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Transparency and Global Real Estate

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Global Real Estate Market  House Price Trends  Transparency 

By - Friday 02 July 2010

Transparency in a country's property market has often been cited as a major factor in attracting foreign investment to a destination. Clear guidelines and rules for overseas and local investors help to build both confidence and strength in the sector, with many individuals being drawn to the relative solidarity and simplicity of buying in more stable destinations.

Rising levels of transparency are associated with an increase in foreign direct investment - this is a powerful incentive to encourage free-flowing information and apply local law fairly and consistently.

Individuals looking to invest in property are increasingly demanding to be provided with more detailed and better information relating to market fundamentals, while governmental agencies continue to work hard to progress regulatory and legal procedures around the globe.

International property financial services firm Jones Lang LaSalle recently published its latest Real Estate Transparency Index, which ranks a total of 81 separate markets around the world in order of their transparency.

Currently, the 2010 list is topped by Australia after the country's strong property market knocked Canada into second place and the UK into third.

Nine of the top 15 improvers on the list are from Europe, while six are from the Asia Pacific region. However, the list shows that overall, one-third of markets globally have shown no change, or worse a deterioration in transparency.

Progress has been made in a number of other markets including China, India, Poland, Portugal, Romania, Greece and Hungary, while a number of more advanced markets, such as Germany, Ireland and Denmark, have also moved up the transparency league.

Economic Issues

Jacques Gordon, global head of strategy for LaSalle Investment Management, said the index reveals a notable slowdown in the progress of real estate transparency over the past two years as governments across the world concentrate on economic issues.

"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," he explained.

However, Mr Gordon goes on to claim that improvements to transparency within markets could act as a catalyst to enhancing the recovery process and as such may be a useful tool for governments to employ to speed up the return to normality.

Most Improved Market

Topping the table in terms of improvements in transparency in the Jones Lang LaSalle list is Turkey, with the European destination moving up 27 places since the index was first published two years ago.

Speaking to Hurriyet Daily News, Alan Robertson, managing director of Jones Lang LaSalle in Turkey, said there are a number of reasons behind the country's climb up the rankings.

"Firstly, the Turkish government has shown a strong determination to improve the business environment and to create a level playing field for both foreign and local investors," he explained.

Mr Robertson told the news provider that by aligning its property systems with that of more developed countries and improving any information held about real estate, it had been able to increase transparency levels.

The property expert predicted that the trend will continue, with Turkey becoming increasingly attractive to those looking for real estate investment opportunities. "Over the next few years we expect to see further improvements in transparency levels, and in my view that is going to be very good news for Turkey, and for those who invest in its commercial real estate markets," he said.

Asia Pacific Going Strong

The Asia Pacific region has, on the whole, shown the broadest improvements in transparency over the past two years, with New Zealand, Hong Kong, India, China and Singapore all benefiting from increased data availability and ongoing regulatory changes.

Furthermore, a booming real estate market in each of the countries has contributed to the improvements as both public and private sector players have taken important steps forward.

In conclusion, it is important to note that the recent trials and tribulations which have been seen across real estate markets around the globe are clear indicators that markets with high levels of transparency do not immediately eliminate risks for investors.

However, increased transparency is 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.

"The real value of transparency, though, should become evident when comparing how quickly markets are able to open up again after a financial crisis. The recapitalisation of real estate in many countries is being helped by the free flow of information and the protection of property rights," Mr Gordon explained.ADNFCR-3415-ID-19866707-ADNFCR

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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.

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