Valentina Ardonceau, Associate at JLL Leasing, explains why the company’s Global Real Estate Transparency Index (GRETI) plays a vital role as the leading industry benchmark in market transparency assessment.
Market transparency is the foundation which allows cross border property investors, developers and corporate occupiers to operate and make decisions with confidence. It also enables governments and public bodies to function effectively, providing international yardsticks to benefit local communities. Without high levels of transparency, real estate markets cannot work efficiently. JLL’s index tracks markets all over the world and reveals a truly global picture of real estate market transparency.
The 2018 GRETI marks the 10th edition of this research – 100 countries, 158 cities and currently 186 indicators – and is a great tool to track historical data globally. It gives an excellent understanding of how real estate is performing in a country, how the market has evolved over time, giving insight into its investability.
The index scales across five levels of transparency – very transparent, transparent, semi-transparent, low transparency and opaque – and scores countries according to 6 specific indices:
- Performance measurement: What are the real estate performance indices?
- Market fundamentals: Is there available market information on different asset types?
- Governance of listed vehicles: Are they disclosing financial activities? Are their annual reports easy to access?
- Regulatory & Legal: Are laws and regulations in place, and are they monitored?
- Transaction process: Is there access to sales transaction information?
- Sustainability: Is there a Green Building Certification process in play? Is there energy benchmarking and efficiency standards?
From a Sub-Saharan perspective (South African data has been included since 2006) the biennial review provides an excellent overview of what’s been happening in emerging real estate markets from a transparency perspective.
With investors and corporate occupiers demanding ever higher levels of disclosure, there is increasing pressure for continued progress.
The 2018 research shows South Africa as the leading country in Africa (ranking 21, it has always been marked as a transparent market), in line with European markets and other developed countries. Botswana is second, ranked midway on the semi-transparent scale at 45. While there has been limited progress on the continent, Nigeria and Kenya are leading improvements. In Kenya (semi-transparent), there has been headway in transaction process and greater data availability and in Nigeria (still low transparency but improving) third party providers are enhancing market coverage and valuation quality.
To make real progress, continued regulatory reforms are what is needed along with robust enforcement to match the scope and ambition of any regulation put in place. Regulation without enforcement will do little to bring about real change. India, as an example, has seen incremental progress up the rankings, thanks to proactive government efforts to transform the real estate industry. We need to get this right in Sub-Saharan Africa if we are to boost investor confidence and activity.
The 2018 research survey has revealed that the landscape of transparency is shifting, with an emergent proptech industry fuelling expectations of a significant improvement in transparency. This next ‘leap’ in transparency is centred on our ability to harness ‘big data’ and digital platforms, revolutionising the sector in terms of access to information.