Commercial Property Price Index®
Pan-European Commercial Property Price Index
Still Waters Run Deep
London, 7 July 2023 – The Green Street Commercial Property Price Index remained flat during the second quarter of 2023. The index, which measures pricing across a broad swathe of B/B+ quality Pan-European commercial properties, sits 21% below its May '22 peak. The retail sector experienced the largest price decline of any core sector over the last three months. A widening gap between prime and average quality retail yields resulted in a 2.8% weighted average price decline across the top 30 markets for the latter. Office prices were stable, falling only 0.4% amidst subtle numerator pressure and unchanged cap rates. Yields were also steady in the residential and industrial sectors, but positive cash flow growth led to asset price increases of 1.4% and 1.1%, respectively.
“Scant transactional evidence suggests that buyers and sellers are still struggling to see eye-to-eye on pricing”, said Marie Dormeuil, Analyst at Green Street. “Deals that have managed to close have gone through lengthy processes, shedding some light on the impact higher borrowing rates have had on asset prices over the last 12+ months. Persistently hawkish central bank policies remain the primary downside risk to how pricing evolves in most sectors during the months ahead. Property types with robust, inflation-beating net rental income growth should offer some buffer even if yields drift slightly higher by the end of summer.”
Green Street Commercial Property Price Index®
Green Street Commercial Property Price Index
Indexed to 100 in August 2007
Indexed to 100 in September 2007
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
July 7, 2023
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.