Commercial Property Price Index®
Pan-European Commercial Property Price Index
Déjà Vu
London, 12 April 2023 – The Green Street Commercial Property Price Index decreased by 6.7% during the first quarter of 2023. The index, which measures a broad swathe of Pan-European commercial properties, now sits 21% below its May '22 peak. The residential sector bore the brunt of the pain this quarter with a 10.4% price decline, although metros with above-average starting yields and limited rental regulation went relatively unscathed. Office investors returned to their post-Covid form as bids fell 9.5% amidst an uncertain economic and financing backdrop. Industrial and retail asset prices fared a bit better, falling only 4.8% and 2.0%, respectively. Resilient fundamentals buoyed the former whilst high cap rates dressed up the latter.
“The first quarter of 2023 failed to quell many of the anxieties that plagued markets last year,” said Peter Papadakos. “In fact, some might say that it has only introduced new ones. A regional banking crisis in the U.S. teleported to Europe shortly thereafter, raising newfound fears over the stability of our financial system and the future of lending standards. Higher interest rates are proving to be an enigmatic challenge for all corners of the economy, and commercial real estate is no exception. Many investors have opted for a ‘wait-and-see’ approach to capital allocation, which has resulted in persistent bid-ask spreads and another leg down in property prices. Pockets of optimism do, of course, exist within a curated selection of sectors and markets. Positive embedded reversion potential, a reliable tenant roster, and the ability to capture inflation-sized indexation rent bumps are a few attributes in particularly high demand. Said differently, cash flow is king once again.”
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Green Street Commercial Property Price Index®
Green Street Commercial Property Price Index
Indexed to 100 in August 2007
Indexed to 100 in September 2007
Download CPPI® Report Download CPPI DataCore 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
April 12, 2023