This study reviews and critically discusses correction-procedures (also called "unsmoothing-procedures") for appraisal-based indices.

Indices tracking values of direct commercial real estate investments are in custom constructed in an "appraisal-based style" : Since transaction prices are scarce, values from regular intervals of appraisals for each "index property" are taken for index calculation. Alas, appraisal-values not necessarily match transaction-prices or true market values of properties. Instead they deviate from market-values due to biases which result from surveyors’ behaviour in appraisals and index construction processes. In the past, some scientific authors suggested to correct (or "unsmooth") appraisal-based indices from several types of biases. They claim that the corrected index returns should rather match the returns of the true market values than the original index returns.

Primarily appraisal-based indices were calculated and published for the USA and UK as convenient target markets for investors. So one long series of an appraisal-based index which is appropriate for time series analysis is the NCREIF Property Index for U.S.-properties. The total index is composed of an income and a capital/appreciation component. The application of the correction procedures and the focus of this study is the NCREIF Appreciation Index. The techniques of the correction-procedures are discussed referring to the NPI and meaningful modifications are proposed.