UK has most transparent commercial property market in the world
Commercial property markets around the world are becoming more transparent with the latest index covering 102 key markets showing over 80% have improved since 2012.
According to the eighth global real estate transparency index from JLL, the top improvers 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.
Top is the UK followed by the United States, Australia, New Zealand and France. The rest of the top group recorded as being highly transparent is Canada in sixth place, then the Netherlands, Ireland and Finland.
In the transparent group is Switzerland, Sweden, Germany, Singapore and Hong Kong while the top improvers are Kenya, Qatar, Ghana, Nigeria, Romania, Zambia, Mauritius, Algeria, Colombia, Ireland, Kazakhstan, Serbia, Peru and Hungary.
The report points out that the key drivers of enhanced transparency include a rising trend among governments and business to encourage a culture of ‘open data’, supported by technological advancement.
There is also an increasing acknowledgement by governments that poor transparency not only hampers investment flows, but it also affects the quality of life of its citizens and their relationship with local authorities responsible for taxing and regulating real estate.
The media spotlight on transparency is also boosting awareness and the report says that the occurrence of several high-profile corruption scandals and building accidents have put the international spotlight firmly on real estate transparency and led to a series of reforms in a diverse group of countries.
The further rise in cross border investment, with MNCs and international real estate advisors both extending their global footprints is accelerating the pace of change and the return of stronger economic growth and improving market fundamentals are enabling governments and the real estate industry to refocus on transparency issues that were put on the back burner during the global financial crisis.
It also highlights rising expectations from the millennial generation for more transparency and accountability of governments and commercial organisations, strengthened by the power of social media as well as a wider adoption of sustainability tools, such as minimum energy standards, green building rating systems and financial performance measurement of sustainable buildings, makes for more transparent markets.
While the world’s most transparent markets are still dominated by Anglophone markets, the top improvers in 2014 are dominated by Sub-Saharan African countries as transparency pushes into the frontiers of global real estate. But the report adds that while progress is being made across the continent, much still needs to be achieved.
Central and Eastern Europe continues to feature among the top improvers, notably Romania, Serbia and Hungary. However, Ukraine has regressed, highlighting how political uncertainty and geo-political strife can quickly compromise transparency levels.
Colombia and Peru are the biggest movers in the Americas underpinned by strong economic growth, high FDI and rising real estate investment. Despite these improvements, no South American country appears in the global top 20 of the overall index or any of the five sub-indices, the only continent to fail to achieve a top scoring position.
MENA has struggled to maintain momentum, with one notable exception, Qatar which is making concerted efforts to create a more open and transparent market. The country also illustrates the power of the international spotlight in forcing more stringent building controls and safety standards.
Improvements in Asia Pacific have been steady but unspectacular, and for the first time there are no Asia Pacific markets in the global top 10. The competition for the most transparent market in Asia has intensified, as Singapore moves ahead of Hong Kong, where cooling measures have compromised transparency levels.