Commercial Property Price Index®
Pan-European Commercial Property Price Index
Bidding Adieu to the Ask
London, 7 July 2022 - The Green Street Commercial Property Price Index decreased by 10.3% during the second quarter of 2022. The index, which measures pricing of a broad swathe of Pan-European commercial properties, retreated as fixed income yields rapidly rose. Low starting yields in residential and cash flow uncertainty in office resulted in asset values falling ~9% and ~19%, respectively, while already-high yields in retail and strong income growth in industrial resulted in the two sectors realizing smaller declines.
“Commercial real estate asset values fell precipitously in the second quarter of this year,” said Peter Papadakos, Managing Director at Green Street. “Dearer debt costs and greater macroeconomic uncertainty are making it harder for commercial real estate investments to pencil. Failed transactions are becoming more prevalent as the bid-ask spread is widening and sellers have been reluctant to sell at the bid. At the sector level, industrial is best positioned with low starting vacancy rates and a backlog of tenant demand. Average-quality office remains the least attractive investment option even after reducing values ~20% due to the pending CapEx backlog. The current macro backdrop warrants caution in underwriting assumptions; based on our numbers, commercial real estate pricing in Europe tilts towards the expensive side of a fair range even after the aforementioned falls during the second quarter.”
Green Street Commercial Property Price Index®
Green Street Commercial Property Price Index
Indexed to 100 in August 2007
Indexed to 100 in September 2007Download CPPI® Report Download CPPI Data
Core Sector Average is equally-weighted between the Industrial, Office, Residential, and Retail sectors.
Change in Commercial Property Values
Amount property values have increased over this period
7 July 2022
What makes our Commercial Property Price Index® unique?
There are significant differences between the Green Street CPPI® and other indices that track commercial property prices. Green Street's CPPI® is appraisal-based. Appraisal-based indices are only as good as the valuation estimates used to construct them, and Green Street has long devoted sizable resources to deriving accurate estimates of the values of the properties owned by REITs. Most other indices are transaction-based.
Green Street's Pan-European Real Estate Analytics platform covers 25 of the most liquid European real estate markets across the industrial, office, retail, and residential property sectors. The Commercial Property Price Index is a time series of unleveraged property values across these sectors and markets, and captures the prices at which commercial real estate transactions are currently being negotiated and contracted. Features that differentiate this index are its timeliness, its emphasis on average institutional quality properties, and its ability to capture changes in the aggregate value of the commercial property sector.