Final Minutes of the e-meetings of the 'Task Force CREI' (1) (Commercial Real Estate Indicators) 16-17th March 2021 - CIRCABC
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
EUROPEAN COMMISSION
EUROSTAT
Directorate C: Macro-economic statistics
Unit C-4: Price statistics. Purchasing power parities. Housing statistics
Luxembourg, 7 June 2021
Final Minutes
of the e-meetings of the
‘Task Force CREI’ ( 1)
(Commercial Real Estate Indicators)
16-17th March 2021
(1) Published in the Register of Commission Expert Groups and Other Similar Entities, code number E03690.1. Approval of the agenda
The chair of the meeting, Head of the unit C4 (Eurostat), welcomed all participants
including representatives from Bulgaria, Hungary, Malta and Slovakia joining the Task
Force for the first time. Furthermore, he introduced Arjan Knibbe and Anton Oskamp
from the contractors KR&A and MMIT (item 5) and Anda Georgescu, Robert Hill,
Miriam Steurer and Gregg Patrick from the contractor Sogeti (item 9). The chair proposed
the agenda, which was approved.
2. Nature of the meeting
The meeting was non-public and held on-line.
3. List of points discussed
Agenda item 2: Minutes and follow up of the TF CREI meeting of 20-21st October
2020
The final minutes of the three online sessions included the comments received on the draft
and were already uploaded in the public space of CIRCABC.
Agenda item 3: Reporting on recent events and BIS presentation: BIS commercial
property price statistics – ongoing developments
Eurostat informed the participants on the ESSC meeting of February 2021. The Member
States welcomed the progress report on CREI and the plan to set up a Task Force Vacancy
Rates for Commercial Real Estate (TF VRCRE). The call for interest had a deadline of 26
March. The first meeting will be in May if feasible.
The BIS clarified that they are disseminating data on CREI in the context of the Data Gap
Initiative (DGI) launched in the financial crisis. BIS does not compile data. Its website is
very rich now encompassing data of 60 countries in the residential segment and 18 in the
commercial real estate segment. The data frequency is annual and limited to price indices.
Rent indices are not yet foreseen to collect which is organised via the NCBs.
The BIS does not collect any aggregated data combining various breakdowns of CREI.
Due to its heterogeneity it was not considered useful.
Agenda item 4: Presentation on progress of national pilot projects 1st part
Agenda item 8: Presentation on progress of national pilot projects 2nd part
Agenda item 4.1: Austria – CREI Groundwork - Conclusions
Statistics Austria presented its tool combining a huge variety of data sources – including
web scraping - in order to produce meaningful CREI data analyses. A data editing and
exploration tool was developed. A new challenge was the so called ‘Fix and Flip’
transactions covering buy, refurbishing/renovating and selling quickly. Dutch data was
used for comparing the results for Austria and finally underlining the plausibility of the
results achieved.
2In the discussion, it was underlined that a cooperation with the central bank could further
improve the compilation of indices by allowing the use of valuation data. A legal act is
under preparation in order to deal with confidentiality concerns.
Furthermore, the ECB noted seasonal effects. End of the year the activity in the CREI
market is higher due to the bonus schemes applied in this market.
Item 4.2: Finland – Developing commercial real estate indicators in Finland
In order to tackle the issue of share deals Statistics Finland uses RCA data which covers
share deals as well. In the SPAR method – based on the Dutch experience – transactions
and valuation data is taken into account. For improving results a new stratification method
has been chosen.
In the discussion it was recommended to use larger windows for shorter data series when
applying the rolling time dummy method.
Furthermore, the question was raised if the scope of rents are just ongoing rents in existing
contracts or if newly agreed rents are covered as well. It would be useful to disentangle
these two types of rents.
Item 4.3: France – Building a hedonic CREI – the French experience
Banque de France is using a dataset that matches fiscal data and land register, available to
public institutions, having a time lag of 6 months. In addition the macroprudential
authority in France (ACPR) has access to details of all real estate holdings.
For the moment, the focus of CREI index production is on annual data and the region Île-
de-France. An extension to the entire country and higher frequency indices is under
preparation including a now-casting of the CPPI. In addition, the development of a rent
index is under scrutiny, depending on available data.
None of the indices is yet published. The next step will be a stakeholder consultation
which is already ongoing. A publication might be envisaged end 2021.
Item 4.4: Hungary – Methodological and practical developments on price and rental
indices
Statistics Hungary has access to a stamp duty data base with some additional information
on CRE. A CPPI is calculated as a quarterly index starting 1q2015 until 4q2019. It takes
into account NACE (Rev 2) classification for L68 Real Estate Activities.
Rent indices are under development and – following the example of the CPPI – based on
a survey. Experimental data starts 1q2016.
On methodological issues NSI HU is cooperating with the Hungarian NCB. Due to lack of
necessary data on characteristics the hedonic method is not yet applied.
3Item 4.5: Netherlands – Commercial property rent indices
CBS uses a non-complete rent registry. Owners have to deliver rental prices allowing
municipalities to compile valuations of the buildings. Data on ongoing contracts is scarce.
When looking at contractual rents, incentives could play a role up to 15-20%. Therefore,
smoothing techniques could help to produce better results.
In the discussion it was underlined that some users are interested in new rents, while other
users have a focus on the entire rental market i.e. existing and new rents.
Furthermore, the distinction of net lease, double net lease and triple net leases was made.
Item 4.6: Portugal – Development of Commercial Real Estate Indicators
Statistics Portugal informed the participants that now a CPPI series with half yearly
frequency is available. The CPPI 2020 will be published in May 2021.
First results capturing the impact of COVID 19 indicate that new rents agreed are often
below existing rents. Some leases were not renewed. The index started to decrease in
2q2020.
The new protocol covering the access to data of the Tax and Customs Authority might
increase the available variables in the future allow to produce more and better indices.
Item 8.1: Denmark – Commercial Real Estate Indicators – a status
Statistics Denmark is closely cooperating with the Danish Property Federation. The
market coverage is 85% in market value. Based on the feasibility of available information
Statistics Denmark decided to produce rental indices (Dutot rent index) and indices on
vacancy rates but not indices on rent levels or yields.
The vacancy rates were split in economic vacancy and vacancy of floor space. More
expensive floor space is less vacant.
In 2021 additional information from the Danish Property Federation will come allowing
further improvements of the indices calculated.
Item 8.2: Germany – Development of SPPI for NACE 68.2 – Rents for Commercial
Real Estate
Destatis started to develop CREI in the context of a survey improving SPPIs targeted to
deflate National Accounts volumes. Starting point was the development of SPPI for
NACE 68.2. SPPIs include secondary products as well. However, the relevance of the
secondary activities is not known due to missing register information.
4The development of weighting schemes is a challenge when aiming to capture at least
75% of turnover. Furthermore, the split in residential real estate and commercial real
estate activities has to be monitored.
In the discussion was highlighted that the NA approach to deflate volumes asks for taking
into account all the rent contracts. However, from the macroprudential perspective there is
interest in separate information on new rent contracts as well.
Agenda item 5: Automatic data collection of information published by real estate
investment funds in ‘Bundesanzeiger’ (KR&A/MMIT)
The contractors presented their work on the automatic data collection of information from
reports published by real estate investment funds on the ‘Bundesanzeiger’ website and its
analyses in order to calculate price indices. The main aim of this project is to evaluate the
feasibility of extracting prices. The published data of the funds are based on valuations
(80%). Transactions play a minor role (20%). The data is biased towards prime locations
and due to the home bias of German funds concentrated on Germany but covering many
other European regions as well.
The huge variety in presenting the data published in annexes to the financial reports is a
challenge for setting up a database combining information across funds and paving the
way for developing indicators for prices or rent data for CRE. The first results are
promising and could eventually be presented after the completion of the project in the next
TF CREI meeting in October 2021.
Agenda item 6: Other ongoing research projects
Eurostat informed about the progress of work under the project on automatic data
collection from web portals advertising CRE for sale or rent. The objective of the project
is to evaluate feasibility of producing price or rent indices for CRE using information
from web portals and to assess the quality of resulting indices. As a result of the work
carried out so far, the decision on the final selection of portals for data collection and price
index construction was taken. The selected portals are from Estonia, Germany, Lithuania,
Spain, Poland, Portugal and United Kingdom. Web scraping started in mid-November
2020 and will be continued until November 2021. The tasks that remain to be performed
are development of data cleaning procedures and production of price and rent indices. The
contractor will present the obtained results at the TF CREI meeting in autumn 2021.
Agenda item 7: New research projects and grants to be launched 2021
Eurostat informed about new research projects, which are supposed to be launched during
2021. The tendering procedure covers the following lots:
Lot 1: Assistance and support to EU Member States and EFTA Countries in the
development of Commercial Real Estate Indicators
Lot 2: Research on Commercial Real Estate Space Market
Lot 3: Support for manual on Commercial Real Estate Indicators
5The Grant exercise for 2021 will cover, among other things, CRE indicators including
vacancy rates. The call for proposals is scheduled for spring 2021 depending on the
adoption of the implementing decisions related to the EU budget 2021.
Agenda item 9: State of play of chapters of CREI Manual (Sogeti)
Sogeti presented the progress on two chapters of the future manual on CRE indicators.
The first chapter is on the functioning of the commercial real estate market. One of the
main difficulties in drafting this chapter turned out to be the definition of commercial real
estate. As part of the presentation, the existing definitions of CRE were reviewed, the
differences between them were noted and the issues that need clarification were identified.
In particular, questions were raised to the TF as to whether properties under development
and undeveloped land should be treated as CRE.
The second chapter of the future manual is on needs of users, with a focus on users
involved in financial stability and macroprudential supervision. The authors of the second
chapter highlighted issues which are crucial for the development of CRE indicators. In
particular, attention was paid to the difficulty of defining what is a prime location.
Moreover, methodological issues related to the development of price indices, rent indices,
rental yield indices, trading volume and vacancy rates were discussed.
In the discussion, it was noted that even if ESRB is an important user it is not the only
one. Other users have different requirements. The most appropriate approach to the
definition of CRE may be Eurostat’s building block approach, which was already the
subject of much discussion. With the building block approach it is possible to track more
scenarios, however it is necessary to think about weighting schemes, in particular if
indicators are to be produced for all individual strata and weight them to obtain the
general CPPI. Moreover it is important to decide which buildings are covered by STS
statistics and which are included in CRE statistics. It is important to realize that buildings
can shift from one statistical area to another.
For a property to be defined as commercial it has to be income producing or intended to
have income in the future. Properties under construction or development should be treated
as CRE. If a building for demolition is purchased in order to add the underlying land to
the company’s assets then it probably should not be treated as CRE. If the building is
demolished with the intention of its immediate rebuild then it may be treated as CRE. The
decision if a building for demolition should be treated as CRE or not can be based on a
fact if a building permit has been issued for this land. Agricultural land should be out of
scope. Real estate is defined as the buildings and land they are built on. Land without
buildings should not be treated as real estate. It would be interesting to have a separate
price index for development land.
Regarding data sources, price indices for CRE should ideally be based on transaction
prices. The second choice should be appraisal data and list prices as a last resort.
However, the usability of appraisal data depends on the purpose of the valuation. In order
to maintain comparability between countries it is important to ensure that the valuation
purpose is the same across countries.
6Net operating income from valuation data could be used when calculating a rental yield
index. It allows to estimate the long-term stabilized yields.
The report of the WG GES on vacancy rates can be useful when working on
recommendation for vacancy rates.
Agenda item 10: Steps towards a legal framework for CREI?
Eurostat introduced a number of aspects for discussion in relation to a future legal
framework for CREI. In particular, the need of reporting on the implementation of ESRB
recommendations was noted, the pros and cons of different types of legislation and the
possible need to develop a new separate legal basis for CREI, which would be a long
process. The question was raised whether some future legal requirements could be more
demanding for larger countries than for smaller, taking the example from STS. Finally, it
was proposed to run a survey this year to take stock of the state-of-play for developing
CREI in each country.
In the discussion, it was noted that, for CREI, national data may often be more important
than European aggregates, as the financial risk are mostly at national level. Taking into
account the time needed to develop legislation, voluntary data transmissions can be set up
first. It was noted that legislation can be beneficial for Member States as it may help to
obtain resources or access to data. The coverage of legislation will need to be decided in
the process. One delegate suggested to develop one overarching real estate legal
framework, including e.g. the house price index.
Agenda item 11: Any other business
No additional points were raised.
The next TF CREI meetings are scheduled for 27-28 October 2021. The Working Group
Real Estate Price Statistics is provisionally scheduled for 13-14 September 2021.
74. List of participants
EU national delegates
Country Delegate name Institution/Organisation
Austria HOFBAUER Stefan Bundesanstalt Statistik Österreich
FARAH Palmira
Bulgaria Statistics Bulgaria
MANOVA-PELOVA Olga
LARSEN Jacob Moos
Denmark Statistics Denmark
MØLSKOV Cajsa
VUORIO Johanna
Finland AUNO Ville Statistics Finland
VIRTANEN Ulla
BLANG Dorothee
Federal Statistical Office of Germany
Germany SCHÖNEICH Cordula Leonie
(Destatis)
TESKE Markus
HAMVAINÉ DR. HOLOCSY
Hungary Statistics Hungary
Ildikó
Ireland CASEY Barra Central Statistical Office Ireland
CAMILLERI Samantha
Malta CASSAR Matthew Statistics Malta
MAGRIN Denise
DE JONGE Thomas
Netherlands VAN SCHIE Ron Statistics Netherlands
ISHAAK Farley
KACZOR Malgorzata
Poland MATULSKA-BACHURA Statistics Poland
Agniezska
Portugal TEIXEIRA Angelo Statistics Portugal
Slovenia PAVLIN Branko Statistical Office of the Republic of
Slovenia
Slovakia KOSSEYOVA Olga Statistics Slovakia
Other public entity
Institution/Organisation Delegate name Department
Bank of Austria WAGNER Karin
8Institution/Organisation Delegate name Department
Bank of International
SZEMERE Robert Monetary and Economic Department
Settlements (BIS)
Banque de France COFFINET Jerôme
DE L'ESTOILE Etienne
Central Bank of the ATILGAN AYANOGLU Ozgul
Republic of Turkey
KIZILKAYA Erdi
Deutsche Bundesbank SCHIMMELPFENNIG Mario
European Central Bank KANUTIN Andrew Directorate General Statistics
(ECB)
International Monetary GUERREIRO Vanda IMF Statistics Department
Fund (IMF)
National Bank of Greece VLACHOSTERGIOU Vasiliki
PAPAPETROU Evangelia
Invited experts
Institution/Organisation Delegate name Department
GEORGESCU Anda
PATRICK Gregg
Sogeti
HILL Robert
STEURER Miriam
DE LEEUW Ernst Jan
KR&A (Knibberesearch)
KNIBBE Arjan
GEERS Ton
MEJIA Teresa
MMIT OSKAMP Anton
VAN DE LOUW Emile
VERHAGEN Herman
European Commission
Directorate-General Delegate name Department
KONIJN Paul Chairman, Head of Unit C4
PARLASCA Peter Unit C4
DG Eurostat TRONET Vincent Unit C4
RECHNIO Renata Unit C4
PASI Simo Unit G3
9You can also read
