DENMARK MARKET REPORT

MARKET UPDATE: COMMERCIAL REAL ESTATE MARKET NEW NORMAL

COPENHAGEN AND Q2 2018 RESIDENTIAL MARKET

Market rents and yields COMMERCIAL REAL ESTATE MARKET Q2 / 2018 PAGE 2 PAGE 3

MARKET UPDATE Q2 2018 NEW NORMAL

Economic indicators have generally shown a slightly weaker development than in the past year, nationally and internationally. This suggests that the economy will develop positively, but at a lower level than previous economic upswings, which many economists denote as “new normal”, or the new normal for economic upswing. The European Central Bank, ECB, will phase out the bank’s bond repurchasing program at the end of the year as there are JOSEPH ALBERTI more signs that the economy is strengthened, and inflation is closer to the bank’s goals. Research Analyst MSc. Econ. Threats of a trade war between the United States and several countries have lowered the Cell phone 23 44 43 49 market’s expectations for the global economy in the near future. [email protected] Stigende vækst og beskæftigelse

Increasing growth and employment

2,300,000 520

2,250,000 500

2,200,000 480

2,150,000 460

2,100,000 440 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 ‘16 ‘17 ‘18

Full time employees Quarterly GDP

Source: Statistics Oxford Economics og Collliers International

Re-printing only allowed with indication of source. Contact: Lisbeth Kempel, marketing director / Cell phone 21 72 83 67 / [email protected] COMMERCIAL REAL ESTATE MARKET Q2 / 2018 PAGE 3

Vacancy for office and industrial and logistics properties has Transaction volume / Q2 2018 reached the lowest point since 2009, creating more incentives for speculative construction. The first signs of speculative logistics Mia. kr Estimated transaction volume construction are already underway in Greve Distribution Center, and speculative office construction is underway in Ørestad City, 100 due to rising employment and falling vacancy, among other things. Conversely, the retail sector is experiencing considerable compe- 80 tition and an ongoing disruption. Retail vacancy has increased in all regions except , where it has remained 60 Bolig 46% unchanged. The grocery industry is characterized by major com- Detail 15% petition, where chains have been forced to close stores with poor 40 locations or concepts that have not been modernized, and either 20 Kontor 22% renovate stores with new concepts or build new stores in areas of population growth. Industri 12% 0 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Andet 5% „The almost explosive increase in e-commerce and changed shop- Source: Colliers International ping patterns has resulted in greater demand for warehouses, which is why the vacancy rate is very low. At one point, it was hard to imagine that there would be a need for all the older warehouses and industrial buildings. But this has happened now. In Denmark, there are not many large modern logistics buildings for rent with a free Transaction volume ceiling height of 12.20 meters and a total open area of 10,000 square by segment / Q2 2018 meters. This is, among other things, justified by strict Danish fire requirements, including requirements for sprinkling. MG Real Estate is now building this speculatively at the Greve Distribution Center and it 5% makes sense, because many decision makers want to see a physical 100 12% building with ramps and outdoor areas, etc. It makes sense to build Residence the modern and high-ceilinged logistics facilities, in particular as 80 Oce

6046% 15% Retail

40 Industry and logistics 22% Other 20 Source: Colliers International 0

Real estate vacancy levels / Q2 2018

many growing companies must constantly seek to maximize building 12 1% capacity in terms of pallet space and inventory management. New 15% high-ceilinged modern facilities will, all else being equal, be signifi- 10 cantly more effective and thus could affect the bottom line positively.“ Lager og produktion Bolig – Tina Iburg, Commercial Real Estate Advisor. 8 5% Detailhandel Kontor 6 Kontor TRANSACTION VOLUME Detail Year to date (YTD) transaction volume nearing the end of Q2 4 22% 2018 is 24.7 billion. This is slightly lower than the level seen in Industri og logistik the record-breaking year 2017. Given that the transaction volume 2 56% Andet

continues at the same pace adjusting for the usual seasonal devel- 0 opment, we expect to reach a total volume of approximately DKK '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 75-85 billion for 2018, which is below the transaction volume in 2017, but still significantly above the transaction volume in 2016. OFFICE RETAIL INDUSTRY AND LOGISTICS

Source: Ejendomstorvet COMMERCIAL REAL ESTATE MARKET Q2 / 2018 PAGE 4 PAGE 5

The population in and Frederiksberg has grown by approximately 1,000 people a month in the years since the financial crisis. People tend to think that the present = the future. However, the reality is that population growth is dynamic and always changing, so population growth is not guaranteed.

COPENHAGEN AND FREDERIKSBERG RESIDENTIAL MARKET

The Copenhagen and Frederiksberg residential market is constantly evolving, and it is exciting to follow regardless of where you live in Denmark, because the capital is most often the first mover in terms of pricing and other developments. It cannot be assumed that the current population growth or the residential PETER LASSEN Partner construction boom will continue in the future. Cell phone 20 45 30 53 [email protected] In this quarterly report, we take a deep dive into the residential market, focusing on the funda- mental economic factors: supply and demand, and give our take on the future of the residential market.

Demand for residential real estate is primarily driven by population growth. The population in Copenhagen and Frederiksberg has grown by approximately 1,000 people a month in the years since the financial crisis. People tend to think that the present = the future. However, the reality is that population growth is dynamic and always changing, so population growth is not guaran- teed. One does not need look further back than 2005 to see a decline in population. Historically, JOSEPH ALBERTI it can be seen from the graph below that there was a decline in population every year from Research Analyst MSc. Econ. 1979 to 1990. The graph not only shows the population growth (the yellow line), but also the Cell phone 23 44 43 49 population growth components which have changed considerably throughout the time period. [email protected] COMMERCIAL REALPopulation ESTATE MARKET developmentQ2 / 2018 PAGE 5 15,000

10,000 Population development Population development

15,000

5,000

10,000

0 5,000

0

-5,000

-5,000

-10,000 -10,000

1991 1979 1980 1981 1982 1983 1984 1985 1986 19871991 1988 1989 1990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Natural increase Net internal migration Net external migration Corrections Population increase Natural increase Net internal migration Net external migration Corrections Population increase

Source: Statistics Denmark

The graph shows that the natural increase Additionally, the general economic situ- Residential real estate supply offerings in (defined as the difference between the ation and the difference in pricing per Copenhagen has been characterized by number of births and deaths) was nega- square meter between apartments in significant construction, especially in the tive until 1997, and positive thereafter. As the city and houses in the suburbs are high-end portion of the market, for ex- a rough measurement, one can say that also important: This can be seen by an ample in the areas of Sydhavn, Nordhavn the natural increase has grown through- decrease in net internal migration dur- and . Demand for large and out the 1979-2017 time period. This is ing “the good years“ leading up to the expensive apartments risk stagnant price due to two factors: First, Copenhagen has financial crisis – something which is also and rent levels due to the significantly increasingly been successful at retaining prevalent now. This happens because increased supply. citizens of childbearing age. In the past, condominium prices in the city increase there were a larger proportion of families more than the price of detached or ter- Yields for newer residential real estate who moved out of the city to the suburbs, raced houses in the surrounding munici- properties have now fallen to 3.75% and when they had children. Second, life palities, thereby making it more attractive for the old housing stock to 3.50%. The expectancy has risen, which has resulted for people to move out of the city. market rent for prime residential real in lower mortality for all age groups. estate is DKK 2,000 per m² per year, Finally, net external migration, calculated which corresponds to rent of DKK 15,000 Net internal migration is a term for as immigrants minus emigrants, has per month plus utilities for a 90 m² apart- domestic migration, ie. moving from one contributed considerably to the population ment. An alternative to renting an apart- municipality to another. In Copenhagen, growth in recent years. ment is to purchase a condominium. Ac- Frederiksberg and in others university cording to boligsiden.dk, the average price towns, there is typically a substantial im- RESIDENTIAL REAL ESTATE SUPPLY per m² condominium in the municipality migration when people are in their early Residential real estate supply has recently of Copenhagen was DKK 40,606 as of 20’s, when they begin start their postsec- reached a new maximum, surpassing the July 2018. m². For a 90m² condominium, ondary education. These cities also typi- previous record which occurred just before this corresponds to a price of 3,654,540 cally have an emigration of approximately the financial crisis in 2008. In the years kr. At these levels, there is limited de- the same amount when people are at the subsequent to the financial crisis, the level of mand. At the same time, the high sales end of their 20’s or their early 30’s, found completed residential real estate construc- prices mean that supply increases, which a family and move out of the city again. tion fell to around 100,000 m² annually. also affects prices. COMMERCIAL REAL ESTATE MARKET Q2 / 2018 PAGE 6 PAGE 7

m2 Residential real estate construction in Copenhagen and Frederiksberg

700,000

600,000 COMPLETED 500,000 RESIDENTIAL REAL ESTATE 400,000 CONSTRUCTION

300,000

200,000

100,000 STARTED RESIDENTIAL 0 REAL ESTATE 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CONSTRUCTION

Source: Statistics Denmark Note: Moving 4-quarter average.

In the years following the financial crisis, residential construction almost stopped, while population development was increasing. Last year, for the first time since 2007, annual residential real estate supply exceeded annual residential real estate demand. On average, completed residential real estate construction has been approxi- mately 250,000 m² during the 2006-2017 time period. Annual residential real estate demand, which is calculated as the annual growth in population multiplied by the average residential real estate consumption per person, has been approximately 440,000 m². This mismatch has meant that there is a pent-up demand of approxi- mately 2,250,000 m² of residential real estate in Copenhagen and Frederiksberg. Naturally, there are several factors which contribute to rising residential real estate prices and falling yields for residen- tial real estate, but the fundamental imbalance between supply and demand is one of the crucial factors.

m2 Residential real estate supply and demand

700,000 700.000700.000 Fuldført nybyggeri & tilbygning FuldførtFuldført nybyggeri nybyggeri & tilbygning & tilbygning 600,000 600.000700.000700.000600.000 FuldførtFuldført nybyggeri nybyggeri & tilbygning & tilbygning 500,000 600.000500.000600.000500.000 Gennemsnitlig efterspørgsel GennemsnitligAVERAGEGennemsnitlig DEMAND efterspørgsel efterspørgsel 500.000500.000400,000 400.000400.000 2 GennemsnitligGennemsnitligGennemsnitlig efterspørgsel efterspørgsel udbud 188,595 m GennemsnitligGennemsnitlig udbud udbud 400.000400.000300,000 300.000300.000 GennemsnitligGennemsnitligÅrlige udbud efterspørgsel udbud ÅrligeAVERAGEÅrlige efterspørgsel efterspørgsel SUPPLY 300.000300.000200,000 200.000200.000 ÅrligeÅrlige efterspørgsel efterspørgsel 200.000200.000100,000 COMPLETED NEW CONSTRUCTION 100.000100.000 AND EXTENSIONS 100.000100.000 0 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ANNUAL DEMAND 200620062007200720082008200920092010201020112011201220122013201320142014201520152016201620172017 0 0 200620062007200720082008200920092010201020112011201220122013201320142014201520152016201620172017 Source: Statistics Denmark and Colliers International COMMERCIAL REAL ESTATE MARKET Q2 / 2018 PAGE 7

Population growth by type

Population growth by type 12,000 10,000 8,000 6,000 4,000 2,000 0 -2,000 -4,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

POPULATION INCREASE NATURAL INCREASE NET MIGRATION

Source: Statistics Denmark and Colliers International

WHAT ABOUT THE FUTURE? growth projections for Frederiksberg and Copenhagen. On the supply side, it is difficult to make predictions, as Population growth is expected to fall steadily from almost Statistics Denmark’s figures for construction starts are 1,000 people a month to about 600 a month in 2027. notoriously inaccurate. This is because reporting often happens with a delay of 2-6 quarters. It should therefore Statistics Denmark does not calculate net internal and be pointed out that started residential real estate con- external immigration separately in their population projec- struction is not a sufficiently reliable indicator for future tions, but gathers the two categories into one: net migra- residential real estate completed construction. Nonethe- tion. Net migration is expected to contribute positively less, the figures show a clear trend that there has been to population growth over the next five years, but with a a sharp decline in residential real estate construction in falling trend. Net migration is expected to have a negative Copenhagen and Frederiksberg - whether this is due to an impact from 2023 and onwards. Conversly, the natural actual decline or delayed reporting is still too early to say. increase is expected to grow steadily from almost 8,000 people annually to almost 10,000 people annually in 2027. On the demand side, a slowdown is also expected. Popu- lation growth will continue, but with diminished force. The greatest population growth is expected to be in the The yellow line in the graph above shows the population urban development areas Ørestad, Nordhavn, COMMERCIAL REAL ESTATE MARKET Q2 / 2018 PAGE 8 PAGE 9

Population growth by area

120,000 2017 2032 100,000

80,000

60,000

40,000

20,000

0 Vanløse Indre Nørrebro Østerbro* Vesterbro** Øst Amager Frederiksberg *** Amager Brønshøj- Source: Statistics Denmark, and Colliers International

Note: * incl. Nordhavn ** incl. and Carlsberg area *** incl. Ørestad and Islands Brygge

Byen and Amager Strand. Amager Vest (however, 25% of the floor area may be / Reducing the smallest residential size is expected to grow by approximately exempted from the calculation). Specifi- in the existing city from 65 m² to 50 m². 30,000 people, Vesterbro with approxi- cally, the municipality is examining the fol- mately 25,000 people and Østerbro with lowing 5 models to promote construction approximately 15,000 people, over a 15 of smaller homes: Finally, Ole Birk Olesen, the Minister for year time period. Transport, Building and Housing, has / Cancellation of housing size provisions. recently invited all municipalities in the On the political front, several initiatives metropolitan area to a housing summit to / Allowing a larger part of the floor area are underway: Copenhagen Municipality discuss and accommodate the need for to be excluded from the calculation of is currently working on new guidelines new, smaller homes. the average. that will make it easier to establish attic apartments in Copenhagen, which could / Increased flexibility coupled with This year, we expect residential real accommodate up to 22,000 residents. requirements for minimum share of estate supply to exceed residential real Additionally, Copenhagen Municipality larger homes and maximum proportion estate demand, and it appears that the is investigating the possibility of chang- of smaller homes. increases in price will be more subdued ing the regulation which stipulates that / Reducing the average size from 95 m² in the coming years, which should be new homes must be 95 m² on average to 85 m². viewed as a healthy sign. COMMERCIAL REAL ESTATE MARKET Q2 / 2018 PAGE 9

From an investors point of view, the residential market will continue to be the most attractive investment object, as the vacancy level is insignificant, and security or risk balancing is a key factor for property investors.

From an investors point of view, the residential market will continue to be the most attractive investment segment, as the vacancy level is insignificant, and security or risk balancing is a key factor for property investors.

Price increases may slow down, and less favourable times may come, but urbaniza- tion is a mega trend that will not stop any time soon. More people will move to the largest cities, so in the long term, prices and returns will increase over time. COLLIERS PULS Q2 / 2018 PAGE 10 PAGE 11

COLLIERS PULS Q2 2018

Overview of market rent and yield The information in this document is regarded as coming from reputable sources. Even though everything has been done to ensure its accuracy, this cannot be JOSEPH ALBERTI guaranteed. We are not liable for any inaccuracies. The reader is encouraged to Research Analyst consult with professionals before acting on the basis of the material in this report. MSc. Econ. Cell phone 23 44 43 49 [email protected] You may quote the market report Colliers PULS by providing a full source of reference.

MARKET RENT rent and after deduction of expenses and operating costs, The market rent is defined as the rent that a qualified tenant at the date of valuation expressed as a percentage of the and a qualified landlord would agree at the evaluation date purchase price or gross capital value. The gross capital value for the respective property, taking into account, among is the total that a purchaser would have to pay, including other things, the location, size, use, flexibility, quality, property transfer taxes and other costs such as legal fees equipment and state of maintenance. The specified market and agents. The property is assumed to be rented on market rent is indicated in DKK per m² per year and is exclusive of consistent terms with no vacancy. operating costs. Operating costs consist of elements such as property tax, street and road contributions, insurance, shared electricity, stair washing, etc. that would normally CONDITION AND LOCATION be paid by the tenant. The landlord normally pays expenses The individual property types and geographic areas are for external maintenance and administration. The market divided into the categories “Best”, “Standard” and “Below rent is determined based on the normal operating expenses, average”. The division refers both to the location and to the consistent with the market, in the respective area. condition of the property, however for new constructions it is mainly location. Note that the division is associated with the NET INITIAL YIELD individual property category, so that a good location for one The yield is defined as the initial net operating income, which property may be poor for another. is the gross rental income and other income less any ground

CATEGORY DEFINITIONS:

= The number is expected BEST // STANDARD // BELOW AVERAGE // to increase in a year Prime location and quality. Good location and condition. The location or condition is Either a new, modern building, The vacancy risk is moderate below average. High vacancy risk = The number is expected to be unchanged in a year or refurbished so that it is and reflects current market relative to market conditions. up-to-date and configured to conditions. = The number is expected meet future requirements. Low to be lower in a year vacancy risk relative to market conditions. COLLIERS PULS Q2 / 2018 PAGE 11

OFFICE PROPERTIES Concerning the required rate of return, it is assumed that office properties are leased at terms consistent with the market.

MARKET RENT NET INITIAL YIELD DKK per m2 per year excluding operation (%)

BELOW BELOW BEST STANDARD BEST STANDARD PROGNOSIS AVERAGE PROGNOSIS AVERAGE Copenhagen City 2.000 1.300 1.000 3.75 5.00 5.50 Brokvarterer and Frederiksberg 1.800 1.100 850 4.00 5.25 5.75 Waterfront 2.000 1.350 1.100 4.00 5.00 5.50 Ørestaden 1.500 1.200 1.000 4.25 5.00 5.50 Other Copenhagen* 1.500 1.000 750 5.50 6.00 6.50 Suburbs north 1.200 900 700 4.75 5.25 7.50 Suburbs south/west 950 750 650 6.00 7.00 8.00 Roskilde 1.100 900 700 6.00 7.00 8.25 Slagelse 850 650 500 7.00 8.00 8.75 Ringsted 850 650 500 6.75 7.75 8.50 Næstved 850 650 500 7.00 8.00 8.75 Holbæk 900 800 650 6.75 7.75 8.75

CENTRAL JUTLAND City 1,400 1,200 975 4.50 5.00 5.50 Greater Aarhus 1,250 850 600 5.00 6.00 7.25 Horsens 1,150 750 475 5.75 7.50 8.75 Randers 850 600 400 7.00 7.50 8.25

NORTHERN JUTLAND City 1.000 850 700 5.50 6.50 7.00 Other Aalborg 850 725 625 6.25 6.75 7.25 Nørresundby 800 650 575 7.25 7.75 8.75 Hjørring 725 700 500 7.25 8.00 8.75 Frederikshavn 700 600 500 7.50 8.00 8.75

TRIANGLE REGION AND SOUTHERN JUTLAND Vejle 1,150 750 475 5.75 7.25 8.75 Kolding 1,150 750 475 5.75 7.25 8.75 Fredericia 1,150 750 475 5.75 7.25 9.00 Esbjerg 1,150 750 475 5.75 7.25 9.00

FUNEN Odense City 1.100 750 600 5.25 7.00 8.00 Other Odense 900 650 550 6.50 8.00 9.00 Svendborg 900 600 450 7.00 8.00 10.00 Middelfart 900 650 475 7.00 8.00 10.00 Nyborg 800 650 450 7.50 8.00 10.00

*Other Copenhagen consists of Vanløse, Valby, Brønshøj, , Amager, etc. COLLIERS PULS Q2 / 2018 PAGE 12 PAGE 13

INDUSTRY AND LOGISTICS PROPERTIES

Properties are located in an industrial zone with several properties of the same type. There is assumed to be a suitable administrative function on the property, in relation to its use. Concerning the required rate of return, it is assumed that the properties are rented to good lessees with leases that conform to the market.

MARKET RENT NET INITIAL YIELD DKK per m2 per year excluding operation (%)

BELOW BELOW BEST STANDARD BEST STANDARD PROGNOSIS AVERAGE PROGNOSIS AVERAGE ZEALAND Other Copenhagen* 500 400 350 6.25 7.75 8.75 Suburbs north 450 400 350 7.00 8.00 8.50 Suburbs south/west 450 400 350 6.50 8.00 8.50 Roskilde 325 300 275 7.50 8.00 8.50 Slagelse 275 250 225 7.75 8.25 9.00 Ringsted 300 275 225 7.50 8.00 8.75 Næstved 275 250 225 7.75 8.25 9.00 Holbæk 275 250 225 7.75 8.25 9.00 Køge** 525 450 400 6.25 7.50 8.00 Greve/Tåstrup** 550 450 400 6.25 7.50 8.00

CENTRAL JUTLAND Greater Aarhus 400 350 300 6.25 7.25 8.25 Horsens 350 250 175 6.50 8.00 9.25 Randers 300 225 100 7.00 8.25 9.50 Herning area 300 225 100 7.25 8.25 9.50

NORTHERN JUTLAND Other Aalborg 375 300 250 6.75 7.75 8.50 Nørresundby 325 250 200 7.50 8.00 9.00 Hjørring 275 225 150 7.75 8.25 9.00 Frederikshavn 275 225 150 7.75 8.50 9.25

TRIANGLE REGION AND SOUTHERN JUTLAND Vejle 350 250 175 6.50 8.00 9.00 Kolding 350 250 175 6.50 8.00 9.00 Fredericia 350 250 175 6.50 8.00 9.00 Esbjerg 300 225 150 6.75 8.25 9.25

FUNEN Other Odense 350 275 200 6.75 7.75 8.25 Svendborg 275 200 175 7.25 8.00 8.75 Middelfart 300 200 150 7.00 7.50 8.00 Nyborg 275 200 150 7.50 8.00 8.75

*Other Copenhagen consists of Vanløse, Valby, Brønshøj, Nordvest, Amager, etc. **Modern logistics. COLLIERS PULS Q2 / 2018 PAGE 13

RETAIL PROPERTIES Properties in, for example, pedestrian streets with rental premises that are targeted towards shopping goods stores.

The rental premises are regular and with a suitable façade width, and their size is between 100–400 m².

MARKET RENT NET INITIAL YIELD DKK per m2 per year excluding operation (%)

BELOW BELOW BEST STANDARD BEST STANDARD PROGNOSIS AVERAGE PROGNOSIS AVERAGE ZEALAND Copenhagen City 25,000 10,000 2,000 3.00 4.00 5.00 Brokvarterer and Frederiksberg 3,700 2,250 1,400 4.50 5.00 6.00 Waterfront 3,500 2,500 1,500 4.50 5.00 6.00 Ørestaden 2,200 1,500 1,000 4.50 5.00 6.00 Other Copenhagen* 2,500 1,750 1,200 5.50 6.25 7.00 Suburbs north 3,500 2,500 1,000 5.50 6.25 7.00 Suburbs south/west 3,000 1,800 900 6.00 6.50 7.00

CENTRAL JUTLAND Aarhus City 7,000 2,600 1,500 4.00 4.75 5.25 Horsens 3,000 2,350 1,000 5.50 6.25 7.25 Randers 1,800 1,400 800 6.25 6.75 7.25

NORTHERN JUTLAND Aalborg City 4,600 2,500 1,500 5.00 6.00 6.50 Other Aalborg 1,400 1,000 700 6.25 6.75 7.50 Nørresundby 1,000 700 550 7.00 7.25 7.75 Hjørring 1,600 1,100 600 6.50 7.00 7.50 Frederikshavn 1,500 1,000 575 6.75 7.25 7.75

TRIANGLE REGION AND SOUTHERN JUTLAND Vejle 3,400 2,300 900 5.25 6.00 7.25 Kolding 2,500 1,500 850 5.50 6.50 7.50 Fredericia 1,800 1,200 800 6.00 6.50 7.50 Esbjerg 3,200 2,500 1,000 5.25 6.00 7.50

FUNEN Odense City 5,300 3,200 1,500 5.00 5.50 6.50 Other Odense 1,550 750 500 7.00 8.00 9.00 Svendborg 2,450 1,000 600 6.00 7.50 9.00 Middelfart 1,200 750 500 6.50 7.25 10.00 Nyborg 1,200 950 700 7.00 7.50 9.00

*Other Copenhagen consists of Vanløse, Valby, Brønshøj, Nordvest, Amager, etc. COLLIERS PULS Q2 / 2018 PAGE 14 PAGE 15

PROPERTIES WITH CONVENIENCE STORES Supermarkets/discount supermarkets.

NET INITIAL YIELD (%)

DISCOUNT SUPERMARKETS PROGNOSIS SUPERMARKETS ZEALAND Copenhagen City 4.75 5.25 Brokvarterer and Frederiksberg 4.75 5.25 Other Copenhagen* 5.50 7.00 Suburbs north 5.75 7.50 Suburbs south/west 6.25 8.00

CENTRAL JUTLAND Aarhus City 4.75 5.25 Horsens 6.25 7.00 Randers 6.25 7.00

NORTHERN JUTLAND Aalborg City 5.50 6.25 Other Aalborg 6.00 6.50 Nørresundby 6.25 6.75 Hjørring 6.50 7.25 Frederikshavn 6.50 7.25

TRIANGLE REGION AND SOUTHERN JUTLAND Vejle 6.25 7.00 Kolding 6.25 7.00 Fredericia 6.25 7.00 Esbjerg 6.25 7.00

FUNEN Odense City 5.75 6.50 Other Odense 6.00 7.00 Svendborg 6.00 7.00 Middelfart 6.00 7.00 Nyborg 6.00 7.00

*Other Copenhagen consists of Vanløse, Valby, Brønshøj, Nordvest, Amager, etc. COLLIERS PULS Q2 / 2018 PAGE 15

BIG BOX STORES WITH SHOPPING GOODS

The property is located in external commercial areas, which targets businesses with shopping goods. Therefore, it does not include properties used for the sale of product categories that take up a lot of space, in accordance with the relevant provisions of the Danish Planning Act. Concerning the required rate of return, it is assumed that the shops are rented out with leases that conform to the market.

MARKET RENT NET INITIAL YIELD DKK per m2 per year excluding operation (%)

BELOW BELOW BEST STANDARD BEST STANDARD PROGNOSIS AVERAGE PROGNOSIS AVERAGE ZEALAND Other Copenhagen* 1,500 850 700 6.25 7.00 8.25 Suburbs north 1,500 900 800 6.50 7.25 8.25 Suburbs south/west 1,500 900 800 6.50 7.25 8.25

CENTRAL JUTLAND Greater Aarhus 1,200 850 650 6.50 7.00 7.75 Horsens 1,100 700 600 7.00 7.50 8.00 Randers 800 600 400 7.25 7.50 8.00

NORTHERN JUTLAND Aalborg 950 775 600 7.00 7.75 8.25 Nørresundby 800 675 500 7.50 7.75 8.00 Hjørring 775 600 450 7.25 7.75 8.25 Frederikshavn 775 600 450 7.25 8.00 8.50

TRIANGLE REGION AND SOUTHERN JUTLAND Vejle 1,200 700 600 7.00 7.50 8.00 Kolding 1,200 900 750 7.00 7.50 8.00 Fredericia 1,000 700 600 7.25 7.75 8.25 Esbjerg 1,200 700 600 7.00 7.50 8.00

FUNEN Odense City 1,050 925 800 7.00 8.00 8.50 Svendborg 800 750 700 8.00 9.00 10.00

*Other Copenhagen consists of Vanløse, Valby, Brønshøj, Nordvest, Amager, etc. COLLIERS PULS Q2 / 2018 PAGE 16 PAGE 17

NEW/NEWER RESIDENTIAL RENT PROPERTIES

Properties occupied after December 31st 1991, and therefore subject to market rent according to s section 15a of the Housing Regulation Act, among others.

MARKET RENT NET INITIAL YIELD DKK per m2 per year excluding operation (%)

BELOW BELOW BEST STANDARD BEST STANDARD PROGNOSIS AVERAGE PROGNOSIS AVERAGE ZEALAND Copenhagen City 2,000 1,650 1,300 3.75 4.00 4.25 Brokvarterer and Frederiksberg 2,000 1,650 1,500 3.75 4.00 4.25 Waterfront 2,000 1,600 1,500 3.75 4.00 4.25 Ørestaden 1,750 1,500 1,350 4.00 4.25 4.50 Other Copenhagen* 1,750 1,500 1,350 4.00 4.25 4.50 Suburbs north 2,000 1,500 1,350 4.25 4.75 5.00 Suburbs south/west 1,500 1,400 1,200 4.25 4.75 5.00

CENTRAL JUTLAND Aarhus City 1,750 1,650 1,550 3.75 4.00 4.25 Greater Aarhus 1,600 1,400 1,150 4.25 4.50 5.00 Horsens 1,150 950 800 4.75 5.25 5.75

NORTHERN JUTLAND Aalborg City 1,350 1,150 1,000 4.00 4.25 4.75 Other Aalborg 1,250 1,125 900 4.50 4.75 5.00 Nørresundby 1,250 1,125 900 4.25 4.50 5.00 Hjørring 1,000 800 600 5.75 6.50 7.25 Frederikshavn 850 750 575 6.00 7.00 7.75

TRIANGLE REGION AND SOUTHERN JUTLAND Vejle 1,250 1,000 800 4.75 5.25 5.75 Kolding 1,100 950 800 4.75 5.25 5.75 Fredericia 950 800 750 5.00 5.50 5.75 Esbjerg 1,100 900 800 4.75 5.50 5.75

FUNEN Odense City 1,500 1,250 1,100 4.00 4.75 5.00 Other Odense 1,150 1,050 950 4.25 4.75 5.00 Svendborg 1,000 900 800 5.25 5.75 6.00 Middelfart 1,100 950 800 5.25 6.00 6.50 Nyborg 1,050 900 800 5.25 6.00 6.50

*Other Copenhagen consists of Vanløse, Valby, Brønshøj, Nordvest, Amager, etc. COLLIERS PULS Q2 / 2018 PAGE 17

OLDER RESIDENTIAL RENTAL PROPERTIES

It is assumed that the properties are fully developed, such that there is no further potential for increasing rent through renovation, in accordance with section 5, subsection 2. Similarly, it is assumed that resources have been allocated for operation, pursuant to applicable rules.

NET INITIAL YIELD (%)

BELOW BEST STANDARD PROGNOSIS AVERAGE ZEALAND Copenhagen City 3.50 3.75 4.00 Brokvarterer and Frederiksberg 3.50 3.75 4.00 Waterfront 3.50 3.75 4.00 Other Copenhagen* 4.00 4.25 4.50 Suburbs north 3.75 4.00 4.25 Suburbs south/west 4.00 4.25 4.50

CENTRAL JUTLAND Aarhus City 3.25 3.50 3.75 Greater Aarhus 4.00 4.25 4.50 Horsens 4.75 5.50 6.00

NORTHERN JUTLAND Aalborg City 3.75 4.25 4.75 Other Aalborg 4.50 4.75 5.00 Nørresundby 4.50 4.75 5.25 Hjørring 6.00 7.00 7.75 Frederikshavn 6.00 7.50 8.25

TRIANGLE REGION AND SOUTHERN JUTLAND Vejle 4.75 5.50 6.00 Kolding 5.00 5.75 6.00 Fredericia 5.25 5.75 6.25 Esbjerg 4.75 5.50 6.00

FUNEN Odense City 4.00 4.75 5.00 Other Odense 4.50 4.75 5.00 Svendborg 5.50 6.00 7.00 Middelfart 5.50 6.00 7.00 Nyborg 6.00 6.75 7.00

*Other Copenhagen consists of Vanløse, Valby, Brønshøj, Nordvest, Amager, etc. Colliers International Group Inc. (NASDAQ: CIGI) (TSX: CIGI) is an industry-leading real estate services company with a global brand operating in 69 countries and a workforce of more than 15,400 skilled professionals serving clients in the world’s most important markets.

With an enterprising culture and significant employee ownership and control, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customized research; and thought leadership consulting.

In Denmark we are approx. 150 professionals in 5 different locations; Copenhagen, Aarhus, Vejle, Aalborg and Odense.

colliers.dk Tlf. 70 23 00 20

COPENHAGEN AARHUS Gammel Kongevej 11, 1610 Copenhagen V Søren Frichs Vej 38 A, 8230 Åbyhøj Palægade 2-4, 1261 Copenhagen K Skovvejen 11, 8000 Aarhus C

VEJLE ODENSE AALBORG Den Hvide Facet 1, 1. sal, 7100 Vejle Tagtækkervej 8, 5230 Odense M Østre Havnegade 20, 9000 Aalborg