Commercial Property Price Index®
Pan-European Commercial Property Price Index
Another Step Down
London, 5 October 2022 – The Green Street Commercial Property Price Index decreased by 4.4% during the third quarter of 2022. The index, which measures pricing of a broad swathe of Pan-European commercial properties, is c.15% below its recent peak. The industrial sector bore the brunt of the pain this quarter with bid pricing down over 10%. Office asset prices declined 4.5% as obsolescence risk continues to be more widely acknowledged. Retail and residential asset prices moved roughly 3% lower.
“Rising real (i.e., inflation adjusted) yields have weighed on financial markets across the board and real estate is no exception,” said Peter Papadakos, Managing Director at Green Street. “Higher real risk-free rates and even more elevated all-in market debt costs paired with significant macroeconomic uncertainty each require higher unlevered returns to justify any investment. Operating fundamentals have remained roughly stable across most property sectors which means initial yields have had to move higher and thus bid prices lower. The current macro backdrop warrants more conservative underwriting assumptions – for example, via higher exit cap rates – and investment committees are heeding that signal with many opportunities being redlined as asking prices are not moving lower fast or far enough towards the bid. Consequently, direct market investment liquidity is likely to significantly deteriorate during the final quarter of 2022. Based on our numbers, commercial real estate pricing in Europe continues to screen expensive versus fixed-income investment-grade bonds even after the aforementioned falls during the first nine months of this year.”
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
5 October 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.