CRE Transparency Improves Globally; U.S. ‘Most Transparent'
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JLL, Chicago, said governments worldwide have been gradually forging greater transparency in real estate markets, addressing growing demands from investors and the public to deliver significant change.
The company's biennial Global Real Estate Transparency Index reported "slow but steady progress," driven by increased regulations and new technology. Since 2016, 85 of the 100 countries surveyed recorded an improvement, and the growing impact of technology may propel this positive trend in the future.
"Transparency is increasingly important for commercial real estate, where investors are allocating ever more capital," said Jeremy Kelly, Director of Global Research with JLL. "The availability and quality of information--from prices to ownership--is crucial when trying to make investment decisions, especially in new markets."
The report noted government measures are aimed at improving their competitive position as both real estate investors and companies looking to lease space increasingly demand standardized data.
For example, the report cited U.K.'s proposed beneficial ownership register and the European Union's Fifth Anti-Money Laundering Directive; and India's government, which has introduced a raft of initiatives aimed at reducing corruption. It said other countries, such as China and Turkey, are "on the cusp" of transparency.
The report noted the U.S., one of the most transparent property markets globally, "has adopted proptech faster than anywhere else." Proptech tools that transcend national borders such as blockchain, brokerage apps and open data could help semi-transparent markets leapfrog the normal process of transparency, JLL said.
Transparency in real estate "increases accountability and quality of governance, and improving it is an important step for countries and cities that want to cultivate a productive business environment," said Fernando Ferreira, Associate Professor of Real Estate and Business Economics & Public Policy with the Wharton School at the University of Pennsylvania.
So far, the report said, proptech has proved broadly helpful. The Netherlands, for instance, has greatly improved its real estate transparency in recent years in large part due to proptech. JLL noted the Netherlands already had a transparent real estate market, but innovation around blockchain and open data initiatives have contributed to its improved position in the index.
Whatever changes are on the horizon, Kelly said, investors and the public will continue to scrutinize every move. "The industry is in the spotlight," he said.