Real estate transparency expectations continue to rise
Global Real Estate Transparency Index, 2018
JLL has been tracking the transparency of the global real estate market for 20 years and today, the demand for higher transparency is stronger than ever, as investors continue to increase their allocations to the sector, public debates around property ownership continue and the industry grapples with significant structural changes.
Introducing the Global Real Estate Transparency Index
Over the past two decades, the Index has become established as the leading industry benchmark for assessing market transparency. Now in its tenth iteration, it continues to guide the sector towards higher standards.
From investment performance measurement to regulatory & legal systems, the Index covers a diverse range of related topics. These elements, that determine how transparent a market is, are key not just to real estate investors and occupiers, but play a role in ensuring governments and communities are able to build functional, liveable and well-run cities.
The 2018 Index covers 100 markets, from the mature economies of Western Europe and North America to opaque markets in Africa, Asia and Latin America. Based on 186 different indicators, the index reveals a truly global picture of real estate market transparency.
What does the 2018 Index tell us?
Globally, steady progress is being made – with 85% of markets showing an improvement in the two years since the last Index. However, there is a feeling that the rising expectations of investors, occupiers and the general public are outstripping the real rate of change.
The United Kingdom, Australia and the United States are the world's most transparent markets, as the leading Anglophone countries continue to dominate the top ranks. But, tech-savvy Continental European markets, notably the Netherlands and Sweden, are also in this top group. The leading set of 'Highly Transparent' markets are among the biggest improvers since 2016, driven by new technologies and their pioneering role in developing a mature 'alternatives' sector.
The world's largest emerging economies are concentrated on the cusp of 'Transparent' status. Accounting for almost 50% of global population, these 'Big 8' markets (Brazil, China, India, Indonesia, Mexico, Russia, Thailand and Turkey) present enormous real estate opportunities that are currently restricted by a lack of transparency. While many of these countries continue to make improvements, further regulatory reforms – and, crucially, stronger enforcement – will be needed to push these markets into the 'Transparent' tier.
Many countries in this year's survey have shown significant improvements in score, and these are not concentrated in one region or driven by a single, shared factor. Myanmar, as part of its recent period of 'opening up', has moved swiftly up the rankings and is the most improved market in 2018 while Netherlands, India, Dubai and Thailand also show strong progress.
The World of Real Estate Transparency
Source: JLL, LaSalle Investment Management
The emerging debates around transparency
The survey also reveals that the landscape of transparency is shifting, with new issues emerging on the horizon as the real estate industry undergoes unprecedented structural change. Four key issues, with significant implications for transparency, stand out:
- The emergence of the 'proptech' sector, as new technologies are adopted by the industry;
- The rise of the flexible office space, as major disruptors (e.g. WeWork, IWG) change real estate market dynamics
- The spotlight on beneficial ownership and anti-money laundering, as public debates around corruption, tax evasion and ownership continue to make headlines;
- The maturing of the 'alternatives' sector, as it goes mainstream and investors demand higher transparency.