Property market in NZ among world’s most transparent – so what does it mean?
New Zealand has consistently been ranked as one of the most transparent countries in the world, but what does that mean for its commercial property market?
Through eleven editions of the Global Real Estate Transparency Index spanning over two decades, JLL have created what is today the industry’s most widely used and, we trust, highly valued benchmark for assessing real estate transparency.
New Zealand has consistently been placed at the pointy end of the scale, so it was no surprise when JLL’s 2020 index showed that out of 99 countries we were ranked in sixth place, among global heavyweights in the top 10 like France, the UK, and the USA.
But what does that mean for New Zealand and its commercial property market?
Clear as day
To answer the question of what a transparent property market entails, part of it is about having legal and regulatory frameworks that provide basic property rights. For example, that means you would have security of ownership and compensation if your property is going to be knocked down to build a motorway.
In addition, countries with good levels of transparency tend to offer better protection for citizens. Such measures include a well-functioning property market served by honest professional advisers, financial disclosure regulations for property investment vehicles, and a wealth of accessible data (such as monthly house price indicators). These help to build trust and feed through into helping people to make informed, sensible decisions about the buildings in which they live and work.
The benefits of a transparent property market
Better transparency is often accompanied by higher levels of business activity and investment.
Shanghai presents a great success story. Transparency advances – such as providing better data on supply, demand and valuations – went parallel with a tenfold increase in real estate investment over the last decade and a fivefold increase in the take up of new office space. In 2015 alone, nearly 600,000 jobs were created.
There is a strong likelihood that the markets which flourish most will also be the most transparent.
New Zealand’s investment case
The 2020 Index was launched at a time of massive economic and societal disruption. As governments, businesses and communities grapple with the impacts of COVID-19, the pandemic has brought the issues of transparency and trust into even sharper focus.
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During times of such uncertainty, the need for transparent processes and accurate, timely data becomes crucial as developers, occupiers, and investors more than ever want to know exactly where their money is going.
And herein lies the case for New Zealand. People around the world are watching as we have crafted a unique global position in having opened the domestic economy with COVID-19 seemingly under control, giving rise to the perception that New Zealand is very much a haven for investment and capital preservation.
The overarching trend globally toward rising allocations to commercial real estate will continue, which means transparency becomes fundamentally more important.
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