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Private Real Estate Valuation and Sale Price Comparison 2021

For mainstream financial asset classes, investment-performance measurement is based on transaction prices. In contrast, direct real estate is well known for being an illiquid and heterogeneous asset class, making the establishment of purely price-based indexes problematic.

Within these limits, valuation-based indexes aim to track actual agreed transaction prices as closely as possible. Therefore, it is of critical importance that users of these indexes can gauge how closely this goal has been achieved. For this reason, MSCI computes and discloses fair indicators comparing valuations and prices for assets that have come to the open market and transacted.

The latest annual report found that, in 2021:

  • Sale sample increased during the post-COVID-19 recovery
  • Weighted average absolute difference and weighted average difference between valuation and sale price increased higher than the 10-year average
  • High sector deviation in average sale premium/discount was sustained

Weighted average difference by sector

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Research Authors

  • Vinay Kakka, Analyst, MSCI Research
  • Girish Walvekar, Senior Associate, MSCI Research
  • Hariharan GG, Vice President, MSCI Research