Deflation og lavvækst Steen Bocian, Chief economist stbo@danskebank.dk +45 45 12 85 31 9. december 2014
Rekordlav inflation 6
Eller er det nu også en rekord? 7
Deflation og hvad så? Nominelle stivheder => For høj realløn Realrente højere end nominel rente => For høj real rente Højere real gæld Købsudskydelse 8
Realrenten er ikke høj (Nationalbankrenten) 9
Reallønsvæksten er ikke høj men måske for høj 10
Inflation spiser gælden! deflation gør ikke 1200000 1000000 800000 600000 400000 0% 2% 4% 200000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 11
Er deflation et nyt fænomen? ikke i relation til forbruget 12
Hvorfor snakker vi så meget om deflation, så?
Vi har været i krise 14
Der er dog formildende omstændigheder i Danmark 15
Beskæftigelsen er faldet voldsomt 16
Men den er ikke lav 17
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
Japan Deflationen og de tabte årtier
Japan har haft deflation siden 2000 ikke før! 20
Det har gjort ondt i det finansielle system i Japan 21
Eller hvor ondt har det egentlig gjort i perioden med deflation? 22
Det har også gjort ondt i boligmarkedet 23
Og jo boligpriserne i Japan har faktisk haft det svært men var deflation det bagvedliggende problem? 24
Væksten har ikke været så ringe endda 25
Ledigheden i Japan har ikke været høj på noget tidspunkt 26
Befolkningsudviklingen har været/er en udfordring 27
Vækst! høj eller lav
To perspektiver på økonomisk vækst 29
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
Vækst på langt sigt www.danskeresearch.com
Der er blevet flere og flere af os! 32
Det gælder også i fremtiden 33
Men det gælder ikke kernearbejdsstyrken 34
Vi skal blive bedre til at udnytte ressourcerne 35
Betydelige regionale forskelle (20-64 årige) 2014 2040 Vækst Vækst i % København 399.810 501.930 102.120 25,5 Frederiksberg 66.331 76.215 9.884 14,9 Aarhus 209.867 233.463 23.596 11,2 Tårnby 24.053 26.657 2.604 10,8 Vallensbæk 8.318 9.122 804 9,7 Horsens 50.134 54.750 4.616 9,2 Gladsaxe 38.715 41.387 2.672 6,9 Hvidovre 30.403 32.483 2.080 6,8 Ishøj 12.750 13.577 827 6,5 Glostrup 12.998 13.833 835 6,4 Rødovre 21.773 23.144 1.371 6,3 Aalborg 126.187 133.607 7.420 5,9 Herlev 15.780 16.595 815 5,2 Lyngby-Taarbæk 30.568 32.130 1.562 5,1 Gentofte 40.936 42.818 1.882 4,6 Brøndby 19.919 20.417 498 2,5 Høje-Taastrup 28.259 28.891 632 2,2 Odense 119.869 121.450 1.581 1,3 Randers 55.134 55.772 638 1,2 Dragør 7.239 7.290 51 0,7 36
Her vil vi ikke bo (20-64 årige) 2014 2040 Vækst Vækst i % Læsø 905 544-361 -39,9 Bornholm 21.665 14.201-7.464-34,5 Lolland 23.499 15.453-8.046-34,2 Langeland 6.655 4.599-2.056-30,9 Ærø 3.131 2.211-920 -29,4 Lemvig 11.246 8.227-3.019-26,8 Struer 11.633 8.522-3.111-26,7 Samsø 1.935 1.437-498 -25,7 Morsø 11.319 8.479-2.840-25,1 Odsherred 17.265 13.131-4.134-23,9 Vordingborg 24.402 18.597-5.805-23,8 Tønder 21.044 16.087-4.957-23,6 Guldborgsund 33.632 25.748-7.884-23,4 Kalundborg 26.743 21.022-5.721-21,4 Skive 26.005 20.629-5.376-20,7 37
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
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
Danskerne tror heller ikke på deflation 40
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Estate Media konference: Deflation Chefstrateg Henrik Henriksen, PFA Asset Management Side 48
Historisk lave europæiske renter Side 49
USA: Værdi af 50/50 portefølje Obligationer har historisk ydet en god beskyttelse under aktienedture Side 50
Japan: Værdi af 50/50 portefølje Obligationer har ydet ringe beskyttelse under aktienedture Side 51
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
Danmark og delation Side 53
Deflation når prisfald rammer indtjeningen i en branche med høj gæld Side 54
Andel af lande med negativ inflation høj under guldfoden. Da seddelpressen fik sit eget liv, forsvandt problemet Side 55
Renter og gæld i G7 landene Side 56
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 50 100% Japanske banker reelt insolvente indtil under Koizumi regeringen Meget vanskeligt at fyre medarbejdere i Japan Japanerne har 55% af opsparing i kontanter Side 57
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
Virksomhedsobligationer: effektiv rente har kun været lavere i 20% af tiden de seneste 100 år Side 59
Lønninger: Europa versus Japan Side 60
Arbejdsmarkeder mere fleksible i Europa end i Japan Side 61
Ejendomspriser i Europa Side 62
Hvad koster en Starbucks latte? Side 63
Eurozonen: Styrkelsen af Euro siden 2012 har påvirket væksten negativt Side 64
Centralbankernes nye kamp - for mere inflation Side 65
Fed har ført en langt mere aggressiv pengepolitik end ECB Side 66
Deflation i oliepriser Jeg vil ikke anbefale køb af fast ejendom i Norge, Canada og Australien Side 67
Boligpriser i forhold til indkomster og huslejer Side 68
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
Udsigter for den globale økonomi og de finansielle markeder Side 70
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 2015. 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 2015. 5%: 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
Meget lempelig global pengepolitik også i 2015. Nye Fed-medlemmer er slappere Side 72
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
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
Kina: Lavere vækstrater Side 75
Side 76 Risici
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
Renteniveauet vil forblive lavt i 2015 - 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
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
Prissætning aktier på develop markets: K/I Side 80
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
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 26 86150 Augsburg T +49 821 509 10-000 F+ 49 821 509 10-999 immobilien@patrizia.ag www.patrizia.ag
The great hope! PATRIZIA Immobilien AG 2014 85
01-01-1980 01-01-1984 01-01-1988 01-01-1992 01-01-1996 01-01-2000 01-01-2004 01-01-2008 01-01-2012 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 2014 86
Maastricht criterion Government debt and deficit of European countries as % of GDP 140 120 Governmental debt in % IT PT IE 2012 2013 100 80 DE AU BE Euro Area FR UK ES NL 60 Maastricht criterion FI DK 40 SE Norway 20 LX 0 1 0-1 -2-3 -4 Source: PATRIZIA, Reuters, all values in % of current GDP in constant prices. PATRIZIA Immobilien AG 2014-5 87-6 -7-8 -9-10 -11 Public deficit in %
The financial crisis will have lasting consequences! ACCELERATED GROWTH STEADY DEVELOPMENT LOSING MOMENTUM 145 140 S E DE 135 130 F R 190 DK NO FI NL UK 180 135 170 125 130 160 125 120 150 120 115 140 115 110 130 110 120 105 105 110 100 100 100 Source: PATRIZIA own calulations, Reuters PATRIZIA Immobilien AG 2014 88
Will this be the solution? PATRIZIA Immobilien AG 2014 89
We can not be sure! PATRIZIA Immobilien AG 2014 90
Or is it more like this? PATRIZIA Immobilien AG 2014 91
01-01-99 01-01-00 01-01-01 01-01-02 01-01-03 01-01-04 01-01-05 01-01-06 01-01-07 01-01-08 01-01-09 01-01-10 01-01-11 01-01-12 01-01-13 01-01-14 Q1 1995 Q1 1996 Q1 1997 Q1 1998 Q1 1999 Q1 2000 Q1 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 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 2014 92
Q1 2000 Q1 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2000 Q1 2001 Q1 2002 Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 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 2014 93
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 135 130 125 120 115 110 105 100 95 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 2014 94
Inflation rate as well as inflation and unemployment 2,1% 1,9% O1/2007 12/2008 1,7% 1,5% 1,3% O1/2005 12/2006 10/2011 03/2013 1,1% 0,9% O1/2009 09/2011 04/2013 05/2014 0,7% 0,5% 7% 8% 9% 10% 11% 12% 13% Notes: aggregated values for the eurozone PATRIZIA Immobilien AG 2014 Unemployment rate 95
Log mean prime rent Prime rents and vacancy rates: the cycles is over! 5,87 5,83 5,79 5,75 5,71 5,67 2005 Q1-2008 Q4 2001 Q3-2004 Q4 2009 Q1-2013 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 2014 96
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 2014 97
YOY GROWTH IN PRIME RENTS Retail prime rents and sales are not always positively correlated 2001-2004 2005-2007 2008-2012 30% 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 2014 98
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 2000 2000s last available Source: PATRIZIA, Reuters, ECB, national statistic offices PATRIZIA Immobilien AG 2014 99
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 2014 100
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 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 17 1700 8% 7% 15 1600 1500 6% 5% NL 13 1400 4% 3% ES AT DE 11 9 1300 1200 1100 1000 2% DK 1% FI FR SE 0% 0 2 4 6 Index of rent control 3,6% 7 900 800 3,4% 3,2% 3,0% FI FR AT DK 5 700 2,8% 2,6% DE SE FR AT NL ES FI DE SE (right axis) DK (right axis) 2,4% 2,2% 2,0% 0 2 4 6 Index of rent control Source: PATRIZIA, Reuters, national statistic offices PATRIZIA Immobilien AG 2014 101
Nordics demographics are robust on the long-run 140 135 130 125 120 Population Growth 1980=100 FN NO DK SE FR NL DE UK POPULATION COUNT (K.) AND GROWTH (%) 1980 2010 2030 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 56 329 62 424 11% 70 525 13% DE 78'234 81'790 5% 79'114-3% 115 110 105 100 95 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028 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. 2 393 Mio. inhabitants or ca. 9.5%. Source: PATRIZIA, Reuters, Oxford Economics. All values set to 100 in 1980. PATRIZIA Immobilien AG 2014 102
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 1980-2012 NO FI DK SE 1980 2012 1980 2012 1980 2012 1980 2012 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
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 2011-2025 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 18 15 15 66 % 12 9 6 7 4 7 6 10 9 6 7 3 0 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
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 2013 87% 85% 2013 85% 1980 83% 1980 2013 83% 81% 79% 2013 81% 79% 77% 77% 75% 75% 73% 73% 71% 1980 71% 1980 69% 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
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 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% 35 30 25 20 15 10 5 0 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 2013. This is a decrease of just 8% in comparison to 2012, but the second highest value since 2009. Source: PATRIZIA, PMA, Union. PATRIZIA Immobilien AG 2014 106
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 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 2014 107
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 2014 108
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 2014 109
Clusteranalysis DENMARK FINLAND SWEDEN NORWAY OFFICE RESIDENTIAL RETAIL Cluster Group Independent Market Source: PATRIZIA PATRIZIA Immobilien AG 2014 110
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 2014 111
2000-01-01 2001-01-01 2002-01-01 2003-01-01 2004-01-01 2005-01-01 2006-01-01 2007-01-01 2008-01-01 2009-01-01 2010-01-01 2011-01-01 2012-01-01 2013-01-01 2014-01-01 2000-01-01 2001-01-01 2002-01-01 2003-01-01 2004-01-01 2005-01-01 2006-01-01 2007-01-01 2008-01-01 2009-01-01 2010-01-01 2011-01-01 2012-01-01 2013-01-01 2014-01-01 2000-01-01 2001-01-01 2002-01-01 2003-01-01 2004-01-01 2005-01-01 2006-01-01 2007-01-01 2008-01-01 2009-01-01 2010-01-01 2011-01-01 2012-01-01 2013-01-01 2014-01-01 2000-01-01 2001-01-01 2002-01-01 2003-01-01 2004-01-01 2005-01-01 2006-01-01 2007-01-01 2008-01-01 2009-01-01 2010-01-01 2011-01-01 2012-01-01 2013-01-01 2014-01-01 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 2014 112