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News release


Australia ranks as one of the world’s three most transparent real estate markets

JLL and LaSalle Investment Management’s biennial Global Real Estate Transparency Index for 2014 released

​CHICAGO, LONDON, SINGAPORE, AUSTRALIA 25 JUNE, 2014 – Australia has maintained its ranking as one of the world’s three most transparent real estate markets, according to JLL’s biennial Global Real Estate Transparency Index for 2014.  Australia has been in the top three since the survey started in 1999. 

World’s most transparent real estate markets in 2014

World's most transparent real estate markets in 2014.jpg
​Source: JLL, LaSalle Investment Management

JLL’s Australasian Head of Research and Consulting, Dr David Rees said, “The highly transparent and stable nature of our market is a major factor behind the strong demand for Australian real estate assets from global investors seeking stabilised, premium core assets.

“The record capital inflow we have seen over the past 12-18 months is in part due to our highly transparent market and the global hunt for yield.  The Australian commercial real estate market saw record inward investment from offshore in 2013 of AUD 5.9 billion, up 13% on 2012 levels.

“This offshore investment has continued to remain strong in 2014.  Over the past four years we have seen offshore investment levels stable at around 25% of total transactions in the office, retail and industrial sectors combined and higher at 35% for office markets. 

“The re-rating of real estate as an asset class has also resulted in higher portfolio allocations to the sector by global sovereign funds and pension funds, who are viewing Australia’s fundamentals favourably.  

“The results from the 2014 Global Transparency Index survey show that Australia ranks second globally, behind the UK, in the investment performance sector of the overall Index.  This reflects the wide use of performance measures for return on investment in Australia. The transparency of the local real estate market is one of the major factors, along with the strength of the economy and the relatively high yield structure that attracts offshore investors to Australia,” said Dr Rees.

The Global Real Estate Transparency Index in detail:

Where transparency broadens, real estate capital flows and market change follows. This trend has finally made its way to one of the “final frontiers” of commercial real estate: Sub-Saharan Africa (SSA), which has claimed five of the global top 10 spots for greatest improvements in real estate market transparency: Kenya, Ghana, Nigeria, Zambia and Mauritius. With an influx of corporate occupiers, the region’s top-rising economies are moving to encourage more global real estate interest.
Across the globe, key drivers of transparency improvement include:

Governments’ recognition that poor transparency affects investment and quality of life
Media spotlight on corruption, scandals and building accidents
A rise in cross-border investments fuelled by more robust real estate markets 
Millennials’ expectations, pushing “Open Data” and sustainability practices up the agenda

According to the Global Real Estate Transparency report, SSA countries are in the very early stages of building and reforming their commercial real estate industry infrastructure; their responses to outside interest, however, mirrors top improvers from previous surveys, such as the MIST (Mexico, Indonesia, South Korea and Turkey) countries, which dominated the 2012 Global Top 10, and BRICs (Brazil, Russia, India and China) in 2010. 

"The top improvers in each cycle generally correlate with a surge in foreign direct investment, as investors push through transparency reforms and because governments quickly realize that poor transparency will deter continued inward investment," said Jeremy Kelly, Director, JLL Global Research. "Kenya is a great example. It saw a spike in FDI projects in the last year, and not coincidentally, it made the greatest leap in real estate industry transparency this year."

Kenya has initiated a number of  real estate industry infrastructure improvements, including land record digitization, enhanced property market research and analysis, and the introduction of a REIT framework for the country. These measures propelled Kenya to 55th place in the Transparency Index from 67th in 2012.

Top Transparency Improvers 2012-2014

Top Transparency Improvers 2012-2014.jpg
The cross-border catalyst
Whether in Africa or elsewhere, cross-border activity is a key driver of improvement in market transparency. In Latin America for example, strongest gains have been achieved in Colombia and Peru, which are key targets of international real estate capital. Progress is generally moving at a slow - though still forward - pace in other parts of the world. 

In Asia Pacific, none of the regional players made the Top 10 improvers list this year as compared to three in 2012, largely due to limited improvement in market data availability and slow progress in policy reforms. "The same applies to other top improvers in previous cycles, like Turkey, South Africa, Dubai and Poland, though the reasons for this vary considerably,” said Craig Plumb, Head of MENA Research, JLL. 

“In Poland, the sluggish pace of transparency change could be attributed to the fact that many cross-border investors have demonstrated overall satisfaction with its current level of transparency, whereas in the MENA region, promising signs of reform leading up to the global financial crisis have not been maintained at the same pace, with the notable exception of Qatar." 

Only in a handful of markets has transparency actually worsened.  These include Ukraine, highlighting how political uncertainty can quickly undermine transparency levels. 

Pushing innovation
Nowhere is the relationship between market sophistication and incremental change more apparent, however, than the top tier of the Transparency Index. Highly Transparent markets have had the types of reforms that may propel other countries from the Low to Semi-Transparent rung for many years. As a result, progress at the highly transparent end of the scale, which remains dominated by Anglophone markets, largely comes down to innovation and technological developments such as open-data initiatives. 

"These kinds of innovations will be critical catalysts of change in real estate transparency moving forward. We can count on that, since the digital information revolution is being fuelled by a young, hyper-connected, information hungry, highly transient workforce generation," Jacques Gordon, Global Strategist, LaSalle Investment Management, concluded. 

About JLL's Global Real Estate Transparency Index
The Global Real Estate Transparency Index, first published in 1999, is based on a combination of quantitative market data and information gathered through a survey of the global business network of JLL and LaSalle Investment Management. For each market a total of 115 separate factors have been assessed, through data collection and survey questions, answered by local research teams in collaboration with business leaders. These 115 factors are grouped into 13 topic areas and further grouped into five sub-index categories – a) performance measurement, b) market fundamentals c) governance and financial disclosure of listed and unlisted vehicles d) regulatory and legal and e) transaction process. A Composite Index for each market is created from the weighted scores of the 115 factors. The scores range on a scale from 1.0 to 5.0. A country or market with a perfect 1.0 score has total real estate transparency; a country with a 5.0 score has total real estate opacity. Countries/markets are assigned to a one of five transparency levels ranging from Highly Transparent, Transparent and Semi-Transparent to Low Transparency and Opaque.
For investors, the Index provides a risk management tool by offering comparative information across multiple geographies, facilitating informed global/regional investment strategies and country target allocations. The Index enables corporate occupiers to more efficiently assess different real estate operating environments across the globe. Transparent markets allow for easier comparison of occupancy costs; provide more options for strategic action (e.g. the execution of sale and leasebacks); and raise the efficiency of transactions and facilities management.