JLL: ‘Transparent’ Real Estate Markets Attract Investment

The 10 most transparent countries account for 75 percent of global commercial real estate investment–highlighting how much transparency drives real estate investment decisions–reported JLL, Chicago. 

JLL and subsidiary LaSalle Investment Management’s 2016 Global Real Estate Transparency Index said two-thirds of real estate markets globally showed increasing transparency over the past two years.

“These results are encouraging as they highlight the steady advances the global real estate industry is making,” said JLL Global Research Programs Director Jeremy Kelly. “Improvements are down to a number of factors: initiatives to deepen the availability and quality of market data and performance benchmarking, the enactment of new legislation in several countries, the introduction of higher ethical standards and the wider adoption of green building regulations and tools.”

While four countries JLL nicknamed ‘The Anglosphere’ dominated the top four: the United Kingdom, Australia, Canada and the U.S. in that order, core continental Europe is catching up, the report said. Germany (ranked 9th) moving into the ‘Highly Transparent’ group for the first time and France (5th) consolidated its position in the top tier.

A further 20 countries received a ‘Transparent’ rating, which accounts for 20 percent of global real estate investment. Most of these countries are European, while Singapore (11th) and Hong Kong (15th) remained neck-and-neck for the top spot in Asia. Taiwan (23rd) moved into the ‘Transparent’ category for the first time and Japan moved up seven places to No. 19.

Several key factors drive greater transparency, JLL said. First, capital allocations to real estate continue to grow. JLL forecasted that within the next decade more than $1 trillion will target the sector compared to $700 billion now. “This growth means investors are demanding further improvements in real estate transparency, expecting standards in real estate to be on a par with other asset classes,” the report said.

Next, JLL identified growing recognition that transparent real estate practices play a significant role in capital formation and as a foundation to improve the quality of life in many communities. “This foundation includes security of property ownership, safe housing and workplaces and the ability to trust agents to act honestly and professionally,” the report said.

In addition, technology enables data dissemination and analysis, so improvements in data capture techniques allow a more granular and timely assessment of real estate markets, JLL said.

LaSalle Investment Management Global Head of Research and Strategy Jacques Gordon said the report shows “steady advances” in transparency due to both industry and government efforts. “That said, there are too many examples of opaque and corrupt practices, poor corporate governance and failures in regulatory enforcement that are resulting in serious consequences for society, business activity and for investment,” he said. “Investors and tenants will bypass countries unable to address these shortcomings and will gravitate instead to more transparent markets.”