JLL: Increases in transparency slow globally but most markets still register improvements

Jones Lang LaSalle and LaSalle Investment Management have today released their 2010 Commercial Real Estate Transparency Index, which shows that Australia is the world's most transparent real estate market in 2010, pushing Canada into second place. Whilst one third of markets globally registered no change or a deterioration, there are a number of bright spots, and real estate transparency continues to improve, albeit moderately, in the majority of markets. Of the top 15 improvers, nine are in Europe and six are in Asia Pacific.

Turkey tops the league table of transparency improvers, and progress has been made in China, India, Poland, Portugal, Romania, Greece and Hungary. Declines in transparency were registered in countries such as Pakistan, Kuwait, Venezuela, Dubai and Bahrain; although the level of decline was modest in these countries, the reversal of past gains is notable. Over the past two years, the average improvement in real estate transparency across the 81 markets covered by the Index has halved, when compared to both the 2006–2008 and 2004–2006 periods.

Jacques Gordon, Global Head of Strategy for LaSalle Investment Management, the independent fund management arm of Jones Lang LaSalle said: "The 2010 Global Real Estate Transparency Index reveals a notable slowdown in the progress of real estate transparency over the past two years. It suggests that the recent turmoil in global financial, economic and real estate markets has impacted on market behaviour, with real estate players focusing on survival rather than market advancement. It is interesting to note that the most highly transparent countries experienced illiquidity and volatility over last two years, despite their positions at the top of the transparency rankings. That said transparency does appear to speed up the restructuring process.

He continued: "Transparent real estate caused problems for investors during the credit crisis because it had been put into opaque vehicles. The 2010 report found that debt transparency is generally lagging behind overall real estate transparency in many countries. We expect that a new focus on regulatory and private market-led transparency in the real estate debt markets will be one of the main reforms to come out of the credit crisis."

Commenting on transparency's impact on city competitiveness, Rosemary Feenan, Head of Global Research at Jones Lang LaSalle, said: "While transparency is highly important to real estate investment and occupational strategies, it also increasingly underpins a city's competitive strength. The challenges of the last few years have served to accentuate the need for business friendliness, and improving transparency is certainly a feature that will add to a city's attractiveness as an investment or corporate location. Our research revealed there is an increasing number of cities where regulations and laws are being enacted to give clarity to the markets; for example in Abu Dhabi plans have been announced to establish a regulator for the real estate market similar to RERA in Dubai, and in Brazil all municipalities must now adopt an approved urban master plan helping to provide solid context for land use futures.

She continued: "The upward movement in the index of Chinese secondary cities has been in a good part due to progress made on the consistency of implementation of income tax, stamp duty and land value appreciation tax, and likewise the Indian tertiary cities are benefiting from improvements in the availability of title records and moves such as the consistent application of building codes. These approaches are creating a new layer of competiveness and as new urban strategies are created, especially in emerging markets, we are likely to see further serious attention given to issues of transparency as these cities work hard to compete for future investment."

Real Estate Debt Transparency: In addition to the original measures of performance measurement, market fundamentals, listed vehicles, legal and regulatory environment and transaction process, the 2010 Inde

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