Page 448 - Invited Paper Session (IPS) - Volume 1

IPS176 Thomas A. K.
the development of commercial property price indices (CPPIs) is “one of the
fields in statistics that has perhaps lagged the furthest behind” (p. 131). Some
important milestones were recently reached nonetheless. International
statistical institutions agreed upon a document informing about source data,
conceptual frameworks and methodologies to compile CPPIs (Eurostat, 2017).
The collection and dissemination of price indicators available for the G-20
countries were institutionalized within the G¬20 Data Gaps Initiative (DGI),
with the Bank of International Settlements (BIS) serving as the data hub and a
concrete short-term target being formulated in DGI Recommendation II.18. 2
In Germany, CPPIs are currently available only from private data providers
while official statistics is reluctant to make vigorous efforts aiming to ensure
data provision in the short and medium run. Among the private data providers,
vdp and bulwiengesa publish CPPIs which are based on sound measurement
and compilation practices to a sufficient degree and reflect price
developments with a broad regional coverage. The transaction-based,
quarterly vdp indices shall currently be deemed most useful for analysts. The
merits of the annual appraisal data from bulwiengesa is not only confined to
cross-checks. Rather, as the data is available in the breakdown of 127 German
towns and cities as well as for several real estate types such as office, retail,
multi-family dwellings, houses and apartments, it is also a valuable source for
compiling CPPIs according to several definitions of commercial real estate on
an experimental basis.
This paper reports on the attempt of the Deutsche Bundesbank to compile
experimental CPPIs for various definitions of commercial property in use on
the basis of bulwiengesa data and coherent weighting schemes regarding
object types. While office and retail buildings as well as logistics and industrial
structures are unanimously considered commercial real estate, there are
alternative views on whether rental housing should be classified as residential
or commercial real estate. In general, the classification of rental housing may
not be decided universally, as the purpose of the analysis matters. Of crucial
importance is, on the one hand, the question as to whether real estate is
classified according to the user or the owner perspective (e.g. Deutsche
Bundesbank, 2013). Amongst the definitions in use, the one laid down in the
Capital Requirements Regulation (CRR) implements the user concept and
thus considers rental housing as part of residential real estate. If, by contrast,
the owner perspective is taken in its pure form, only owner-occupied housing
should be regarded as residential real estate, implying that commercial real
estate – as it completely includes rental housing – is understood in the

2 The target is that by 2021 G-20 economies are encouraged to provide nationally available CPPI
data to BIS, be it from private sources or sourced from official statistics, the latter obviously
being the preferred option.
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