Increasing transparency across global real estate markets

real estate markets

Increased transparency in global real estates markets aids investors and occupiers.

According to the 2016 Global Real Estate Transparency Index report, a staggering 90 per cent of markets have registered advances in real estate transparency, over the last two years.

Improved market data and performance measurement, as well as better governance of listed vehicles have driven advancements within the market.

Singapore and Hong Kong topped the global transparency tables.

The 2016 Global Real Estate Transparency Index calculated transparency in 97 real estate markets by analysing a total of 83 differing factors.

The report found that the US ranks as the world’s most transparent real estate market in 2016, followed closely by the UK and Australia.

Existing countries considered ‘Highly Transparent’ are the Netherlands, New Zealand, Canada, France, Finland, Sweden, and Switzerland.

Ranking under the ‘Transparent’ bracket were Hong Kong, Germany, Singapore, Denmark, and Ireland.

The ‘Semi-Transparent’ band consisted of the Philippines, Thailand, and Indonesia.

The Jones Lang LaSalle survey provides investors and corporate occupiers with data and analysis fundamental to transacting, owning, and operating in global markets.

The Index reiterated the ascent of the MIST (Mexico, Indonesia, South Korea, and Turkey) growth markets; all are amongst the leading improvers. Turkey consistently leads with the most improved transparency rate.

“While the world economy is still in recovery, the 2016 Index reveals that real estate investors and corporate occupiers are widening their activity across a broader range of markets. This cross-border activity encourages faster rates of transparency improvement in growth and emerging economies as the market opens up further to international competition and their real estate sectors embrace global best practices,” said Jacques Gordon, global head of strategy for LaSalle Investment Management.

Managing director of Singapore and Southeast Asia, Jones Lang LaSalle Chris Fossick, said: “The real estate markets in Southeast Asia have made significant inroads in improving their transparency over the past two years. Three out of the top ten improvers globally are from the region – The Philippines, Indonesia, and Vietnam.

“All three countries have improved on the back of greater availability of market data and changes in the regulatory and transaction processes. With the exception of Vietnam, most Southeast Asia markets are either in the transparent (Singapore and Malaysia) or semi-transparent band.

“This finding is echoed by the recent rise in direct foreign investments (FDI) into the ASEAN especially into Indonesia and the Philippines. The rise of FDI into ASEAN is testament of global investors’ confidence of the long-term growth potential in this region.”

He confirmed that whilst there are no Asian cities in the top ten highly transparent global markets, Hong Kong ranks the highest in Asia at 11. Singapore is closely behind, ranking at number 13.

“Both Singapore and Hong Kong have shown improvements in their overall global ranking with Hong Kong marginally ahead of Singapore as a result of more detailed market fundamental data,” said Mr Fossick.

The 2016 Index showed continued transparency deficiencies in many African, Middle Eastern and Latin American markets.

Ranking lowest, under the ‘opaque’ market were: Venezuela, Mongolia, Tunisia, Ghana, Iraq, Pakistan, Algeria, Belarus, Angola, Nigeria, and Sudan.

National director of Global Research at Jones Lang LaSalle, Jeremy Kelly said: “While steady progress in real estate transparency has been made during the past two years, much still needs to be done. The pace of regulatory and legal reform has been slow, and we have seen limited improvement on the transparency of transition processes, despite recognition by government and industry bodies that transparent real estate markets are necessary.”

Looking ahead, Kelly speculated on the presiding issues likely to lead to further transparency results in the next update of 2018. He cited that a growing recognition in many emerging economies that the current lack of performance indicators and accurate market information is hindering inward investment and crippling the development of competitive domestic real estate sectors.

Property sustainability characteristics will affect lease and investment decisions; growing from a marginal criterion to a critical decision-making input. This will result in greater transparency of energy efficiency and Green Building benchmarking.

The ongoing financial crisis, particularly in Europe, will motivate regulators, central banks, foreign investors, and other real estate professionals towards better transparency, in the process offering more public data on real estate debt and monitoring lenders more closely.