Denmark’s office and retail sectors held back the performance of the country’s property sector in 2013, while Finnish property suffered as a result of an underperforming office market.

The total return of 3.5% for Danish property in 2013 is a 0.4% decrease on the previous year, according to the Investment Property Databank (IPD).

The result is also well below the 14-year historical return of 8.1%.

John Frederiksen, president of the Danish Property Federation – which had predicted higher returns in its 2013 consensus forecast – said: “The total return for 2013 is disappointing for Danish property.”

Values fell across all of Denmark’s major sectors in 2013, with the exception of residential, which recorded a 0.1% rise.

The largest fall in value was recorded by industrial, with capital growth of -3.3%.

Håvard Bjorå, head of Nordic client consultants at IPD, said values could fall most significantly in Copenhagen’s south and west office sub-sectors, as well as in the logistics sector.

Shopping centres, both in Copenhagen and beyond, are experiencing declining values, Bjorå said, while other types of retail property are “on the whole, holding-up relatively well”.

He added: “Post-millennium residential properties in Copenhagen are performing steadily. The better performing parts of the office market are to be found in Copenhagen’s central business district and other major towns.”

In Finland, office property’s poor performance pushed overall returns down, according to data compiled by KTI.

Property investment delivered a total return of 4.4% last year, while office delivered a total return of just 1.1% – the lowest figure since KTI began tracking the sector in 1998.

KTI’s report said office property – traditionally the largest sector in institutional investors’ portfolios – remained a challenge.

Office market values have fallen since 2008, and capital growth, at -4.6%, is worse than in previous years.

Subsectors Espoo and Vantaa suffered the most, pushed down by an uncertain space demand and low occupancy rates.

While the decrease in commercial property market values accelerated, the residential sector was the best performer for the sixth consecutive year, due to rising market values, delivering a total return of 8.2%.