Global sales prices of commercial real estate in 2022 were 3.6% higher than their most recent valuation by owners, according to a new research report from MSCI.
This was 417 basis points less than in 2021, making it the largest decline for the weighted average difference (WAD) since 2008 and below the average for the past decade.
The report especially highlighted patterns in Sweden and the Netherlands.
In Sweden, the WAD grew for two consecutive years, with owners selling properties in 2022 for 9.1% more than the most recent appraisal value, which is the biggest difference since 2011.
On the opposite end, the WAD in the Netherlands was negative, with owners selling properties in 2022 for 0.6% less than the most recent appraisal value. The last time there was a negative difference in the Dutch market was in 2015.
The office, industrial and residential sectors had a positive WAD in 2022. Retail was the only sector to register a negative WAD (- 0.4%).
A key factor that affected the WAD was the rise in interest rates that impacted pricing and valuations in commercial estate markets in the latter part of 2022, resulting in a notable slowdown in investment activity.
The report, which is produced annually from data in the MSCI Global Annual Property Index, covers the world’s 12 largest property markets in 2022 (including France, Germany, Italy, Netherlands, Sweden, Switzerland and the UK) with 1,816 transactions worth a combined total of USD52.3 bn (€47.4 bn).
