JLL Releases
Global Real Estate Transparency Index 2014
India Shows
Moderate Improvement
Where transparency broadens, real estate capital flows and market
change follows. JLL’s eighth Global
Real Estate Transparency Index,
covering 102 markets worldwide, shows continued progress in the
transparency of commercial real estate around the world. Over 80% of
markets have registered improvement since 2012.
The top improvers in
each survey generally correlate with a surge in foreign
direct investment and corporate occupier activity, as investors help to
accelerate transparency reforms and governments realise that poor
transparency will affect continued inward investment, long-term growth
prospects and the quality of life of citizens.
Nowhere
is the relationship
between market sophistication and incremental change more apparent than
the top tier of the Transparency Index. Highly Transparent markets have
had the types of reforms that may propel other countries from the Low
to Semi-Transparent rung for many years.
As
a result, progress at the highly transparent end of the scale, which
remains dominated by Anglophone markets, largely comes down to
innovation and technological developments such as open-data initiatives.
These kinds of innovations
will be critical catalysts of change in real estate transparency moving forward,
since the digital information revolution is being fuelled by a young, hyper-connected,
information hungry, highly transient workforce generation
Jeremy Kelly, Director
– Global Research, JLL says, ”The primary cities in
India have shown modest improvements in transparency over the
past two years, mainly due to advancement in market data availability.
Progress has nonetheless been the strongest in the Asia Pacific region,
with Indian cities starting to make up for lost
ground against other BRIC markets, where progress has been weaker. We
expect momentum in transparency improvements to build over the next two
years.
For example, India is likely to enact the Real Estate Regulation
Bill, which seeks to improve regulation over
real estate agents and the quality of land registry records. More
generally, India could see faster improvements in real estate
transparency, with the new government undoubtedly in a stronger position
to push through economic reforms.”
World’s most transparent
real estate markets in 2014
(Source: JLL,
LaSalle Investment Management)
Across the globe, key
drivers of transparency improvement include:
·
Governments’ recognition that poor transparency affects investment and quality of life
·
Media spotlight on corruption, scandals and building accidents
·
A rise in cross-border investments fuelled by more robust real estate markets
·
Millennials’ expectations, pushing “Open Data” and sustainability practices up the agenda
The
top improvers in
each cycle generally correlate with a surge in foreign direct
investment, as investors push through transparency reforms and because
governments quickly realize that poor transparency will deter continued
inward investment.
The
Asia
Pacific region
continues to display the widest diversity in real estate transparency worldwide -
Australia (3rd) and New Zealand (4th) top the Asia Pacific ranks, while
Mongolia (99th) and Myanmar (100th)
are some of the least transparent countries globally. In the latest
survey, the top tier in Asia Pacific has pushed forward in terms of
global rankings (New Zealand from 5th to
4th), but most of the region has not seen much change. In fact, the lowest rung has fallen in terms of global rankings -
Vietnam (from 62th to 68th) and Macau (from 64th to 71st) due to faster progress seen elsewhere in the world, and
Mongolia (from 93rd to 99th) due to scores worsening since 2012.
Overall
transparency in the region has seen moderate improvements in the 2014
survey, building on advancement in 2010 (due to progress in
China and India) and 2012 (led by emerging South East Asian countries). Only five markets (Japan, Thailand, India
Tier 1 & 2 cities and South Korea) have registered
moderate score improvements, but none ranks among the global Top 10
improvers; the rest of the region has seen generally small improvement.
Limited
improvement in the availability of market fundamentals data and slow
progress in regard to policy reforms in the past two years have
contributed to the results in 2014:
·
China’s
limited improvement in overall real estate transparency is mainly restricted to its Tier I cities.
·
Singapore
has inched ahead of Hong Kong
once
again (also in 2010) in a close race for the top transparency position
in Asia, with the latter seeing its scores fall since 2012 in the areas
of corporate governance and property taxation.
·
Transparency levels are still low in
Japan and South Korea relative to these two countries’
economic maturity. This is largely due to a relative lack of market
fundamentals intelligence as well as low transparency regarding
reconciliation of services charges for facilities management.
·
India
has seen moderate improvements in overall transparency scores for Tier I
and II cities (mainly in market fundamentals) and limited gains for
Tier III cities. India still scores among the lowest in the
transparency of its transaction process (e.g. high costs
of investment transactions, weak professional standards for local
agents).
·
All countries in emerging
Southeast Asia have seen some improvements (but less significant
than 2012 when the sub-region accounted for 3 out of the top 10 global
improvers). The sub-region has generally seen improvements in
regulatory/legal and the transaction process.
·
Going
forward, the region should see further progress in transparency
improvements stemming from both public and private sector players.
Demand from international investors and corporate occupiers should
continue to lead to better information on market fundamentals. Another
area that is moving in a positive direction is the
regulatory and legal environment. For example, China plans to
introduce a national property registry before 2018, which will probably
precede the expansion of a property tax nationally.
Taiwan is currently examining a bill which requires all pre-sales to be declared. Later this year
India is likely to enact the Real Estate Regulation Bill, which
seeks to improve regulation over real estate agents and the quality of
land registry records. India could see faster improvements in real
estate transparency in the future following the
election in May of the first majority government in 30 years; the new
government will undoubtedly be in a stronger position to push through
economic reforms.
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For media contact
Arun Chitnis
Head – Corporate Communications & Media Relations
JLL India , Pune 411001.
Tele: (020) 3093 0441 Fax: (020) 4019 6101
Mob: +91 9657129999
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