JLL’s 2016 Global Real Estate Transparency Index reveals that real estate transparency has continued to improve steadily at a sub-national, national and international level. Globally, transparency scores have advanced by an average of 2.4% (2014-2016), matching broadly the improvements made between 2010-2012 (at 2.9%) and 2012-2014 (at 3.4%). Two-thirds of markets have shown progress over the past two years.
These encouraging results highlight a real estate industry that is making steady progress through initiatives to deepen the availability and quality of market data and performance benchmarking; by enacting new legislation to reduce roadblocks to progress; by setting higher ethical standards; and by taking steps to make transaction processes more fair and transparent.
Median change for all markets included in each two year period
Source: JLL, LaSalle Investment Management
The Anglosphere countries continue to dominate the upper echelons of the transparency hierarchy – accounting for six of the world’s ten ‘Highly Transparent’ markets. The
Canada and the
United States hold the top positions.
These traditional standard-bearers are taking transparency to a new level; making improvements that go beyond other ‘Highly Transparent’ markets, particularly in areas of performance measurement, market fundamentals data and valuation practices. In these markets, property data is increasingly available at the city sub-market level and by property type; and further improvements in performance measurement and market data are on the horizon, especially in tracking niche property sectors.
They are setting a high bar for transparency and are showing the way for other markets to follow. The world is looking to these ‘Highly Transparent’ markets to take the lead in introducing greater transparency on beneficial ownership disclosure and on tightening up anti-money laundering legislation and procedures in the wake of the revelations from the Panama Papers.
Serbia are the top improvers globally since 2014, followed by
Bulgaria. These three Balkan countries have moved up into the ‘Semi-Transparent’ category due to improving market fundamentals data and better valuation practices, but they remain well below most of the rest of Europe. Echoing the 2014 survey, Sub-Saharan Africa is also home to some of the strongest improvers – notably
Greatest progress over the past two years has been made in ‘Market Fundamentals’ – the access, depth and quality of aggregated and disaggregated data on real estate market conditions. Despite improvements, this is an area of real estate transparency that still has the strongest potential for further development.
Data access and tracking is being facilitated by technology advancement and a rising culture of ‘open data’. A real estate industry that was slower than others in technology innovation is seeing a quantum leap, with an emergent ‘prop-tech’ sector offering platforms of real-time, very granular data to corporate tenants and landlords.
The next two years are likely to bring about an even faster pace of change in the technology and data platforms and infrastructures that the commercial property industry utilises – and underlying transparency should improve as a result.
Technology is also allowing some emerging markets to leapfrog the normal transparency evolution. Examples include the digitisation of land registries in
Ghana is reportedly trialling a system to record title deeds with blockchain technology.
Regulatory reforms are essential for further progress in real estate transparency and a number of governments appear to be taking steps forward by introducing new legislation, with recent examples including
Taiwan. However, in many markets there continues to be a disconnection between the existence of regulations and actual enforcement.
The largest differences between regulation and enforcement are found among the ‘Semi-Transparent’ group of countries, where progress still needs to be made in enforcement of financial regulation, land use planning, building codes and contracts, and where penalties for non-compliance need to be more stringently applied.
Meanwhile, ‘Opaque’ markets demonstrate little difference between regulation and enforcement – suggesting that a lack of regulation itself is holding these least transparent countries back, rather than a lack of enforcement.
There continues to be evidence that sustainability considerations are becoming more widely established, although the pace of progress in creating tools and regulations is slow. Most of the improvements have been driven by the introduction of minimum energy standards for new and existing buildings.
There are encouraging signs that two cornerstones of environmental performance transparency (minimum energy efficiency standards and green building certification schemes) are available in the majority of key markets.
France is the top scorer through the roll-out of legislated mandates to transition to a low carbon economy.
Japan joins France,
Australia and the
UK in the top group for the first time through the introduction of several new tools. Dubai is another robust improver with its mandatory green building standards.
Read more about Real Estate Environmental Sustainability Transparency
Rising Real Estate Transparency
in Central and Eastern Europe We look at how transparency improvements in
the CEE Region are changing investor perceptions