European Commercial Property Price Index: April, 2024

A Lot Going On Beneath the Surface

The Green Street Commercial Property Price Index was flat in the first quarter of the year although the overall average obscures diverging fortunes between sectors. The index, which measures pricing of a broad swathe of Pan-European commercial properties, sits c.24% below its ’22 peak. The residential and industrial upticks (+1.4%) were driven by resilience in operating fundamentals. Conversely, the office sector endured further erosion in bid pricing (-1.1%) on lower income expectations. Pricing in the retail sector moved marginally lower (-0.7%) following increased liquidity and price discovery.

“A slight pickup in European transaction activity over the past three months suggests that pricing levels are stabilising across traditional sectors, on average”, said Marie Dormeuil, Senior Analyst at Green Street. “While the signal from the debt market points to good value at current private-market pricing in average quality commercial real estate overall, office has yet to fully correct while industrial is past its bottom and considered cheap. REIT share prices are signalling that overall direct market spot values are about right overall, while also agreeing with our bearish and bullish stance on office and industrial private market pricing prospects, respectively.