Global property loses focus on transparency

TRANSPARENCY across 81 global real estate markets halved during the past two years as players focused more on survival in the challenging conditions, according to a report.

The Jones Lang LaSalle 2010 Global Real Estate Transparency Index (GRETI) also revealed that Australia has overtaken Canada, the United Kingdom and the United States as the most transparent market in the world.

In contrast, deterioration in transparency was registered in markets such as Pakistan, Kuwait, Venezuela, Dubai and Bahrain.

A number of markets have seen declining or static levels of transparency with one-third (27 markets out of 81) recording either deterioration or no improvement between 2008 and 2010.

JLL said 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.

Over the past two years, the average improvement in real estate transparency across the 81 markets covered by GRETI has halved, when compared to both the 2006-2008 and 2004-2006 periods. More surprising is the evidence of a slowdown of progress in the transparency of real estate regulatory and legal environments.

However, 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. A number of more advanced markets, such as Germany, Ireland and Denmark, have also moved up the transparency league.

Aside from Australia, New Zealand and Singapore, Asia Pacific also continues to show some of the biggest anomalies, with both Japan and South Korea showing low levels of real estate transparency relative to their economic maturity.

With regard to the transparency of real estate debt markets, across much of Asia Pacific there is still a lack of clarity on the size of total outstanding debt.

Even in Australia there is no central source of information (i.e. it comes from various sources such as REITs, commercial banks, the central bank and credit rating agencies). However, the poor availability of information on CRE debt is less likely to be an issue in the region than for Europe or the Americas, as real estate players in Asia Pacific generally rely on traditional bank lending and not the securitized debt market.

Europe is a mixed picture of transparency. Turkey and some CEE countries have shown good progress as their markets become more internationally traded and their regulatory and legal environments become aligned with core EU economies. In fact, the more advanced CEE countries (i.e. Poland, the Czech Republic and Hungary) have now caught up with the laggards in Western Europe, such as Italy, who have struggled to improve real estate transparency.

However in Russia and the Ukraine, transparency improvements have stalled in 2010, a reflection of the severity of the real estate downturn in both markets and a sharp contrast to the strong improvements registered in 2008.

The Americas markets have shown more modest changes in transparency. Improvements have been static in the region’s two most transparent markets, the United States and Canada, as well as in most of the Latin American markets. Of the major economies, only Brazil has registered notable progress, while Venezuela—which showed a sharp deterioration between 2006 and 2008—has seen a further weakening in 2010.

Australian Property Journal

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2010 Rank	Market	2010 Score	2010 Tier
1	Australia	1.22	1
2	Canada	1.23	1
3	United Kingdom	1.24	1
4	New Zealand	1.25	1
4	Sweden	1.25	1
6	United States	1.25	1
7	Ireland	1.27	1
8	France	1.28	1
9	Netherlands	1.38	1
10	Germany	1.38	1
11	Belgium	1.46	1
12	Denmark	1.50	1
13	Finland	1.53	2
14	Spain	1.58	2
15	Austria	1.71	2
16	Singapore	1.73	2
17	Norway	1.75	2
18	Hong Kong	1.76	2
19	Portugal	1.82	2
20	Switzerland	1.87	2
21	Italy	1.89	2
22	Poland	1.99	2
23	South Africa	2.09	2
24	Czech Republic	2.15	2
25	Malaysia	2.30	2
26	Japan	2.30	2
27	Hungary	2.33	2
28	Israel	2.38	2
29	Greece	2.60	3
30	Slovakia	2.61	3
31	Russia Tier 1 Cities	2.64	3
32	Romania	2.68	3
33	Taiwan	2.71	3
34	Chile	2.72	3
35	Russia Tier 2 Cities	2.86	3
36	Turkey	2.90	3
37	UAE – Dubai	2.93	3
38	Brazil	2.95	3
39	Thailand	3.02	3
40	Bulgaria	3.03	3
41	India Tier 1 Cities	3.11	3