U.S. Remains Most Transparent Market as Openness Advances Globally: Jones Lang LaSalle
Jones Lang LaSalle Inc. reported on Tuesday that the United States continues to offer the world’s most transparent commercial real estate market. That conclusion was part of the company’s biennial Global Real Estate Transparency Index, a proprietary JLL study that compares 97 real estate markets around the world based on 83 different factors that measure transparency.
Broadly speaking, the index attempts to measure the openness and accessibility of a country’s commercial real estate market. Transparency is looked on favorably by investors and real estate users because it reduces uncertainty in cross-border transactions. It also raises the efficiency levels of those transactions and helps level the playing field for new market entrants.
The trend in much of the world has been toward greater transparency since the index was first published in 1999, though it’s been a bumpy ride. ”Following the slowdown in progress that was observed in several countries in the immediate aftermath of the global financial crisis, our 2012 biennial survey highlights steady improvement during the past two years,” the report notes. “Nearly 90 percent of markets have registered advances in real estate transparency since 2010.”
Closely following the top-ranked U.S. in 2012 are the United Kingdom and Australia. Also earning recognition in the “Highly Transparent” category: the Netherlands, New Zealand, Canada, France, Finland, Sweden and Switzerland. The Transparent category encompasses nations with slightly lower scores, such as Germany, Singapore, Denmark and Ireland.
Other nations have improved greatly in the last two years, says the report. Improving market fundamentals data and performance measurement, combined with better governance of listed vehicles, have underpinned much of the progress.
Countries that have achieved major improvements in accessibility of performance data—a market isn’t considered very transparent if that information is secret or uncollected—include Brazil, Mexico, Central European and Eastern European states, and most of Asia’s emerging nations. Data on market fundamentals has been enhanced in most places, with several Central European countries, such as Poland, adopting and improving upon best practices for real estate market data collation.
By contrast, Jones Lang LaSalle found that Middle Eastern and North African nations have made considerably less progress since the previous global survey. Dubai remains the region’s most transparent market, but the most biggest progress has been in Lebanon, where the market is gaining transparency and attracting more institutional players. On the other hand, Egypt is the only market anywhere to have registered deterioration in transparency over the past two years.
Recognizing the growing interest in sub-Saharan Africa, particularly among corporate users, the 2012 index includes several countries from this region for the first time. As the continent’s only market to earn a transparent rating, South Africa sits head and shoulders above the rest, with Botswana, Mauritius and Kenya some distance behind in the “Semi-Transparent” category. However, most sub-Saharan markets occupy the “Low Transparency” or “Opaque” categories, bringing up the rear of the global pack.
The issue of environmental sustainability is gradually moving to the forefront of real estate investor and corporate occupier concerns, Jones Lang LaSalle reports, and this year the company is debuting a sustainability transparency index for a select group of 28 countries. The ratings covers such issues as energy benchmarking and green building rating systems. The U.K., Australia and France are the top scoring countries in this new index.
JLL posits that transparency will continue to improve over the next two years. The reasons for this include, as the report puts it, “the growing recognition in many emerging economies that the current lack of performance indicators and accurate market information is hindering inward investment and hampering the development of competitive domestic real estate sectors.”