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News release


Australia is the World’s Most Transparent Real Estate Market

2010 Global Transparency Index reveals a slowdown in the progress of real estate transparency due to the challenging market conditions from the GFC. 

SYDNEY, 23 JUNE 2010 – Australia has topped the rankings for the most transparent real estate market in the world, according to the 2010 Global Real Estate Transparency Index released today by Jones Lang LaSalle and LaSalle Investment Management. 
Australia rated the highest amongst 81 markets around the world. The Asia Pacific region showed the best improvement in regional transparency over the past two years.
The 2010 Index revealed a worldwide slowdown in the progress of real estate transparency over the past two years. The survey 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.
The average improvement in real estate transparency across the 81 markets covered by the survey has halved in 2008-2010, when compared to the 2006-2008 and 2004-2006 period.  According to the transparency index, Australia now ranks as the world’s most transparent market, pushing Canada into second place and the UK into third.  The traditional leading pack - Australia, New Zealand, the UK, the United States and Canada, have now been caught up by a number of European markets, namely  Sweden, Ireland and France who now sit amongst the world’s most transparent markets.
Asia Pacific
The Asia Pacific region has shown the most broadly based improvements in transparency over the past two years.  Australia and New Zealand are the region’s most transparent markets, closely followed by Singapore and Hong Kong.
Rising levels of transparency are associated with rising levels of foreign direct investment, a powerful incentive for encouraging the free flow of information and the fair and consistent application of local property laws. It is in India and China where the region’s greatest improvements in transparency has been recorded, a trend that has now filtered across India and China’s secondary and tertiary cities which have shifted from the Low-Transparency to a Semi-Transparent level.
Alastair Hughes, Chief Executive Officer for Jones Lang LaSalle in Asia Pacific comments, “I am pleased to see the most transparent real estate market is in the Asia Pacific region and that transparency of the transaction process is improving generally in our market. One of the chief concerns for the international real estate investor is where to safely place capital, and at the same time corporate occupiers need a clear understanding of global operating conditions. The Transparency Index will help both investors and occupiers operating in foreign markets to anticipate these challenges. For governments and industry organizations, the index provides a gauge to help improve the transparency in their home markets.”
John Talbot, Australian Head of Capital Markets said with Asia Pacific expected to grow faster than the overall global economy in 2010, Australia’s position in the region as the world’s most transparent real estate market would be viewed favourably by off-shore investors.
“Foreign investors have been active in the Australian market due to the strong fundamentals – the stability of the economy and how it weathered the GFC and our transparent market, which ranks number one in the world.  Commercial real estate in Australia has offered solid and stable returns for investors seeking stability in their globally diverse portfolios.
“Investors are increasingly demanding better information on market fundamentals. They are requiring longer due diligence and are generally looking for more certainty in their investment decisions.  The Global Transparency Index is a useful tool for global investors to gain a better understanding of the risk characteristics of global real estate investment.
“Despite continuing global economic uncertainty, Australia remains a strong performer compared to most of the major world economies.   With a strong and well regulated banking sector, Australia is well positioned to continue to capitalise on strong long-term growth coming out of the Asia Pacific region, fuelled primarily by the growth in China and India,” Mr Talbot said.
Real Estate Debt Transparency
In light of the financial crisis, the transparency Index has specifically assessed the transparency of the real estate debt markets in terms of the breadth and depth of data available on commercial real estate debt -originations, outstanding balances, maturities, and defaults as well as how thoroughly real estate debt on banks’ balance sheets is monitored. 
The countries that scored highest on debt transparency were Australia, the United States, Ireland and Canada.  Just over 89% of countries received a score of Semi-Transparent or below on this question.
Jacques Gordon, Global Head of Strategy for LaSalle Investment Management, the independent fund management arm of Jones Lang LaSalle said: “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.”
Dr David Rees, Australian Head of Research for Jones Lang LaSalle, said the Index showed that across much of Asia Pacific, there is still a lack of information on the size of total outstanding commercial real estate debt, while the availability of information on equity exposures is improving.
“Even in Australia, information on real estate debt markets is not easily available from a central source as it comes from various sources such as REITs, commercial banks, the central bank and credit rating agencies.
"However, the limited availability of information on commercial real estate debt is less of a constraint in the Asia Pacific region than in Europe or he Americas because real estate investors in the Asia Pacific region generally rely on banks and not the public debt markets for real estate financing. Despite less stringent oversight of commercial real estate debt exposures by bank regulators in the Asia Pacific region, it is in Europe and North America that severe problems have emerged in exposure to real estate debt. High levels of transparency do not necessarily translate into low volatility, as the past two years have demonstrated," Dr Rees said.
The Index notes that in the future, regulators will rightfully emphasize the importance of more disclosure in order to gauge the credit-worthiness of commercial real estate and to evaluate the sector’s ability to carry debt.  As these steps are put in place, it is expected the transparency of real estate debt, and hence all real estate capital markets, will rise.  But it is not likely that the inherent cyclicality of real estate will ever be eliminated.
The last two years demonstrate how high levels of transparency certainly do not eliminate risks for investors or occupiers. However the real value of transparency should become evident when comparing how quickly markets are able to open up again after a financial crisis.
Largest improvements in transparency – 2008 - 2010
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.
The Americas
The Americas markets have shown more modest changes in transparency.  Transparency improvements have stalled in the region’s two most transparent markets, the United States and Canada, as well as in most Latin American markets. Canada and the United States have however remained the region’s only two Highly-Transparent (Tier 1) countries, and rank among the world’s most transparent markets. Only Brazil registered a notable improvement, while Venezuela which showed a sharp deterioration between 2006 and 2008 has seen a further weakening in 2010.
Middle East and North Africa (MENA)
Markets in the MENA region, which were highlighted in our 2008 Index for their strong progress in transparency, have had a set back in 2010.  A number of Gulf markets have registered deterioration in transparency, including Kuwait, Dubai and Bahrain.  Pakistan has also struggled to maintain even poor transparency levels.  Dubai, which was rocked particularly hard by the real estate crisis, epitomises the region’s struggle to improve transparency levels.
The major debt related news story in MENA was the Nakheel group failing to make its debt service payments on Dubai World in 2009. Since this happened, the region is rethinking how real estate properties should be financed. A debt restructuring proposal for Dubai World has been released which addresses how the government will deal with excessive debt and the oversupply of property from large overbuilding over the past 8 years. Although this proposal represents progress, most real estate debt in the region has been downgraded, especially in Dubai.
Europe shows a mixed picture of transparency. Turkey and some CEE markets 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 like Poland, Czech Rep and Hungary have now caught up with the least transparent markets in Western Europe, such as Italy and Austria, which have struggled to improve real estate transparency. Further east 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 in sharp contrast to the strong improvements registered in 2008.
The survey identifies the fastest moving markets over the past two years, and presents the top-ranking markets in each of the five transparency categories - Performance Measurement, Market Fundamentals, Listed Vehicles, Legal and Regulatory Environment and Transaction Process.  Experts from the disciplines of accounting, finance and law have also been consulted, especially in emerging markets, in order to supplement Jones Lang LaSalle’s real estate knowledge.
To access the Global Transparency Report, including detailed regional breakdown, rankings, graphs and detailed methodology please visit