The inclusion of portfolio sales in real estate price indices
Conference
65th ISI World Statistics Congress 2025
Format: IPS Abstract - WSC 2025
Keywords: commercial real estate
Thursday 9 October 2 p.m. - 3:40 p.m. (Europe/Amsterdam)
Abstract
Constructing commercial property price indices (CPPIs) presents several challenges. One significant issue is the relatively low volume of commercial real estate (CRE) sales compared to residential real estate. Additionally, many CRE transactions involve portfolios, which encompass multiple properties and can span various property types and regions. Including portfolio sales in CPPIs is particularly challenging. While a straightforward approach is to exclude portfolio sales, this exacerbates the problem of low sales volume. To this date, methods for incorporating portfolio sales into CPPIs have not been studied. This study addresses the challenges in constructing price indices due to portfolio sales, proposes potential solutions for their inclusion in CPPIs, and evaluates the feasibility of these solutions by providing assessment methods. A model-based bootstrap resampling method is used as an assessment technique. The study utilizes official data on CRE transactions from the Land Registry Office, official valuations, and detailed information on buildings in the Netherlands. The proposed solutions aim to provide compilers of CPPIs with guidance on handling portfolio sales, while the assessment techniques offer a means to evaluate the quality of these solutions.