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Archive:Real estate statistics - NACE Rev. 1.1

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This article belongs to a set of statistical articles which analyse the structure, development and characteristics of the various economic activities in the European Union (EU). According to the statistical classification of economic activities in the EU (NACE Rev 1.1), the present article covers real estate statistics, corresponding to NACE Division 70, which is part of the real estate, renting and leasing sector.

Real estate services are classified alongside a range of business services within NACE Section K. However, some parts of the activity have a close relationship with the construction sector (see Construction statistics - NACE Rev. 1.1) and others with architectural activities (see Architectural, engineering and technical services statistics - NACE Rev. 1.1).

Figure 1: Real estate activities. Annual growth rate for stocks of loans by MFIs to households and individual enterprises, euro area (%)

Main statistical findings

Table 1: Real estate activities (NACE Division 70). Structural profile: ranking of top five Member States in terms of value added and persons employed, 2006
Table 2: Real estate activities (NACE Division 70). Main indicators, 2006 (1)

One indicator of the level of activity in the residential property market is lending for house purchases. Data from the European Central Bank (ECB) indicate how the stock of such lending, was increasing at a progressively stronger rate throughout the period 2003 to 2005, and peaked at 12.1 % in March and April 2006; since when the rate of growth slowed mirroring the increase in interest rates that started in December 2005.

Structural profile

There were around 1.1 million enterprises active in the EU-27's real estate services sector (NACE Division 70) in 2006 and together they employed 2.9 million persons. These enterprises generated EUR 570 billion of turnover, from which close to half (EUR 270 billion) was retained as value added. As such, this sector's contribution to the total for real estate, renting and leasing (NACE Divisions 70 and 71) ranged in 2005 and 2006 between three quarters for turnover to four fifths for value added and employment.

Germany had by far the largest real estate services sector in the EU-27, generating EUR 64.4 billion of value added, close to one quarter of the EU-27 total. In contrast the United Kingdom had the largest workforce in this sector, with just over half a million persons employed in real estate services, some 17.5 % of the EU-27 total. As a proportion of value added in the non-financial business economy (NACE Sections C to I and K), the real estate services sector in 2006 was largest[1] in Denmark, generating 12.2 % of the non-financial business economy value added, far ahead of the proportions recorded in Latvia and Sweden (just over 7 %). This sector's smallest contribution to non-financial business economy value added was in Greece where it was less than 1 %.

Expenditure and productivity

In 2006, gross tangible investment in the real estate services sector was valued at EUR 177 billion, equivalent to 70.2 % of such investment in real estate, renting and leasing. The investment rate in the real estate services sector was 65.6 %, slightly below the real estate, renting and leasing average of 74.1 %, but still more than three and a half times as high as the non-financial business economy average, and the third highest investment rate among the non-financial business economy NACE divisions in 2005 or 2006. In more than one third of the Member States the investment rate in this sector was above 100 %, indicating that investment exceeded value added: particularly high investment rates were recorded in Bulgaria and Greece.

Another indicator of the capital intensive nature of this sector in the EU-27, though less spectacular than the investment rate, is the relatively low (13.3 %) share of personnel costs in operating expenditure in 2006, below the non-financial business economy average (16.1 %). Average personnel cost in 2006 in the EU-27's real estate services sector were EUR 29.9 thousand per employee, very close to the non-financial business economy average.

As noted in the overview article, financial costs and depreciation charges may constitute the main costs faced in some parts of the real estate sector, and these are not considered when calculating gross value added. As such, productivity measures based on gross value added tend to be particularly high. Apparent labour productivity was EUR 93.1 thousand per person employed for real estate services in the EU-27 in 2006, more than double the non-financial business economy average. The combination of high apparent labour productivity yet typical average personnel costs resulted also in a very high wage-adjusted labour productivity ratio of 311.9 %, which was also more than double the non-financial business economy average (151.1 %). In every Member State the wage-adjusted labour productivity ratio in real estate services exceeded 200 %, and was always above the national non-financial business economy average.

Data sources and availability

The main part of the analysis in this article is derived from structural business statistics (SBS), including core, business statistics which are disseminated regularly, as well as information compiled on a multi-yearly basis, and the latest results from development projects.

Other data sources include the European Central Bank.

Context

Real estate services and renting and leasing services are provided to households and to business clients. The use of renting or operating leasing can increase financial flexibility, reducing the need to commit own capital, whether for buildings, machinery, equipment or appliances.

The activities of real estate services are very diverse: real estate agents let (rent) or sell on a commission basis; traders buy and sell property; valuers, facilities and estate managers provide professional services; and finally owners let property. Most of these activities are related to the secondary market concerned with existing property, although some, such as property developers are active in the primary market and are therefore more closely related to construction. The wide range of real estate service activities have very different cost structures and revenue streams and care has to be taken when comparing them, particularly when trying to measure the size of each subsector or their labour productivity. In particular, when enterprises are the owner of a good that they rent or lease, their financial costs and depreciation charges may constitute the main element of their total costs, but these are not considered when calculating gross value added or indicators of productivity based on this.

Further Eurostat information

Publications

Main tables

Database

Dedicated section

See also

Notes

  1. ↑ Bulgaria, Cyprus, Poland and Romania, 2005; Luxembourg, Malta and the Netherlands, not available.
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