In the past, U.S. real estate faced challenges with appraisal objectivity. Looking at the disconnect between what appraisals and transaction-market prices would suggest for investment returns provides some support to the notion that motivations have been skewed, writes Jim Costello, executive director at MSCI Research, in a Dec. 13 blog post.
Appraised values for CBD offices had fallen only 43 percent from the peak levels to midyear 2024, while the RCA commercial-property price index (CPPI) for CBD offices stood 51 percent lower than the peak at that time. Recalculating the performance index using CPPI trends — i.e., measuring changes in asset prices rather than appraisals — produces a different story on investment performance.
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