD yoy % (LHS) IPD all properties total return yoy % (LHS) 4,0% 3,0% 8,0% 6,0% Inflation yoy % (RHS) 2,0% 1,5% 10,0% 2,0% 4,0% 1,0% 5,0% 1,0% 2,0% 0,5% 0,0% 0,0% 0,0% 0,0% -5,0% -1,0% -2,0% -0,5% -10,0% -2,0% -4,0% -1,0% -15,0% -3,0% -6,0% -1,5% -20,0% -4,0% -8,0% -2,0% Source: PATRIZIA, Reuters PATRIZIA Immobilien AG

93 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Not much additional insight from the UK and the US! United Kingdom US Inflation yoy % (LHS) IPD all property total return yoy % (RHS) Inflation yoy % (LHS) NCREIF all property total return yoy % (RHS) 6,0% 24,0% 6,0% 6,0% 20,0% 5,0% 16,0% 5,0% 4,0% 12,0% 4,0% 2,0% 4,0% 8,0% 4,0% 3,0% 0,0% 3,0% 0,0% 2,0% -2,0% -4,0% 2,0% -8,0% 1,0% -4,0% -12,0% 0,0% -6,0% 1,0% -16,0% -20,0% -1,0% -8,0% 0,0% -24,0% -2,0% -10,0% Source: PATRIZIA, Reuters PATRIZIA Immobilien AG

94 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Economic growth is in general not supporting rental growth EUROZONE AT BE DE DK ES FI FR IT NL STRONG RENTAL MOMENTUM CAN NOT BE EXPECTED FROM OVERALL GROWTH OUTLOOK CASH FLOW DEVELOPMENT OF INVESTMENT PROPERTIES MUST BE MAINLY SUPPORTED FROM WITHIN THE PROPERTY RATHER THAN FROM GENERAL MARKET DEVELOPMENTS Souce: PATRIZIA Own calculations, 01/01/2002 = 100 PATRIZIA Immobilien AG

95 Inflation rate as well as inflation and unemployment 2,1% 1,9% O1/ /2008 1,7% 1,5% 1,3% O1/ / / /2013 1,1% 0,9% O1/ / / /2014 0,7% 0,5% 7% 8% 9% 10% 11% 12% 13% Notes: aggregated values for the eurozone PATRIZIA Immobilien AG 2014 Unemployment rate 95

96 Log mean prime rent Prime rents and vacancy rates: the cycles is over! 5,87 5,83 5,79 5,75 5,71 5, Q Q Q Q Q Q3 5,63 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 3Q lagged mean vacancy rate A CYCLICAL MARKET PLAY IS CURRENTLY NOT POSSIBLE IN EUROPE AN OPPORTUNITY DRIVEN APPROACH SEEMS REASONABLE AND NECESSARY FOR CORE PROPERTIES Source: PATRIZIA, own calculations PATRIZIA Immobilien AG

97 T. /m²/p.a. The European retail cycle and the city size effect 2,8 2,6 2,4 2,2 2 1,8 1,6 1,4 1,2 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% EUROPEAN PRIME RENT CYCLE Low Pop Med Pop High Pop Low Pop Med Pop High Pop 6,0% 5,8% 5,6% 5,4% 5,2% 5,0% 4,8% 4,6% 4,4% 4,2% 4,0% EUROPEAN PRIME YIELD CYCLE Low Pop Med Pop High Pop City size matters: the rent cycles across European retail markets show a size related dynamic The inverse relationship of retail prime yields before the financial crisis is corrected, with a high dynamic of prime yields in the big European retail centres Source: PATRIZIA, own calculations PATRIZIA Immobilien AG

98 YOY GROWTH IN PRIME RENTS Retail prime rents and sales are not always positively correlated % 30,0% 30,0% 20% 20,0% 20,0% 10% 10,0% 10,0% 0% 0,0% 0,0% -10% -10,0% -10,0% -20% -20,0% -20,0% -30% -30,0% -30,0% -10,0% 0,0% 10,0% 20,0% -10,0% -5,0% 0,0% 5,0% 10,0% 15,0% -10,0% -5,0% 0,0% 5,0% 10,0% 15,0% YOY GROWTH IN RETAIL SALES Three retail real estate cycles are recognisable comparable to the ones seen in the office market. The correlation between retail prime rents and retail sales show periods of booms and bursts. Source: PATRIZIA, own calculations PATRIZIA Immobilien AG

99 Ownership rates start to head south European average Central Europe Northern Europe Southern Europe Current home ownership rates in Europe 80% 70% 60% 50% 40% 30% 1960ies 1980ies 1990ies s last available Source: PATRIZIA, Reuters, ECB, national statistic offices PATRIZIA Immobilien AG

100 Index of tenant landlord regulation Rental market regulation remains very diverse in Europe 4,5 SE 4,0 3,5 ES PT FR AT 3,0 2,5 2,0 FI UK PL IE IT HU BE CH NO LU DK CZ DE NL 1,5 1,0 0 0,5 1 1,5 2 2,5 3 3,5 4 4,5 5 Index of rent control Source: PATRIZIA; Reuters, ECB PATRIZIA Immobilien AG

101 Rent growth 10 years p.a. /m²/month SEK or DKK/m²/p.a. Rental growth volatility Residential rents: Regulation limits growth, but causes volatility % 7% % 5% NL % 3% ES AT DE % DK 1% FI FR SE 0% Index of rent control 3,6% ,4% 3,2% 3,0% FI FR AT DK ,8% 2,6% DE SE FR AT NL ES FI DE SE (right axis) DK (right axis) 2,4% 2,2% 2,0% Index of rent control Source: PATRIZIA, Reuters, national statistic offices PATRIZIA Immobilien AG

102 Nordics demographics are robust on the long-run Population Growth 1980=100 FN NO DK SE FR NL DE UK POPULATION COUNT (K.) AND GROWTH (%) FN 4'775 5'357 12% 5'736 7% NO 4'082 4'874 19% 5'648 16% DK 5'123 5'541 8% 5'807 5% SE 8'307 9'359 13% 10'333 10% NL 14'120 16'595 18% 17'592 6% FR 55'200 64'743 17% 68'468 6% UK % % DE 78'234 81'790 5% 79'114-3% Positive demographic growth in the Nordics as a consequence of stable fertility rates and positive net migration. In absolute numbers, the population increase in the Nordics from 2010 until 2030 will reach ca Mio. inhabitants or ca. 9.5%. Source: PATRIZIA, Reuters, Oxford Economics. All values set to 100 in PATRIZIA Immobilien AG

103 The population development is heavily skewed, Population count 2011 Large differences in concentration of population across the Nordic NUTS-3 counties. The four capital cities account for almost 20% of the Nordics population. It is to expect that the concentration in main cities will increase. 23% 20% 17% 14% 11% 8% Urbanization trends % of inhabitants in urban areas NO FI DK SE Source: Word Bank Source: PATRIZIA, Reuters, Oxford Economics, World bank WDI, RegioGraph. Urban areas defined as agglomeration centres or regions with more than 1 M inhabitants. 103 PATRIZIA Immobilien AG 2014

104 Number of Counties... and even more in the future Population count 2011 During the next 14 years approx. 66% of all 71 Nordic counties will experience a population increase while the rest will shrink. Population growth As a consequence of the ongoing urbanization, demographic demand in main agglomeration centres will increase Knowledge about the regions and main centres essential for investment decisions Distribution of population growth rates % At NUTS-3 level Source: PATRIZIA, Reuters, Oxford Economics, World bank WDI, RegioGraph. Urban areas defined as agglomeration centres or regions with more than 1 M inhabitants. 104 PATRIZIA Immobilien AG 2014

105 Share of urban population in Sweden Share of urban population in Finland, Norway and Denmark Urbanisation: Very different developments in the capital cities 87% Denmark Finland Norway Sweden % 85% % % % 81% 79% % 79% 77% 77% 75% 75% 73% 73% 71% % % 69% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25% 26% NOTES: Definitions and data gathered from the World bank via Thomson Reuters. Urban population refers to people living in urban areas as defined by national statistical offices. Population in capital cities is relative to country s urban population living the largest metropolitan areas. 105 PATRIZIA Immobilien AG 2014 Share of population in the capital city

106 In Bn. Significant investment volumes in CRE in an European context Share of transaction volumes of CRE in Europe Nordics Germany France UK 100% 90% 80% 70% 60% 50% 40% CRE transaction volumes in the Nordics Norway Denmark Finland Sweden 30% 20% 10% 0% The transaction volumes in the Nordics account for ca. 20% of all CRE investments in the UK, Germany and France. Nordic region property investment was 17.8 Bn. in This is a decrease of just 8% in comparison to 2012, but the second highest value since Source: PATRIZIA, PMA, Union. PATRIZIA Immobilien AG

107 and sustainable returns allow good portfolio diversification Cumulative total returns since 2000 Office assets Retail assets Residential assets 160% 140% 120% 100% 80% 60% 40% 20% 0% DK FI NO SE 160% 140% 120% 100% 80% 60% 40% 20% 0% The performance of office assets across the Nordics shows historically a stable growth path as well as a modest response to recessionary shocks. The same holds for retail assets and specially for Norwegian retail assets, which present a very strong development. Residential assets in Sweden show in a broad comparison over 14 years the highest cumulative return. The extraordinary low volatility of Finish assets is remarkable when taking the market movements into account. Source: PATRIZIA own calculations; Reuters, IPD. All series in local currency. PATRIZIA Immobilien AG

108 Historical Mean Total Returns Mean Total Returns by Asset Class, Currency and Country Euro Pound Local Retail Sweden US-Dollar Retail Norway Office Denmark 15% 13% 11% 9% 7% Office Finland Office Norway Retail Finland 5% Office Sweden Retail Denmark Residential Denmark Residential Sweden Residential Finland Source: PATRIZIA PATRIZIA Immobilien AG

109 Total Return Volatility Euro Pound Local US-Dollar Retail Norway Retail Finland Total Returns Volatility by Asset Class, Currency and Country Retail Sweden Office Denmark 19% 17% 15% 13% 11% 9% 7% 5% 3% 1% Office Finland Office Norway Office Sweden Retail Denmark Residential Denmark Residential Sweden Residential Finland Source: PATRIZIA PATRIZIA Immobilien AG

110 Clusteranalysis DENMARK FINLAND SWEDEN NORWAY OFFICE RESIDENTIAL RETAIL Cluster Group Independent Market Source: PATRIZIA PATRIZIA Immobilien AG

111 Deflation in the Nordics: We have a Rumsfeld problem! There are known knowns. There are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don t know. But there are also unknown unknowns. There are things we do not know we don t know. it s the latter that tend to be difficult PATRIZIA Immobilien AG

112 Deflation and real estate in the Nordics: remarkable correlation Denmark Inflation yoy % (LHS) IPD all property total return yoy % Norway 5,0% 4,5% 4,0% 3,5% 3,0% 2,5% 2,0% 1,5% 1,0% 0,5% 0,0% 20,0% 18,0% 16,0% 14,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% -1,0% -2,0% -3,0% 21,0% 18,0% 15,0% 12,0% 9,0% 6,0% 3,0% 0,0% -3,0% -6,0% -9,0% Sweden Finland 6,0% 26,0% 6,0% 14,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% -1,0% 22,0% 18,0% 14,0% 10,0% 6,0% 2,0% -2,0% 5,0% 4,0% 3,0% 2,0% 1,0% 0,0% -1,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% -2,0% -6,0% -2,0% 0,0% Source: PATRIZIA, Reuters PATRIZIA Immobilien AG