Page 450 - Invited Paper Session (IPS) - Volume 1

IPS176 Thomas A. K.
The paper is organised as follows. In the first part of the methodology
section, the data and calculation methods applied to extract price trends for
office, retail and rental housing in 127 German towns and cities are presented.
The second part is devoted to explain the source data used and the choices
and assumptions made to derive a coherent weighting scheme for the several
definitions of commercial real estate in policy use. In the results section, the
price indices for commercial real estate are shown for the total aggregate of
127 towns and cities. Finally, conclusions are drawn and potential further work
in this field is sketched.

2. Methodology
The price indices for commercial real estate in 127 German towns and cities
are compiled on the basis of two major components. These are, first, the price
trends for office buildings, retail space, multi¬family dwellings as well as
houses and apartments in each of these towns and cities and, second, the city-
level data on floor space which is needed to construct weighting schemes
according to the definitions of commercial real estate under consideration.

a. Price data for 127 German towns and cities
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The data base RIWIS maintained by bulwiengesa comprises the
information needed to calculate prices for office, retail and multi-family
dwellings following an income approach. According to this, the market value
MV of commercial real estate is inferred using the valuation equation:
O
=

where OI is (annual) rental income less of operating costs (including
maintenance, administration etc.) and vacancy costs and is the
capitalisation rate.
The data is stratified in the sense that the pricing information is available
for each of the relevant object types (office, retail, multi-family dwellings) and
for the each of the 127 German towns and cities considered. It results from
intensive market observations consisting of surveys among realtors, investors,
owners and lessees in the context of actual sales and a careful validation by
bulwiengesa experts. The information is of an appraisal nature, as the raw data
for individual objects are adjusted by expert judgment in order to fit the
reference of prime-segment objects. The valuations thus refer to objects of
constant quality over time, implying that their percentage changes can be
interpreted as price changes.

RIWIS is the acronym for Regionales Immobilienwirtschaftliches Informationssystem meaning
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regional real estate information system.
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