Lighter Transaction Evidence May Not Be the Constraint for Valuations

Valuers in commercial real estate cannot price on sentiment. They must rely on confirmed transaction evidence, and an analysis of MSCI data over more than two decades may illustrate that discipline.

We examined the spread between valuation and transaction price for sales from portfolios contributing to the MSCI Global Annual Property Index. From 2000 to 2025, the valuation spread averaged +2.9%, meaning transaction prices were above valuations. (In growth periods when the spread is positive, that figure reaches 3.9%.) A potential explanation is that appraisers waited for confirmed comparable evidence rather than pricing to sentiment. In downturns — 2008, 2009, 2023 and 2024 — the spread turned negative and averaged -2.6%, so the same evidence-led approach held in both directions.

Taking direction out of it, the absolute spread averaged 9.3% in the 26-year period, with a standard deviation of just 1.3 percentage points. It only widens slightly when markets move fast: Absolute spread correlated 0.46 with the size of annual capital growth, whichever way it is moving. That looks like a timing effect, with evidence taking a while to catch up to a fast-moving market, rather than a shortage in the volume of evidence.

An understandable concern in the industry could be that lack of transaction evidence may lead to poor valuation accuracy. This data would argue against that. Strengthening markets bring more transactions (transaction count correlated 0.57 with capital growth), yet accuracy does not improve with them, as the absolute spread barely tracks transaction count at all (0.26). The volume of transaction evidence does not seem to be the constraint; rather, evidence would suggest market speed is.

For investors, this shows that appraisal-to-transaction gaps are small, consistent and driven by timing rather than a shortage of evidence, meaning valuations remain a dependable benchmark for pricing decisions even when markets move quickly.

Global transaction count is total global volume, not only the transactions tied to portfolios contributing to the MSCI Global Annual Property Index. Valuation spread denotes the weighted average difference between sale price and last uninfluenced market-adjusted valuation; a positive spread means sales cleared above valuations. Absolute valuation spread denotes the weighted average absolute difference between sale price and last uninfluenced market adjusted valuation; this measure shows the magnitude of deviation regardless of direction. Past performance — whether actual, backtested or simulated — is no indication or guarantee of future performance. Data as of Aug. 5, 2026. Source: MSCI Global Annual Property Index (Unfrozen: Weighting: Market Size); MSCI Real Capital Analytics