A new standardized approach for collecting, measuring and interpreting real estate investment performance data responds to the ever widening scope of global portfolios and institutional investors’ need for transparency and cross-border consistency. MSCI — the producer of property and property fund indices worldwide, including the REALpac/IPD Canada Property Index and Canada Property Fund Index — recently introduced global data and methodology standards to fill a recognized gap in comparing real estate to other asset classes.
“The potential advantages of commercial real estate may be constrained by information inconsistencies and hampered by slow, costly and error-prone data collection and transfer processes,” acknowledges Sebstastien Lieblich, managing director, MSCI. “The Global Data Standards aim to provide efficient and consistent data that would give property investments the same level of insight and uniformity that is evident in equities and bonds.”
MSCI began applying the standards, which were developed through extensive industry consultation, in the preparation of second quarter 2016 index results. The methodology standards define procedure methods and rules for computation of indexes and benchmarks. The data standards drill down to performance measurement inputs at the vehicle, asset and tenancy levels.
“Today, performance information about private real estate investments often remains relatively opaque, and the timely measurement requires multiple layers of private data to be passed between owners, managing agents, accountants, valuers and analysts on an increasingly frequent basis,” states MSCI’s guidance document for the new standards. “The data standards have been developed to provide the real estate industry with improved comparability across markets and asset classes, and overcome information exchange challenges.”