Global Real Estate Transparency Index, 2014
Real Estate Raises the Bar
Data Disclosure and Technology Lift Transparency Levels
TRANSACTION
PROCESS
INDICES
VEHICLES
TITLE
DEEDS
LISTED
EMINENT
DOMAIN
OCCUPIER
SERVICE
CHARGES
PUBLIC
PROFESSIONAL
STANDARDS
TITLE
DEEDS
CHARGES
ROFESSIONAL
TANDARDS
ENFORCEABILITY
OF CONTRACTS
CHARGES
UNLISTED REAL
ESTATE FUND
INDICES
PROFESSIONAL
STANDARDS
PLANNING
ANDBUILDING
CODES
BIDDING PROCESSES
STANDARDS
GREEN
BUILDING
RATING SYSTEMS
PROFESSIONAL
STANDARDS
UNLISTED REAL ESTATE
RATING SYSTEMS
COMPULSORY
PURCHASE
GREEN
BUILDING
RATING
SYSTEMS
OCCUPIER SERVICE CHARGES
OCCUPIER SERVICE
STANDARDS
GREEN BUILDING
OCCUPIER
SERVICE
CHARGES
PROFESSIONAL
COMPULSORY
PURCHASE
DEEDS
TITLE
REAL
ESTATE INDICES
LEGAL
L
ENVIRONMENT
SUPPLY
DATABASES
STANDARDS
TITLE
DEEDS
GOVERNANCE
COMPULSORY
COMPULSORY
PURCHASE
EMINENT
DOMAIN
PURCHASE
PROFESSIONAL
RATING SYSTEMS
COMPULSORY PURCHASE OCCUPIER SERVICE
FUND INDICES
PROFESSIONAL
BANK
REGU.5LATION
GREEN BUILDING
GREEN BUILDING
RATING SYSTEMS
UNLISTED REAL ESTATE FUND INDICES
TAX
PLANNING
AND BUILDING CODES
PROFESSIONAL
RENTAL DATA SERIES
GOVERNANCE
PROPERTY
UNLISTED
REAL ESTATE
FUND INDICES
GREEN
BUILDING
RATING
SYSTEMS
STANDARDS
ACCOUNTING STANDARDS
PRESALE
INFORMATION
LISTED
VEHICLES
GREEN
BUILDING
RATING
SYSTEMS
PUBLIC
RATING SYSTEMS
SUSTAINABILITY
PLANNING AND BUILDING CODES
REAL
GREEN
BUILDING
INVESTMENT PERFORMANCE BENCHMARKS
PROPERTY
TAX
PROPERTY
TAX
ACCOUNTING
BANK
REGULATION
STANDARDS
COMPULSORY
PURCHASE
ACCOUNTING
LAND
REGISTRY
INVESTMENT
PERFORMANCE BENCHMARKS
LISTED VEHICLES PROFESSIONAL STANDARDS OCCUPIER SERVICE CHARGES
EMINENT
DOMAIN
PROPERTY
TAX
PLANNING
AND BUILDING
CODES
PLANNING AND
BUILDING CODES
GREEN
PLANNING AND
BUILDING CODES
BUILDING RATING
SYSTEMS
PLANNING AND
BUILDING CODES
PUBLIC REAL
ESTATE INDICES
PRE-SALE INFORMATION
MARKET INFORMATION
OCCUPIER SERVICE CHARGES
PLANNING AND BUILDING CODES
EMINENT
DOMAIN
GREEN BUILDING
RATING SYSTEMS
REGULATION
LISTED VEHICLES
UNLISTED REAL ESTATE FUND INDICES
GREEN BUILDING
RATING SYSTEMS
GOVERNANCE
STANDARDS
ESTATE
ESTATE INDICES
GREEN BUILDING RATING SYSTEMS
UNLISTED REAL
PLANNING
AND BUILDING
CODES
ESTATE FUND INDICES
EMINENT DOMAI
PROFESSIONAL
STANDARDS
UNLISTED REAL
UNLISTED
CODES
FINANCIAL
ANDBUILDING
REAL ESTATE FUND INDICES
PLANNING
OCCUPIER SERVICE
TITLE
DEEDS
PROFESSIONAL
STANDARDS
REPORTING
PLANNING
AND BUILDING CODES
PLANNING AND
BUILDING
CODES
FINANCIAL
REPORTING
COMPULSORY
CODES
UNLISTED REAL ESTATE
FUND INDICES
LAND
REGISTRY
PURCHASE
CODES
INDICES
PUBLIC REAL
ESTATE
PLANNING
ANDBUILDING
STANDARDS
BUILDING RATING
SYSTEMS
TITLE
DEEDS
PROCESS
TRANSACTION
UNLISTED REAL ESTATE FUND INDIC
PUBLIC REAL ESTATE INDICES
PERFORMANCEUNLISTED
MEASUREMENT
REAL ESTATE FUND INDICES
REGULATION
PLANNING ANDBUILDING
STANDARDS
TTRANSPARENCY
RENTAL DATA SERIES
OCCUPIER
SERVICE
CHARGES
PLANNING AND
BUILDING
CODES
RATING SYSTEMS
TRANSACTION PROCESS
GREEN BUILDING RATING SYSTEMS
ACCOUNTING STANDARDS
DOMAIN
PROFESSIONAL
PLANNING AND
BUILDING
CODES
PROPERTY TAX
PROFESSIONAL STANDARDS
REAL ESTATE FUND INDICES
REAL ESTATE UNLISTED
OCCUPIER SERVICE CHARGES
EMINENT
GREEN
BUILDING
RATING
SYSTEMS
DOMAIN
GREEN BUILDING
PROFESSIONAL
ESTATE
EMINENT
COMPULSORY
PURCHASE
PUBLIC REAL
UNLISTED REAL ESTATE
FUND
INDICES
BANK REGULATION
OF CONTRACTS
BIDDING PROCESSES
FINANCIAL
REPORTING
PROPERTY
TAX
PRE-SALE INFORMATION
FACILITIES
MANAGEMENT INVESTMENT PERFORMANCE BENCHMARKS EMINENT DOMAIN COMPULSORY PURCHASE
INVESTMENT PERFORMANCE
ENFORCEABILITY
BUILDING RATING SYSTEMS
GREEN
PROFESSIONAL
RENTAL STANDARDS
FINANCIAL
DATA REPORTING
SERIES
OF CONTRACTS
GREEN
SERVICE
PLANNING AND
BUILDING CODES
OCCUPIER
DOMAIN
EMINENT DOMAIN
UNLISTED REAL
CHARGES
OCCUPIER
SERVICE
CHARGES
ACCOUNTING EMINENT
STANDARDS DOMAIN
ENFORCEABILITY
LISTED
VEHICLES
DEEDS
EMINENT
EMINENT
DOMAIN
PROFESSIONAL
STANDARDS
UNLISTED REAL
ESTATE FUND
INDICES
CODES
OCCUPIER
SERVICE
CHARGES
TITLE
SERVICE
CHARGES
EMINENT
DOMAIN
PLANNING
ANDBUILDING
PLANNING AND
BUILDING
CODES
OCCUPIER
ESTATE FUND
OCCUPIER
SERVICE
CHARGES
REGULATION
INVESTMENT PERFORMANCE BENCHMARKS
INDICES
ENFORCEABILITY
OF CONTRACTS
MARKET
INFORMATION
ACCOUNTING STANDARDS
PROCESS
TRANSACTION
COMPULSORY
PURCHASE
PLANNING AND BUILDING
CODES
UNLISTED REAL ESTATE FUND INDICES
EMINENT
DOMAIN
VALUATIONS
UNLISTED REAL ESTATE
FUND INDICES
PLANNING
ANDBUILDING
CODES
OCCUPIER
SERVICE
CHARGES
BIDDING PROCESSES
2
Global Real Estate Transparency Index 2014
Real Estate Raises the Bar
Data disclosure and technology lift transparency levels
The eighth edition of JLL’s Global Real Estate Transparency Index, covering 102
markets worldwide, shows continued progress in the transparency of commercial
real estate around the world. Over 80% of markets have registered improvement
since 2012.
The key drivers of enhanced transparency are:
‡ $ rising trend among governments and business to encourage a culture
of ‘open data’, supported by technological advancement.
‡ $n increasing acknowledgement by governments that poor transparency
not only hampers investment Àows, but also affects the Tuality of life of
its citizens and their relationship with local authorities responsible for
taxing and regulating real estate.
‡ The occurrence of several highpro¿le corruption scandals and building
accidents that have put the international spotlight ¿rmly on real estate
transparency and led to a series of reforms in a diverse group of
countries.
‡ The further rise in crossborder investment, with 01&s and international
real estate advisors both extending their global footprints, is accelerating
the pace of change.
‡ The return of stronger economic growth and improving market
fundamentals, which is enabling governments and the real estate
industry to refocus on transparency issues that were put on the back
burner during the Global )inancial &risis G)&.
‡ The rising expectations from the ‘0illennial’ generation for more
transparency and accountability of governments and commercial
organisations, strengthened by the power of social media.
‡ The wider adoption of sustainability tools, such as minimum
energy standards, green building rating systems and ¿nancial
performance measurement of sustainable buildings.
The world’s most transparent markets are still dominated by anglophone markets
± the 8., 8nited 6tates, $ustralia and 1ew =ealand. +owever, )rance and
Finland, which are at the forefront of ‘open data’ initiatives, have consolidated their
positions in the top ranks. Ireland has moved into the top tier of transparency as a
result of new REITenabling legislation.
The top improvers in 2014 are dominated by 6ub6aharan $frican countries, as
transparency pushes into the frontiers of global real estate. Five of the Global Top
10 improvers are in the region ± .enya, Ghana, 1igeria, =ambia and 0auritius.
+owever, while progress is being made across the continent, much still needs to
be achieved.
JLL
&entral and Eastern Europe continues to feature among the top improvers
± notably Romania, 6erbia and +ungary. +owever, 8kraine has regressed,
highlighting how political uncertainty and geopolitical strife can Tuickly
compromise transparency levels.
&olombia and 3eru are the biggest movers in the $mericas underpinned by strong
economic growth, high FDI and rising real estate investment. Despite these
improvements, no 6outh $merican country appears in the Global Top 20 of the
overall index or any of the ¿ve subindices ± the only continent to fail to achieve a
topscoring position.
The 0iddle East and 1orth $frica 0E1$ has struggled to maintain momentum
– the notable exception is Qatar which is making concerted efforts to create a
more open and transparent market. The country also illustrates the power of
the international spotlight in forcing more stringent building controls and safety
standards.
Improvements in $sia 3aci¿c have been steady but unspectacular, and for the ¿rst
time there are no $sia 3aci¿c markets in the Global Top 10. The competition for
the most transparent market in $sia has intensi¿ed, as 6ingapore moves ahead of
+ong .ong, where cooling measures have compromised transparency levels.
3
4
Global Real Estate Transparency Index 2014
Global Real Estate Transparency Index, 2014
Top Transparency Improvers in 2014
Latin
America
Sub-Saharan
Africa
Middle East and
North Africa
Nigeria
Algeria
Ghana
Europe
Zambia
Colombia
Peru
Qatar
Kazakhstan
Kenya
Mauritius
Serbia
Asia
Pacific
Romania
Hungary
Ireland
India
Tier 1
cities
Key Drivers of Transparency Improvement
Renewed economic
growth
Recognition of
impacts
and more robust real
estate markets
by governments on
FDI and quality of life
Expanding
global reach
Media spotlight
on transparency following
corruption scandals / building
accidents
Sustainability tools
Rising expectations
more widely adopted
of Millennial generation
of cross-border investment
and growing MNC footprints
6ource: JLL, La6alle Investment 0anagement
‘Open data’
culture
JLL
Contents
JLL Global Real Estate Transparency Index, 2014
Real Estate Transparency Timeline
Global Overview: Key Findings in 2014
Outlook to 2016
Regional +ighlights
$mericas
$sia 3aci¿c
Europe
0iddle East and 1orth $frica
6ub6aharan $frica
Real Estate Environmental Sustainability Transparency Index
Transparency in Tables and &harts
Technical 1ote
6
8
12
17
18
20
26
32
36
41
46
50
56
5
6
Global Real Estate Transparency Index 2014
JLL Global Real Estate
Transparency Index, 2014
JLL’s Global Real Estate Transparency Index is a uniTue survey that Tuanti¿es real estate market transparency
across 102 markets worldwide. The Index is updated every two years and has been charting the steady progress
in real estate transparency across the globe for 15 years. The 2014 Index is our eighth edition.
The Index aims to help real estate investors, corporate occupiers, retailers and hotel operators understand
important differences when transacting, owning and operating in foreign markets. It is also a helpful gauge for
governments and industry organisations who are seeking to improve transparency in their home markets.
In the 2014 Index, we have introduced much greater granularity as transparency levels come under greater
scrutiny and the real estate industry seeks more detailed information to inform decisions. While the survey
covers the same topics as the 2012 edition, it now breaks these down into 115 factors, representing nearly a
40% increase on the 83 covered in 2012. $lthough the consistency of the survey is not compromised, the explicit
inclusion of many more factors does underpin some of the changes in score between 2012 and 2014.
&overage has been extended further into SubSaharan $frica to include Ethiopia, 0ozambiTue, Senegal and
8ganda 0yanmar is a new addition in $sia 3aci¿c, while Libya has reMoined the Index.
$s in prior surveys, teams of researchers and business leaders from JLL and LaSalle Investment 0anagement
have worked together to assess the transparency in each of the 102 markets. Our $lliance 3artners have also
helped to provide additional ‘ontheground’ information. $ccounting, ¿nance and legal experts have been
consulted too, especially in emerging markets, in order to supplement our collective real estate knowledge.
Since we launched the Index in 1, its components have evolved and been re¿ned to reÀect the changing
demands of crossborder investors and corporate occupiers. Therefore, to enable comparisons to be made
across time, we have recreated an historic Transparency Index based on current weights and Tuestions. We
should like to emphasise that the recalibrated historic Indices differ from those published at the time of each
survey.
In addition to this report, the results of the 2014 Transparency Index are also presented in an
interactive website: www.jll.com/Transparency
The website allows users to explore the different components of real estate transparency at a global, regional and
national level. Data sets for all 102 markets covering composite and subindex scores can also be downloaded.
$ series of interactive visualisations facilitate a comparison of transparency between markets and over time.
We trust that the 2014 Transparency Index will provide valuable insights into the changes in real estate
transparency across the globe. $ complete description of the methodology used to create this Index is set out in
the Technical 1ote.
For more information about the Index and how we can help with your real estate decisions, please connect with
one of the Global Real Estate Transparency Team.
JLL
Global Real Estate Transparency Index
The 2014 survey covers 102 markets worldwide
Highly Transparent
Transparent
Semi-Transparent
Low Transparency
Opaque
Source: JLL, LaSalle Investment 0anagement
Transparency Index Components
Incorporating 115 different factors
Composite Score
5 Sub-Indices
Performance
Measurement
Market
Fundamentals
Governance of
Listed Vehicles
Regulatory
and Legal
Transaction
Process
Real Estate Tax, Land
Use Planning, Building
Controls,
Enforceability of
Contracts
Property Registration
Compulsory Purchase
Debt Regulation
Pre-Sale Information,
Bidding Processes,
Professional
Standards of Agents
Occupier Services
13 Transparency Topics
Direct Real Estate
Performance Indices
Listed Real Estate
Securities Indices
Unlisted Real Estate
Fund Indices
Valuations
Market
Fundamentals Data
Offices
Retail
Industrial
Hotels
Residential
Financial Disclosure
Corporate
Governance
115 individual questions and datapoints for each market
Source: JLL, LaSalle Investment 0anagement
7
8
Global Real Estate Transparency Index 2014
Real Estate Transparency Timeline
Measuring transparency since 1999
1999
It has been 15 years since JLL started to track real estate transparency in response to the
demands of crossborder investors for a more rigorous and Tuanti¿able assessment of the risks
of transacting, owning and operating in foreign markets. Back in 1999, we reported on only
30 markets, which represented the range of most crossborder investors’ targets. Levels of
transparency were far lower than today only four countries – $ustralia, the 8nited States, the
8nited Kingdom and &anada – were classi¿ed as ‘+ighly Transparent’, and they represented the
beacons of transparency in a largely opaTue international real estate market. 0any countries that
today are important crossborder investment destinations – such as 3oland, Spain and &hina –
were well down the transparency spectrum in 1999.
2004 – Transparency deepens
2004
Over the subseTuent ¿ve years 19992004, levels of real estate transparency steadily improved,
coinciding with real estate’s ‘coming of age’ as a global asset class. By 2004, when the survey
moved to a biennial event, the Index had been extended to 50 markets. The survey was also
re¿ned into ¿ve subindices to reÀect the broad range of issues relevant to transparency. The
1etherlands and 1ew =ealand Moined the ‘+ighly Transparent’ category, while newer crossborder
destinations, such as Spain and Italy, registered notable movements up the transparency spectrum.
2006 – Cross-border investment: a powerful force for change
2006
The rise of crossborder real estate investment during the mid2000s proved to be a powerful force
for change, with the strongest improvement in transparency recorded during the 20042006 period.
The launch of new investment performance benchmarks, more ¿nancial disclosure and improved
governance of listed vehicles helped to boost transparency. Once again, Southern European
markets featured strongly among the top improvers, as well as several &entral European markets,
like 3oland, underpinned by E8 accession.
2008 – Transparency moves into new markets
2008
2008 saw a signi¿cant expansion in the geographical coverage of the survey, particularly into the
0iddle East and 1orth $frica 0E1$. The region’s main real estate markets – Dubai, Egypt and
Saudi $rabia – were also amongst the strongest improvers between 2006 and 2008. The survey
also moved into secondary and tertiary cities in the BRI& economies. Recognising that the Index
was being used extensively by corporate occupiers, new components were added to the survey
relating to occupier service charges and facilities management.
JLL
2010 – The GFC puts transparency improvement on the back-burner
2010
The two years following the onset of the GF& saw a notable slowdown in the progress of real
estate transparency across the globe, with real estate players focusing on survival rather than
on advancement. The role that real estate debt had played in the crisis steered us to add new
components relating to the availability of information on commercial real estate debt and the role of
bank regulators. The BRI& markets notably &hina and India were heavily represented among the
top improvers – &hina had come of age, with a sharp rise in real estate investment volumes.
2012 – Transparency back on track
2012
By 2012, transparency improvements were back on track in the maMority of markets. Technology was
making it easier for ¿rms to monitor their real estate platforms across the globe, further contributing to
the pace of change. ReÀecting the global footprints of crossborder investors and corporate occupiers,
nearly 100 markets were covered, with the survey extended into SubSaharan $frica and &entral
$merica. Top improvers in 2012 included the socalled ‘0IST’ markets – 0exico, Indonesia, South
Korea and Turkey. We also added features relating to Environmental Sustainability for a subset of
markets, as the sustainability issue started to rise up the agenda of the real estate industry.
2014 – Extending the frontiers of transparency
2014
This year’s survey has shown continued progress in the maMority of markets, with SubSaharan $frica
this time taking centre stage as transparency pushes into the frontiers of the global real estate industry.
Kenya, Ghana and 1igeria are the star performers, although they are improving from a low base.
0eanwhile, a rising culture of ‘open data’ and technological innovation has emerged as a new driver
of greater transparency across the globe, a trend that is likely to continue as we look ahead to the
next survey in 2016.
9
10
Global Real Estate Transparency Index 2014
Real Estate Transparency Timeline
Top Improver Groups by Year
50
2004
Southern Europe – Cross-border investment
2006
Central Europe – Structural reforms following EU
2008
forces the pace of change in Spain and Italy
accession boost transparency, notably in Poland
Middle East – Booming real estate market drives
transparency improvement in Dubai
Coverage
increased
50 countries in 2004
to 102 markets in 2014
from
102
Source: JLL, LaSalle Investment 0anagement
BRICS – Growing international investment
2010
triggers
transparency improvement in China. India also among
top improvers
2012
MIST– Increased international investor and corporate
occupier activity lead to transparency improvements in
Turkey, Mexico and Indonesia
2014
Sub-Saharan Africa – Improving
transparency pushes into the frontiers of global real
estate. Top improvers - Kenya, Ghana and Nigeria
JLL
Global Real Estate Transparency Index, 2014
Transparency
Level
High
Transparent
Semi
2014
Composite
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
Market
United Kingdom
United States
Australia
New Zealand
France
Canada
Netherlands
Ireland
Finland
Switzerland
Sweden
Germany
Singapore
Hong Kong
Belgium
Denmark
Poland
Spain
Norway
South Africa
Austria
Italy
Portugal
Czech Republic
Hungary
Japan
Malaysia
Brazil - Tier 1
Taiwan
Romania
Israel
Slovakia
Greece
Turkey
China - Tier 1
Thailand
Russia - Tier 1
Philippines
Indonesia
India - Tier 1
Mexico
India - Tier 2
South Korea
Puerto Rico
Brazil - Tier 2
Croatia
China - Tier 2
Botswana
UAE - Dubai
India - Tier 3
Mauritius
1ew &ountries added to the 2014 Survey
Source: JLL, LaSalle Investment 0anagement
2014
Composite
Score
1.25
1.34
1.36
1.44
1.52
1.52
1.57
1.62
1.69
1.73
1.79
1.79
1.81
1.87
1.92
1.96
2.02
2.05
2.07
2.09
2.10
2.10
2.18
2.20
2.21
2.22
2.27
2.44
2.55
2.56
2.63
2.66
2.71
2.72
2.73
2.76
2.82
2.84
2.85
2.86
2.89
2.90
2.90
2.95
2.95
3.00
3.04
3.09
3.11
3.14
3.14
Transparency
Level
Semi
Low
Opaque
2014
Composite
Rank
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
Market
Chile
UAE - Abu Dhabi
China - Tier 3
Kenya
Cayman Islands
Argentina
Qatar
Russia - Tier 2
Bahrain
Peru
Slovenia
Zambia
Colombia
Serbia
Bulgaria
Saudi Arabia
Vietnam
Jordan
Russia - Tier 3
Macau
Egypt
Panama
Ukraine
Kuwait
Morocco
Uruguay
Costa Rica
Bahamas
Oman
Lebanon
Uganda*
Ghana
Kazakhstan
Jamaica
Nigeria
Venezuela
Mozambique*
Guatemala
Algeria
Dominican Republic
Tunisia
Pakistan
Belarus
Angola
Honduras
Iraq
Ethiopia*
Mongolia
Myanmar*
Senegal*
Libya
2014
Composite
Score
3.19
3.20
3.26
3.29
3.29
3.37
3.37
3.37
3.40
3.44
3.47
3.49
3.54
3.55
3.55
3.57
3.59
3.62
3.63
3.65
3.67
3.70
3.71
3.74
3.76
3.77
3.81
3.83
3.88
3.90
3.97
3.98
3.98
4.01
4.03
4.11
4.20
4.20
4.20
4.21
4.23
4.25
4.29
4.36
4.41
4.45
4.46
4.47
4.48
4.52
4.63
11
Global Real Estate Transparency Index 2014
Global Overview: Key Findings in 2014
Growing expectations of market transparency
The world’s dominant commercial real estate markets are in better shape than at any time since the Global
Financial &risis of 20082009. Levels of capital markets activity are returning to precrisis levels and real estate
investors are moving up the risk curve into new geographies and property types. 0eanwhile, corporates are now
executing longterm portfolio strategies and selectively extending their footprints into emerging markets.
$s momentum builds across the global real estate markets, investors, developers and corporate occupiers are
demanding and expecting ever greater levels of real estate transparency in terms of legal and regulatory
enforcement, ¿nancial disclosure, fairness of transaction processes and access to highTuality market data and
performance benchmarks.
$t the same time, there is a growing recognition by governments, particularly in emerging economies, that poor
real estate transparency not only hinders inward investment but also has deep impacts on the Tuality of life of its
citizens and their relationship with local government. &orruption scandals often involving the permit process for
real estate development and several highpro¿le building accidents are forcing governments to pay much greater
attention to regulatory enforcement. In addition, ‘open data’ policies, aided by technological advances, are
playing a greater role in boosting transparency levels across the globe.
Average Change in Transparency Score, 2004-2014
Increasing cross
border investment
boosts transparency
6%
Median Change in Transparency Score
12
Steady transparency
improvements as real
estate markets recover
4%
Improvements stall
due to Global
Financial Crisis
2%
0%
2004 to 2006
2006 to 2008
Source: JLL, LaSalle Investment 0anagement
2008 to 2010
2010 to 2012
2012 to 2014
JLL
2014 Index reveals steady transparency improvements
JLL’s latest Global Real Estate Transparency Index reveals continued progress in transparency over the past
two years. Over 80% of markets have registered an improvement since 2012, although typically, increases in
most markets have been ‘slow but steady’. Only 14 markets saw a notable upgrade in their overall score i.e.
their &omposite Index score improved by more than 25 basis points.
The World’s Most Transparent Countries, 2014
Dominated by $nglophone 0arkets
Transparency Level
+ighly Transparent
Transparent
2014 Composite Rank
Market
2014 Composite Score
1
United Kingdom
1.25
2
United States
1.34
3
$ustralia
1.36
4
1ew =ealand
1.44
5
France
1.52
6
&anada
1.52
7
1etherlands
1.57
8
Ireland
1.62
9
Finland
1.69
10
Switzerland
1.73
11
Sweden
1.79
12
Germany
1.79
13
Singapore
1.81
14
+ong Kong
1.87
Source: JLL, LaSalle Investment 0anagement
Top positions still dominated by anglophone markets
The world’s most transparent markets continue to be dominated by the highly liTuid anglophone markets. The
8K has inched past the 8.S. to move into top position, while $ustralia, 1ew =ealand and &anada sit in third,
fourth and sixth place respectively. Differences in transparency among these ‘+ighly Transparent’ markets are
marginal however, and each has been Mockeying for top position over the past decade.
0ore signi¿cantly, France has moved into ¿fth position as its government embraces a policy of ‘open data’.
This is France’s best ever performance, overtaking the 1etherlands 7th as the most transparent market in
&ontinental Europe. Ireland’s position 8th has been boosted by a new REIT regime. Finland 9th completes
the ‘+ighly Transparent’ category, a country that has been at the global forefront of ‘open data’ policies.
Switzerland 10th, Sweden 11th and Germany 12th, having made limited progress over the past two years,
sit Must outside the ‘+ighly Transparent’ category. In $sia, there is now a closer race for top position, with
Singapore 13th edging ahead of +ong Kong 14th, where property market cooling measures introduced in
2013 have compromised tax predictability and consistency.
13
Global Real Estate Transparency Index 2014
Sub-Saharan Africa shows greatest improvement
In previous Transparency surveys the &EE &entral and Eastern Europe and $sian regions, and more recently
the BRI& and 0IST markets, have dominated the list of top transparency improvers. This year, SubSaharan
$frican countries have taken centre stage, as improving transparency pushes into the frontiers of the commercial
real estate industry. Over the past two years, we have seen a sharp rise in interest in commercial real estate
opportunities in SubSaharan $frica, which is feeding through to greater transparency. &orporate occupiers are
leading the move into the continent, but international capital is also beginning to focus on $frica’s potential.
Five out of the Global Top 10 improvers in the 2014 Index are from the SubSaharan region, led by Kenya 1st,
Ghana 3rd and 1igeria 4th, where concrete efforts are being made to improve governance and the regulatory
framework in order to create a more businessfriendly environment. =ambia and 0auritius also make the top
cut. 1onetheless, $frican countries are rising from a low base and $frica remains the most opaTue continent,
home to six of the world’s 10 least transparent real estate markets. Doing business in $frica is not easy, and
while great strides have been made over the past two years, much still needs to be achieved.
Top Transparency Improvers, 2012–2014
SubSaharan $frica Takes &entre Stage
0.5
0.4
Score Change (Inverse)
0.3
0.2
0.1
Hungary
Peru
Serbia
Kazakhstan
Ireland
Colombia
Algeria
Mauritius
Zambia
Romania
Nigeria
Ghana
Qatar
0.0
Kenya
14
Source: JLL, LaSalle Investment 0anagement
Wider adoption of sustainability tools
There are further signs that sustainability considerations are becoming a more widely established element of the
global real estate market. JLL’s 2014 Real Estate Environmental Sustainability Transparency Index, which now
extends to 33 countries, has registered a large increase in the number of markets in the ‘+ighly Transparent’
and ‘Transparent’ categories. Improvements in country scores have been driven by two key factors: the greater
availability of marketspeci¿c green building certi¿cation schemes, which are now available in 80% of surveyed
markets and the wider adoption of energy benchmarking systems – with minimum energy ef¿ciency standards
now in place in virtually all surveyed countries.
The leaders of the Sustainability Transparency Index are the same as two years ago, with $ustralia, France and
the UK retaining the top scores. What sets these top three apart is the adoption of tools that track the ¿nancial
performance of sustainable buildings versus buildings that lack sustainable attributes. &anada and 1ew
=ealand have more recently introduced such tools.
JLL
‘Open data’ policies boost transparency
0ore governments appear to be embracing a policy of ‘open data’, allowing easy online access to land registry
information for example. France and Finland are taking maMor steps towards ‘open data’ which is further
boosting their already high transparency levels. But this is not Must a trend in the more transparent markets –
several initiatives are underway in countries traditionally characterised by low transparency. Qatar, in a maMor
move to increase transparency, announced a new ‘open data’ policy earlier this year which involves the release of
a large Tuantity of governmentheld, nonpersonal data to residents. In Uruguay, public land registry information
is now available online, while Kenya is starting to digitise all its land records.
Extension of REIT structures
The introduction of REIT structures continues to underpin improving transparency in several countries. Ireland is
seeing the renaissance of the listed sector, with GreenREIT launched in summer 2013 being the ¿rst company
making use of the new REIT regime. In Mexico, following the inauguration of the FIBR$ 0exican REIT market
in 2011, data availability has certainly increased. 0eanwhile, proposed legislation in Panama would allow for the
formation of a listed REIT market, whilst the government in Kenya has also recently passed REIT legislation. In
China, &ITI& has recently won regulatory approval to issue the country’s ¿rst REIT.
The unexpected power of sporting events
Real estate transparency also appears to be advancing as the unexpected conseTuence of international media
attention on countries holding maMor sporting events. Qatar’s successful bid for the 2022 FIF$ World &up has
brought transparency issues into sharp focus and is leading to more stringent building controls and higher
standards of safety. Likewise, the global spotlight is now ¿rmly on Brazil as the host of the 2014 FIF$ World &up
and 2016 Summer Olympics, which will intensify international attention on any de¿ciencies in transparency.
The enhanced role of Ànancial regulators
$ push for higher transparency has also come in an indirect way, as more rigid regulations in the banking and
¿nance world permeate into commercial real estate. 0any central banks are demanding more insights and
reporting on real estate lending and minimum capital reTuirements for property debt. &entral banks in Greece,
the UAE and Qatar, amongst others, have launched initiatives to monitor commercial real estate markets more
closely.
Limited launch of new investment performance indices
The number of new performance indices launched over the past two years has slowed compared to previous
surveys – the 3erformance 0easurement SubIndex registered the weakest improvement of the ¿ve
Transparency subindices. The notable exceptions were in Japan where the $ssociation for Real Estate
Securitization $RES launched in late 2012 an index tracking the performance of unlisted property funds
and Botswana, where I3D in association with the Real Estate Institute of Botswana has created a real estate
performance index based on the portfolios of six leading property companies.
Enhanced data on residential real estate
Supporting the improvement in the 0arket Fundamentals SubIndex, greatest progress has been made in
the availability of data on the residential sector, in part fuelled by stronger interest in residential property from
institutional investors and from central banks.
15
16
Global Real Estate Transparency Index 2014
JLL
Outlook to 2016
Technology enhancing transparency
The forces moving global real estate markets towards greater transparency will, over the next two years, be as
strong as ever, as new technologies help to boost transparency, even for those countries already among the most
transparent globally. 1ew technologybased data vendors and innovative data models, such as crowdsourcing,
promise more realtime, granular and specialised information on a large scale. The United States is taking
the lead in crowdsourcing platforms for real estate, which are emerging with increasing freTuency. The data
vendor &ompStak is one example of a startup that enables sharing of transaction information between market
participants. $nother is $uction.com, which is bringing realtime property sales transactions to an online platform.
Over the medium term, the proliferation of new technologybased crowdsourcing data companies could
enable emerging real estate markets to leapfrog the traditional evolution of building market fundamentals and
performance data sets.
Rising expectations from Millennials
The revolution in digital communication and information is being driven by the ‘0illennial’ generation i.e.
those in their 20s and early 30s, a demographic that will play a greater role in reshaping the global real estate
markets. Their use of social media, their hyperconnectivity and thirst for knowledgesharing is feeding through to
increasing demands for transparency in government and commercial organisations.
Measuring the performance of sustainable buildings
Sustainability and the built environment will continue to rise up the agenda, and we are likely to see more tools
to track the ¿nancial performance of sustainable buildings. GRESB, the Global Real Estate Sustainability
Benchmark, which assesses the sustainability performance of real estate portfolios around the globe, is making
good progress through sharpening the attention of investors on building sustainability.
Sub-Saharan Africa continuing to show strong improvement
$fter showing the largest improvements in the past two years, SubSaharan $frica is likely to continue to register
the most rapid progress between 2014 and 2016. $s more international players move into the region, this will
inevitably lead to further structural changes in the way $frican real estate markets operate. 0any of the region’s
markets, and indeed transparency initiatives, are at a nascent stage, and there remains a lot to be done before the
continent can compete with other regions on more eTual terms.
BRICs showing renewed impetus
The BRI& markets, where transparency improvements have lost some impetus in 2014, have strong potential
to build momentum once again. In &hina, pressure from potential bond defaults and regulators attempting
to reduce ‘moral hazard’ are leading investors to demand better information in order to price credit risk more
accurately. $dditionally, the planned introduction of a national property registry and property tax should also
boost transparency.
India is likely to enact the Real Estate Regulation Bill, which seeks to improve regulation over real estate agents
and the Tuality of land registry records. 0ore generally, India could see faster improvements in real estate
transparency in the future following the election in 0ay of the ¿rst maMority government in 30 years the new
government will undoubtedly be in a stronger position to push through economic reforms.
17
18
Global Real Estate Transparency Index 2014
Regional Highlights
Sub-Saharan Africa shows strongest improvement, but much still needs to be achieved
The 2014 survey reveals that SubSaharan $frica SS$ has made the world’s strongest advances in real estate
transparency. Five out of eight SS$ markets namely Kenya, Ghana, Nigeria, Zambia and Mauritius have
demonstrated signi¿cant improvement in transparency scores ! 25 bps. $ll these markets secured a position in
the Global Top 10 improvers, whilst $ngola has also seen moderate transparency improvement since 2012. While
tangible progress is being made across the continent, much still needs to be achieved. Senegal, Ethiopia and
Angola all feature in the bottom 10 of the Index.
Central Europe drives improvements on the continent
Within Europe, it is once again the &entral and Eastern European subregion that has seen the greatest shifts in
transparency. $mong the top improvers in 2014 are Romania, Serbia and Hungary. Romania’s improvement
reÀects the government’s concerted actions to enforce EU legislation, as well as ongoing efforts to ¿ght corruption.
Serbia has started formal EU accession negotiations, which is pushing through to structural reforms as has
occurred previously in other &EE accession countries. +ungary is also amongst the improvers, making up for
lost ground compared to neighbouring Poland and the Czech Republic.
Political upheaval in Eastern Europe compromises transparency
By contrast, the 2014 Index shows Ukraine and Russia Tier II and III cities struggling to maintain even moderate
levels of transparency, and once again highlights how political turmoil and uncertainty can Tuickly undermine
transparency levels. The deterioration in transparency in Ukraine is far from a uniTue event however, with Egypt
2012 and Venezuela 2008 both moving into reverse in previous surveys.
Modest improvement in MENA
The 0iddle East and 1orth $frica remains one of the least transparent regions in the world. Following
encouraging signs of improvement in transparency prior to the GF&, the region has not maintained momentum.
While there is increasing recognition across 0E1$ of the importance of improving real estate transparency, in
most cases this has failed to translate into ¿rm action. The notable exception is Qatar – which sits among the
Global Top 10 improvers – where the government is taking measures to increase its global presence, which has
involved taking a more open and transparent stance on several issues. 1orth $frican countries, such as Egypt,
have also shown progress as they regain some lost ground from the effects of the ‘$rab Spring’.
Economic growth drives transparency increases in Latin America
In Latin $merica, the strongest gains have been achieved in Colombia and Peru which, not coincidentally, have
also been amongst the region’s fastest growing economies, attracting increasing FDI, and are now the targets
of international real estate capital. Brazil Tier I cities and Mexico have maintained their positions as Latin
$merica’s most transparent markets.
Moderate progress in Asia PaciÀc
The $sia 3aci¿c region has seen a moderate pace of transparency progress in 2014 following advances in
2010 due to increases in &hina and India and 2012 due to emerging South East $sia such as Indonesia and
Vietnam. Limited improvement in market data availability and slow forward movement in regard to policy reforms
in the past two years have contributed to the results in 2014. 1onetheless, there are selective examples of
progress including more rigorous reporting of transactions in Taiwan and the introduction of an index tracking the
performance of unlisted property funds in Japan.
JLL
Several dynamic markets lose impetus
Several countries that have featured among the top improvers in previous surveys, including Turkey, Poland,
Dubai, China and South Africa, appear to have lost some impetus and have been treading water over the
past couple of years. In &hina, for example, advances in structural reforms and the strengthening of regulatory
enforcement have been slow, and it continues to fall behind in the transparency of transaction processes. For
many crossborder investors, 3oland has reached an acceptable level of transparency, which may have taken the
pressure off further improvements.
Transparency levels within BRIC countries widen
The survey also reveals evidence of a widening gap in transparency within BRI& countries, between their Tier I
cities such as Shanghai, Mumbai, Moscow and Sao Paulo and the lower tier cities, where progress has been
slower and, in the case of Russian Tier II and III cities, has deteriorated.
Transparency Index 2014, by Region
Performance Measurement
Market Fundamentals
Global
Americas
Europe
Asia Pacific
MENA
Sub-Saharan
Africa
3.51
3.59
3.96
4.10
2.99
2.86
3.06
2.96
4.06
4.47
4.22
4.67
Governance of Listed Vehicles
2.88
3.52
2.33
2.50
3.14
3.68
Regulatory and Legal
2.64
2.66
2.11
2.59
3.48
3.04
Transaction Process
2.68
2.57
2.08
2.83
3.63
2.99
Composite Index
3.08
3.35
2.50
2.81
3.81
3.72
Source: JLL, LaSalle Investment 0anagement
Transparency Change by Region, 2012-2014
Region
Average Score 2014
Average Score 2012
Change
Americas
3.35
3.43
0.09
Europe
2.50
2.55
0.05
Asia Pacific
2.73
2.83
0.11
Middle East & North Africa
3.76
3.89
0.14
Sub-Saharan Africa
3.43
3.75
0.32
Global
3.00
3.10
0.11
*comprises only markets included in the Index in both updates
Source: JLL, LaSalle Investment 0anagement
19
20
Global Real Estate Transparency Index 2014
Americas Continues on Gradual
Path to Transparency
In the 2014 Index, the $mericas region has recorded overall modest
improvement in real estate transparency. 1otably, it has tended to be the larger
and relatively more developed Latin $merican economies and property markets
that have seen the greater shifts towards increasing transparency since 2012.
These top improvers also generally correspond to those countries that have
attracted signi¿cant andor rapidlygrowing foreign direct investment, including
into their real estate sectors. This contrasts with many of the smaller &entral
and South $merican, as well as &aribbean markets, which on average have
experienced smaller gains – as has been the case with the region’s two ‘+ighly
Transparent’ markets: the United States and Canada.
Poor real estate data and a small, still-emerging listed sector
weigh on regional standing
In the $mericas region overall, 3erformance 0easurement, 0arket
Fundamentals and Governance of Listed Vehicles remain decidedly less
transparent subindices. 1onetheless, as investors continue to take interest
in a wider array of property markets in the region, this will lead to more and
better property market fundamentals and performance data, as well as
a higher standard of governance for listed property companies. In many
countries in the $mericas, no disaggregated databases are available, while a
maMority of markets also have limited availability of robust timeseries market
data. $dditionally, in stark contrast to a country like the U.S. in which robust
performance measurement and other data is widely available for even such
niche publiclylisted sectors as selfstorage and student housing a maMority of
Latin $merican and &aribbean markets have no benchmark return indices for
publiclyowned property, because those publiclytraded companies that do exist
largely tend to be homebuilders or development ¿rms.
… but signs of improvement
Even so, this will likely change over time as REIT structures are gradually
introduced into more markets. For example, there is currently proposed
legislation in 3anama that would allow for the formation of a listed REIT market.
In 0exico, following the inauguration of the FIBR$ 0exican REIT market a
few years ago, available data has certainly increased, although performance
benchmark indices are generally still of fairly limited use. The recent introduction
of retail funds primarily invested in FIBR$s is likely to change this in the near
future. Furthermore, the largest FIBR$ has successfully placed over US1
billion in the public debt market. Finally, a corollary of the multiple reforms
undertaken by the government in 2013 will be greater private investment
in energy markets and ports which will likely trigger institutional real estate
investment and greater transparency in these markets.
JLL
Initial steps in private performance measurement taken in
Latin America
For most Latin $merican and &aribbean markets, there are no private real
estate indices in use, and thus no local privatelyheld return benchmarks.
In fact, in several countries there is still Tuite little in the way of institutional
ownership of commercial property within the private realm. In Brazil, however,
there is a homegrown private real estate index – the IG0I& – that was
launched in 2011. The index was created by FGV, an institution that publishes
a variety of price and asset indices, another being the IG30, which is widely
used for the purposes of adMusting rents in the market. The IG0I& index was
developed in large part with the obMective of bringing more transparency to the
real estate market in the country.
In another example, though, of how the stage is being set for much greater
real estate performance measurement data availability in Latin $merica, the
introduction in recent years of &apital Development &erti¿cates in 0exico’s
private institutional investment mainly pension fund arena will produce the raw
data vital to the creation of privatelyheld property performance measurement
indices. With the historical instruction of many more mature real estate
markets, it seems probable that such private indices in 0exico will become
available in coming years.
Information on real estate debt still relatively scarce
Throughout the $mericas, detailed real estate debt information is still, on the
whole, neither very extensive nor widely available. The United States, largely
through its Federal Reserve, is the global ‘gold standard’ in this respect, with
its tracking of debt Àows – overall and by speci¿c lender types – and available
information on mortgage originations and maturities. Canada also has a good
degree of accessible information, but notably has substantially less data widely
available to the public in terms of mortgage originations.
The role of the ¿nancial regulators in various markets has also strengthened
and contributed to improved transparency in the region. Even in Argentina,
in a perhaps somewhat counterintuitive example, much stricter capital controls
enacted by the government in recent years have led to greater reTuirements
for property lenders to monitor cash Àows and collateral values, and also to
appraisal reTuirements and associated noncompliance penalties.
21
22
Global Real Estate Transparency Index 2014
Selected geographic and country highlights
For the second consecutive Transparency survey, Brazil Tier I &ities continues to be the most transparent market
in Latin $merica, followed by Mexico, Puerto Rico and Brazil Tier II &ities. Brazil Tier I has maintained its
movement towards greater transparency, despite the emergence of economic and real estate market challenges
as well as capital outÀows over the last 1218 months. 3rogress in recent years has been concentrated in the
regulatory and legal system, as well as transaction processes. Even here, though, opportunities for further
improvement certainly remain – for example, transaction cost conventions in the market are Tuite complex and
can vary greatly. In addition, title insurance is also not obtainable, and property title records, while publicly
available, are not yet accessible online. This actually contrasts, interestingly, with Uruguay, a much less
transparent country overall but one in which more public land registry information is available online.
&ontinued progress in real estate transparency in Brazil is perhaps now of even greater relevance for the market,
given the global spotlight that will shine intensely on the country over the 20142016 period, with its staging of the
FIF$ World &up and Summer Olympics. The potential to reap investment bene¿ts from greater transparency will
perhaps be especially ampli¿ed over the next several years.
In Mexico, the largest improvements in transparency can be attributed in part to the dramatic deepening of the
country’s real estate capital markets over the past few years, with respect to the still very young and growing REIT
and private domestic pension fund real estate investment markets. +owever, the government has also embarked
on a series of signi¿cant reforms across a variety of sectors including energy, telecoms, education and taxes.
One way in which real estate taxation changes have challenged transparency is through the recently approved
lengthening of the holding period for property to Tualify for taxexempt status.
The least transparent real estate markets in the $mericas are concentrated in the &aribbean Basin. These
countries include Honduras, Guatemala, the Dominican Republic, Venezuela and Jamaica, and generally rate
very poorly in the areas of market and performance data as well as governance of listed vehicles.
Colombia and Peru log largest gains in transparency
The two most improved larger markets since the last survey are Colombia and Peru. 1ot coincidentally these are
the two countries that have seen among the most consistently strong economic growth over the last several years
and have garnered striking increases in foreign direct investment within the region.
&olombia in particular has seen notable improvements in the availability of property market data – especially in
the of¿ce and industrial sectors, as global real estate investors, brokerages and other services ¿rms have been
expanding their presence and activities. $s a result, more data is being collected including a greater depth
of detailed property fundamentals data, by submarket and in some cases by sector and it is often improving
in Tuality and becoming more widely available. In addition, formal RF3s for real estate proMect and transaction
assignments are now far more commonplace in the primary cities than was the case Must two to three years ago.
JLL
Real Estate Transparency
in the Americas, 2014
United States, &anada
+ighly Transparent
Brazil Tier 1
Transparent
0exico, 3uerto Rico, Brazil Tier 2, &hile, &ayman Islands, $rgentina, 3eru
SemiTransparent
&olombia, 3anama, Uruguay, &osta Rica, Bahamas
Low Transparency
Jamaica, Venezuela, Guatemala, Dominican Republic, +onduras
OpaTue
CA
US
BS
DO
PR
MX
HN
KY
GT
CR
JM
VE
PM CO
Highly Transparent
Transparent
Semi-Transparent
Low Transparency
Opaque
Not Covered
BR
PE
CL
AR
UG
Brazil – based on Tier 1 cities
Source: JLL, LaSalle Investment 0anagement
23
24
Global Real Estate Transparency Index 2014
Colombia
Top regional transparency improver &olombia has enMoyed increases in data coverage in recent years. One
manifestation of the improving market data Tuality has been a stronger convergence among independent analysts
as to basic indicators, including the overall size of the market and other standard supply and demand metrics. This
enhanced Tuality and availability of data is Must one factor behind the entrance into and development within the market
of more established real estate investment funds and developers. These include U.S.based participants such as
ETuity International and 3aladin Germansourced capital – Jamestown domestic ¿rms that are raising institutional
capital from multiple geographies including the U.S. – such as Ospinas international shopping centre specialist
Sonae Sierra and larger and increasingly sophisticated domestic groups that are raising capital and operating
executing on multiple platforms across various sectors, such as Terranum.
In addition to improvements in data Tuality and availability, &olombia has achieved transparency gains in its
regulatory and legal environment. For example, market participants’ expectations for entering into contracts have
become much more professionalised and routine. $ higher, more ‘international standard’ has developed, with
enforceability of contracts being taken Tuite seriously by participants with the backing of the courts in the maMor cities
of Bogota, 0edellin, Bucaramanga and &ali. $t the same time however, in secondary cities and on the &aribbean
coast, legal norms still remain much more lax and informal.
$nother important set of developments is the ongoing proliferation of Free Trade and other bilateral agreements,
such as those with the U.S., South Korea, Israel and the EU, as well as the stock market merger between &olombia,
3eru and &hile. Such agreements have necessitated more uniformity and a standardisation of stock markets, trade
regulations, and legal and regulatory frameworks. $s an example, there has been an increasing regulatory and
enforcement focus over recent years on cracking down on money laundering in order to facilitate transparency in
international trade agreements. One result of such efforts has been more stringent legal standards for accounting
and contract enforcement, including in real estate transactions.
JLL
Peru
3eru has registered relatively strong transparency improvement which has edged it into the ‘SemiTransparent’
category. The country has experienced transparency increases in its regulatory and legal practices, as well
as in transaction processes and governance of listed vehicles. There are some interesting distinctions to be
drawn between 3eru’s standing and that of &olombia. Lima is widely considered to be a more global city,
and its exceptionally strong ‘centre of economic and real estate gravity’ within 3eru contributes to the country
being highly urbanised overall, with a variety of more extensive international connections than Bogota or the
other maMor &olombian cities. This could play a role in certain ‘standard’ global market practices being adopted
earlier or at a somewhat Tuicker pace than in &olombia. For instance, in some respect 3eruvian property
¿rms in general are seen to have higher professional standards, with broader adoption of, adherence to and
enforcement of its industry body’s code of ethics.
This difference also has at least partial cultural underpinnings, as there is a much greater acceptance and
‘culture’ of outsourcing business services – particularly in this case property services – in Lima than in
&olombia’s primary cities. In &olombia, most ¿rms attempt to keep all functions inhouse, which may support the
perception of more uneven and generally lower professional standards than in 3eru. In perhaps a similar vein,
3eru is also modestly outpacing &olombia in terms of governance standards and practices of listed property
companies. $t the same time, more widespread ‘international standard’ practices in 3eru have also made the
market somewhat easier to understand for foreign investors than many other emerging markets. Furthermore,
local partnership opportunities in 3eru – often critical for foreign investors ¿rst entering new markets – can
sometimes be more easily identi¿ed and de¿ned than in other Latin $merican countries, including &olombia. $s
such, foreign REITs have found a path to entry and success in 3eru. For example, U.S. REIT Kimco Realty, in
addition to others, has been an active player in the country. By contrast, the market in &olombia has been on
balance dominated by more private and locallybased investors to this point.
25
26
Global Real Estate Transparency Index 2014
Moderate Improvements
in Asia Paci¿c
The $sia 3aci¿c region continues to display the widest diversity in real estate
transparency worldwide – Australia 3rd and New Zealand 4th top the region’s ranks,
while Mongolia 99th and Myanmar 100th are some of the least transparent countries
globally. In the latest survey, the top tier in $sia 3aci¿c has pushed forward in terms of
global rankings 1ew =ealand from 5th to 4th, but most of the region has not seen much
change. In fact, the lower rungs have fallen in terms of global rankings – Vietnam from
62nd to 68th and Macau from 64th to 71st due to faster progress seen elsewhere in the
world, and Mongolia from 93rd to 99th due to scores worsening since 2012.
Overall transparency in the region has seen a moderate improvement in the 2014 survey,
building on advances in 2010 due to progress in China and India and 2012 led by
emerging South East $sian countries. Only ¿ve markets Japan, Thailand, India Tier I
and II cities and South Korea have registered moderate score increases, but none rank
among the global Top 10 improvers; the rest of the region has seen generally small gains.
Limited improvement in the availability of market fundamentals data and slow progress in
regard to policy reforms in the past two years have contributed to the results in 2014:
‡
‡
‡
‡
‡
China’s limited improvement in overall real estate transparency is mainly restricted to
its Tier I cities.
Singapore has inched ahead of +ong Kong once again also in 2010 in a close race
for the top transparency position in $sia, with the latter seeing its scores fall since
2012 in the areas of corporate governance and property taxation.
Transparency levels are still low in Japan and South Korea relative to these two
countries’ economic maturity. This is largely due to a comparative lack of market
fundamentals intelligence as well as low transparency regarding reconciliation of
service charges for facilities management.
India has seen moderate improvements in overall transparency scores for Tier I and II
cities mainly in market fundamentals and limited gains for Tier III cities. $mong the
different categories, India still scores the lowest in the transparency of its transaction
processes e.g. high costs of investment transactions; weak professional standards for
local agents.
$ll countries in emerging South East Asia have seen some advances but less
signi¿cant than 2012 when the subregion accounted for 3 out of the top 10 global
improvers. The subregion has generally seen progress in regulatorylegal and the
transaction process.
JLL
Selective examples of improvement
1otwithstanding these results, there are a few notable
examples of improvements across the region over the last
two years. In Taiwan, the price of all property transactions
must now be reported to the government within 30 days after
the sale has been registered. In Japan, the $ssociation for
Real Estate Securitization $RES launched in late 2012 an
index tracking performance of unlisted property funds. There
have also been small improvements in regulation of real
estate lending in a few markets including China, Taiwan,
New Zealand and Macau.
Going forward, the region should see further progress in
transparency improvements stemming from both public
and private sector players. Demand from international
investors and corporate occupiers should continue to lead
to better information on market fundamentals. $nother
area that is moving in a positive direction is the regulatory
and legal environment. For example, China plans to
introduce a national property registry before 2018, which will
probably precede the expansion of a property tax nationally.
Elsewhere, Taiwan is currently examining a bill which
reTuires all presales to be declared and, later this year, India
is likely to enact its Real Estate Regulation Bill, which seeks
to improve regulation over real estate agents and the Tuality
of land registry records. India could see faster improvements
in real estate transparency in the future following the election
in 0ay of the country’s ¿rst maMority government in 30 years;
the new government will undoubtedly be in a stronger
position to push through economic reforms.
27
28
Global Real Estate Transparency Index 2014
Real Estate Transparency in
Asia Paci¿c, 2014
$ustralia, 1ew =ealand
+ighly Transparent
Singapore, +ong Kong, Japan, 0alaysia
Transparent
Taiwan, &hina Tier 1, Thailand, 3hilippines, Indonesia, India Tier 12
South Korea, &hina Tier 2, India Tier 3, &hina Tier 3
SemiTransparent
Vietnam, 0acau
Low Transparency
0ongolia, 0yanmar
OpaTue
MN
JP
KR
CN
TW
HK
IN
MO
TH
VN
MM
PH
MY
SG
ID
Highly Transparent
Transparent
Semi-Transparent
Low Transparency
Opaque
Not Covered
AU
NZ
&hina and India – based on Tier 1 cities
Source: JLL, LaSalle Investment 0anagement
JLL
China
Similar to 2012, &hina’s overall transparency score has seen limited improvement in the 2014 survey after strong
advances in 2010. Enhanced data availability in the country’s secondary and tertiary cities contributed to 2010’s
improvement, while slow but steady progress was made on the regulatory and legal fronts in both 2010 and 2012. In
2014, &hina scores relatively well globally in investment performance measurement and market fundamentals but
continues to lag in areas such as transaction process particularly standards for agents and reconciliation of service
charges for facilities management. 3rogress in structural reforms and stronger regulatory enforcement has been
slow since 2012, and the gap between Tier I and the lower tier cities has slightly widened as bigger improvements
have been generally limited to the primary cities.
3rogress since 2012 has been restricted to a few areas such as land use planning predictability of change of land
use; stricter enforcement and compulsory purchase by a public body fewer instances of unreasonable notice
periods. +owever, these have been partly offset by lower scores in taxation consistency and predictability as well as
a setback in accuracy of data on real estate debt, which has suffered from the increase in trust lending and debt from
shadow banking channels.
Ironically, pressure from potential bond defaults may promote greater transparency in the future, as attempts by
regulators to reduce ‘moral hazard’ are leading investors to demand better information in order to price credit risk more
accurately. $nother key area that is moving in a positive direction in &hina is the planned introduction of a national
property registry and property tax. The national property registry is being implemented on a pilot basis in several Tier
II cities and should lead to more complete and easily available records, and thereby help to promote a less strati¿ed
operating environment between city tiers for real estate players. $ third area to watch for improvement will be in the
listed real estate sector where the country
s ¿rst exchangetraded REIT began trading in 0ay.
29
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Global Real Estate Transparency Index 2014
Hong Kong
Sitting close to the ‘+ighly Transparent’ category, on a par with many Western European countries, and with
the fourth most transparent market in the $sia 3aci¿c region, +ong Kong has seen its transparency score fall
marginally in 2014 and it now sits one place behind Singapore.
The city ranks among the top Tuartile globally in every transparency category highest for market fundamentals
at 7th place globally, but has seen scores fall in a few areas since 2012. 3roperty market cooling measures
introduced in 2013 e.g. standard stamp duty rates were doubled for all direct property transactions as well as
being levied on all subsales of nonresidential property have lowered tax predictability. In the residential sector,
the introduction in 2012 of a 15% buyer’s stamp duty on nonlocals has also reduced tax consistency for foreign
purchasers.
0oreover, market experts have lowered their opinions since 2012 on both accounting standards and corporate
governance. For instance, a greater level of detail is needed in ¿nancial reports e.g. individual asset performance
of landlords. Lower corporate governance scores reÀect the slow pace of listed companies’ compliance with
recent changes to the &orporate Governance &ode of the +ong Kong Stock Exchange; e.g. more independent
nonexecutive directors on company boards.
+ong Kong is likely to maintain generally high levels of transparency going forward. +owever, local companies
may continue to be slow to accept best practices in corporate governance. In addition, property market cooling
measures will probably remain in place for the foreseeable future, leading to ongoing uncertainties over tax
consistency and predictability for local and foreign investors.
JLL | Global Real Estate Transparency Index, 2014
JLL
Australia
$lready one of the world’s most transparent markets, $ustralia has seen its transparency score improve slightly
since 2012 and it has maintained its global ranking at third place.
$ustralia is second globally behind the UK in terms of investment performance measurement, reÀecting the
country’s wide use of all performance indices, coupled with sophisticated listed real estate companies highly
securitised with the second largest REIT market globally behind only the U.S. and high standards of valuation
methods. Globally, it is placed only behind the U.S. in terms of market data availability, with long timeseries
of data for most real estate indicators and comprehensive databases at a dealproperty level for the maMority of
sectors.
$ustralia also ranks well in regulatory and legal processes in 4th place with near perfect scores on land use
planning, enforceability of contracts, compulsory purchase as well as availability and Tuality of land registry
records albeit scoring slightly lower on tax consistency and predictability. In governance of listed vehicles it is
ranked 7th worldwide, with near top results for accounting standards and corporate governance.
The only category where $ustralia lags behind the Global Top 10 in 13th place is in the transparency of
transaction processes, but this is principally due to the ¿ne differentiation at the top end of the ladder. $lmost
every aspect of the transaction process in $ustralia is very transparent.
+igh real estate transparency is a maMor factor behind the strong demand for $ustralian real estate assets from
global investors. Fullyear 2013 commercial real estate transaction volumes set a new record at US22 billion,
up 33% on 2012. &rossborder purchases were a maMor contributor to this growth, accounting for 30% of total
investment volumes in 2013, a record in dollar and percentage terms. $ range of foreign investors recently active
in the $ustralian market include pension funds, global fund managers, sovereign wealth funds, foreign listed REITs
and high net worth individuals.
31
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Global Real Estate Transparency Index 2014
Europe’s Transparent Markets Underpin
Strong Cross-Border Investor Activity
Real estate transparency across most of Europe has not registered signi¿cant change since our last survey in
2012; unsurprising given that the region houses many of the world’s most transparent markets. Europe remains
the most internationally traded region, attracting high inÀows of capital from across the globe.
+igh Tuality of valuations, the depth of market data and performance benchmarks, clear and enforceable rules
on land use and taxation, and bidding processes that are fair and do not discriminate against any party involved,
have become key elements of a ‘safe haven’ and are among other factors reasons why Europe continues to be
one of the most international investment destinations.
The importance of transparency for investment decisionmaking from around the world is clearly visible in markets
such as London, 3aris and the German cities, which are key investment targets, not only because of their size and
liTuidity, but also given their market transparency, with the UK coming top of the global ranking this year, France
up to 5th place and Germany sitting in 12th position.
Key features of this year’s survey in Europe are:
‡ Once again the &entral and Eastern European subregion has seen the greatest shifts
in transparency across Europe. Two of the top improvers in 2014 have been Romania
and Serbia. In January 2014, Serbia started formal EU accession negotiations which
will involve signi¿cant regulatory reforms. 0eanwhile, Romania has shown strong
improvement, with EU legislation being more ¿rmly enforced and evidence of ongoing
efforts to ¿ght corruption and increase the ef¿ciency of the Mudicial system.
‡ Hungary is also amongst the improvers in 2014. Following front runners 3oland and
the &zech Republic, the country is building its position as a &EE investment destination,
which is supporting increases in the transparency of its investment processes. Poland
and the Czech Republic, which both lead the transparency ranking in the sub
region, have shown limited improvement in 2014. For many crossborder investors,
transparency levels are now ‘acceptable’, which may explain the loss of some impetus
of transparency advances in the two countries.
‡ Further east, Russia’s Tier II and III cities, as well as Ukraine, have struggled to
maintain even moderate levels of transparency, with a notable gap emerging not
only with 0oscow, but also with the rest of Europe. Our Index shows decreases
in transparency in both countries due to lower scores across a range of indicators.
Transparency in Kazakhstan and Belarus, though improving, remains very poor and
both countries still sit in the ‘OpaTue’ category.
‡ Turkey, which for the past two surveys topped the ranks of global improvers, has
been unable to maintain momentum in 2014 with its overall score improving only
slightly. 3erceptions of transparency may have been impacted by the recent headlines.
1evertheless, the Istanbul real estate market continues to show strong expansion.
JLL
‡ $mong the big improvers in Western Europe is Ireland, which is currently experiencing
a strong market recovery and has moved into the ‘+ighly Transparent’ category in 2014.
The upward change has been driven by the renaissance of the listed sector, with Green
REIT launched in summer 2013 being the ¿rst company to make use of the country’s
new REIT regime. $t the same time, Irish ‘bad bank’ 1$0$ continues to make further
progress on working through the debtproperty portfolios acTuired from distressed Irish
banks at the peak of the ¿nancial crisis.
‡ 3ortugal has also shown reasonable improvements in the 2014 survey. The country
was hit hard by the ¿nancial crisis, which impaired its ability to improve transparency,
particularly as a lack of investment activity reduced the amount of available information
on transactions. The government has, however, introduced profound economic and
banking sector reforms, and investment activity has started to increase again. During
the crisis, it also introduced a ‘Golden Visa’ programme offering nonEU investors visas
if they invested in 3ortugal, including in real estate which opened the market to a new
source of global capital.
While Europe hasn’t seen a maMor push in regulations between 2012 and 2014, there has still been improvement
in transparency in the way that existing frameworks are more rigorously applied and enforced. The crisis of 2009
has clearly shown how a lack of risk management and overly optimistic valuations and also the neglect of analysis
of market fundamentals can create huge problems. It appears that there is now a renewed focus on deepening
real estate market analysis, and maMor independent data providers in the direct and indirect markets continue to
re¿ne their analytic tools.
33
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Global Real Estate Transparency Index 2014
Real Estate Transparency
in Europe, 2014
United Kingdom, France, 1etherlands, Ireland, Finland
+ighly Transparent
Switzerland, Sweden, Germany, Belgium, Denmark, 3oland
Spain, 1orway, $ustria, Italy, 3ortugal, &zech Republic, +ungary
Transparent
Romania, Israel, Slovakia, Greece, Turkey,
Russia Tier 1, &roatia, Russia Tier 2
SemiTransparent
Slovenia, Serbia, Bulgaria, Russia Tier 3, Ukraine
Low Transparency
Kazakhstan, Belarus
OpaTue
Highly Transparent
Transparent
Semi-Transparent
Low Transparency
Opaque
Not Covered
FI
SE
NO
GB
BE
RU
DK
NL
PL
DE
IE
FR
IT
ES
CZ SI
AT HU
RO
SL
BY
KZ
UA
RS
CH
TR
PT
HR
G R BG
Source: JLL, LaSalle Investment 0anagement
IL
JLL
France
Despite already high levels of transparency, France has continued to show steady improvements and has
overtaken the 1etherlands to become continental Europe’s most transparent market. The country’s listed real
estate sector is highly diversi¿ed and is growing once again, increasing the use of performance benchmarks. $
further positive development is the high number of listed companies that now report in English as well as French.
+owever, the largest improvement concerns the availability of data – in 3aris, ORIE the regional observatory of
real estate has relaunched its of¿cial of¿ce stock statistics for the ÌledeFrance region with the Moint support of
various market players, who already provide a high level of transparency through ‘ImmoStat’. $t the same time,
public institutions appear to be increasingly embracing a policy of ‘open data’, allowing easy access to the land
registry. It is now also possible to buy information about the real estate stock for every city in France, based on
the property tax ¿les. This offers the potential to precisely calculate the of¿ceretailindustrial stocks for any town,
and to access details of ownership.
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Global Real Estate Transparency Index 2014
Modest Improvements in Middle East
and North Africa
Of the 16 0iddle East and 1orth $frica 0E1$ markets covered in the Transparency Index,
14 have shown an improvement in transparency since 2012. +owever, these changes
have been relatively modest compared to preGF& and 0E1$ remains one of the least
transparent regions in the world.
Dubai is still the most transparent market within the region but has seen little progress since
2008. The strongest advances over the past two years have been recorded in Qatar, with
more modest improvements in 1orth $frican markets, such as Egypt and Tunisia, where the
effects of the $rab Spring
have now largely subsided. While transparency has made gains
in less developed markets, such as Algeria and Pakistan, these remain among the least
transparent real estate markets globally. Lebanon has struggled to maintain momentum over
the past two years as the country faces increased political instability and strains relating to the
continued conÀict in neighbouring Syria.
Dubai remains the region’s most transparent real estate market
The U$E has retained its position as the most transparent real estate market in the region,
although there has been little further progress made over the past two years. Even so,
Dubai continues to bene¿t from the U$E’s status as one of the best regulated and open real
estate markets in a still volatile region. It has built upon its position as the leading business
destination in the 0iddle East over the past two years and has the longest history of offering
freehold ownership to overseas parties, dating back around 15 years.
In advances that have been made, the Dubai government has introduced a number of
measures to improve the legislative and regulatory environment in an attempt to avoid
another real estate bubble, with the real estate regulator RER$ remaining the most
developed such body in the region. $mong these adopted measures is the recent doubling of
the transfer fee seen as an ‘antiÀipping’ measure. Furthermore, the Dubai Land Department
DLD has announced the launch of uni¿ed real estate contracts. These new agreements
have been designed to regulate the relationship between the parties involved in property
transactions, and to help avoid any problems that may arise from misinterpretation of
documents. The contracts have become a mandatory reTuirement since 0ay 2014.
0oreover, the &entral Bank of the U$E has taken steps to better regulate the market by
controls on lending to real estate developers and the imposition of loantovalue ratios on
mortgages.
In line with the Dubai Strategic 3lan 2015, the latest regulatory change in Dubai has seen the
0unicipality mandate a series of green building regulations, which include speci¿cations to be
applied to all newlyconstructed buildings within the Emirate of Dubai including Free =ones
since 0arch 2014.
JLL
Abu Dhabi treading water
In Abu Dhabi the Tuality of real estate market data is higher than in Dubai in several
sectors and the planning system is more regulated through the Urban 3lanning &ouncil.
Improvements in these areas have reinforced $bu Dhabi’s position as the second most
transparent market in the 0E1$ region. There has, however, been disappointingly little
progress elsewhere, including crucial real estate legislation which has been drafted for a
number of years but has still to be enacted.
$n example of this inertia is in $bu Dhabi’s creation of a new ¿nancial Free =one on $l
0aryah Island; its legislative framework has yet to be rati¿ed, and this is resulting in a lack of
clarity around the status of existing tenants.
Lebanon loses momentum
Lebanon has struggled to maintain momentum over the past two years. It has faced serious
economic, security and political hurdles since the last Index was published, and the security
situation remains unstable, exacerbated by the continued civil war in neighbouring Syria.
These challenges have hindered any progress towards improved regulations and real estate
transparency, effectively reversing the gains that were registered in previous surveys.
North Africa gains from improving stability
1orth $frican countries notably Egypt, Algeria and Tunisia have seen a positive
improvement in transparency since 2012. This is a reÀection of the more stable political
environment in these countries, which were embroiled in the $rab Spring
at the time of the
2012 survey. While progress towards democracy has been limited, this stability has resulted
in some improvement in the real estate operating environment.
Egypt, in particular, has seen a modest increase in transparency over the past two years
and there are signs emerging that con¿dence in the &airo real estate market is returning to
pre $rab Spring
levels. The decisive result of presidential elections in 0ay 2014 is likely to
increase certainty and con¿dence in the real estate market.
Libya in, Sudan out
Indicating increased interest from international investors and corporate occupiers, Libya has
reMoined the Transparency Index. Investing in Libya comes with challenges including security
concerns, a lack of policy enforcement and a high level of corruption. $s a conseTuence,
Libya has reentered the survey as the least transparent market in the 0E1$ region and at
the bottom of the global rank. Given the current violent conÀict in Sudan and the imposition
of international sanctions, business interest has declined and Sudan has therefore been
excluded from the 2014 Index.
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Global Real Estate Transparency Index 2014
Real Estate Transparency in MENA, 2014
U$E Dubai, U$E $bu Dhabi, Qatar, Bahrain
SemiTransparent
Saudi $rabia, Jordan, Egypt, Kuwait, 0orocco, Oman, Lebanon
Low Transparency
$lgeria, Tunisia, 3akistan, IraT, Libya
OpaTue
TN
KW
LB
MO
IQ
PK
BH
JO
ALG
LY
EG
SA
QA
LY
OM
Highly Transparent
Transparent
Semi-Transparent
Low Transparency
Opaque
Not Covered
UAE
NG
Source: JLL, LaSalle Investment 0anagement
JLL
Qatar
Qatar is the only market within the 0iddle East that has witnessed a signi¿cant improvement in transparency over
the past two years, and features among the top global improvers in the Index, moving into the ‘SemiTransparent’
category for the ¿rst time in 2014. Despite this, it remains some way behind the U$E in terms of real estate
market activity and transparency.
Behind the improvement has been a determination by Qatar to take measures that will increase its regional and
global presence, and this has involved taking a more open and transparent stand on several issues. These
changes are in line with the more youthful and modern approach being adopted by Sheikh Tamim bin +amad al
Thani, who assumed power from his father in June 2013.
The other catalyst to Qatar’s improved openness and transparency has been the international criticism of its
successful bid to hold the FIF$ 2022 World &up and ongoing concerns about working conditions for those involved
in constructing the necessary infrastructure to support the event.
In a maMor move to increase transparency, Qatar announced a new ‘open data’ policy earlier this year which
involves the release of a large Tuantity of governmentheld, nonpersonal data to residents. This policy is in
support of ‘1ational Vision 2030’ which states the need for ³a transparent culture where knowledge bases are kept
current and easily accessible´ in order to further Qatar’s aim of becoming a knowledgebased economy. $s part of
this general initiative to improve public access to data, access to the land registry and other real estate data will be
increased.
Other improvements to transparency have stemmed from the increasing maturity of the real estate market over
the past two years, as well as the greater involvement of international real estate consultancies, which have
helped to boost professional standards and enhance the Tuality of real estate market data. Elsewhere, in the
wake of the tragic ¿re at the Villaggio 0all in Doha in 0ay 2013, the authorities in Qatar have implemented more
stringent building control measures, including adherence to higher standards of design and safety.
While there has been no new legislation regarding corporate governance, there is a perception that standards
have been improved as Qatar seeks to run its listed real estate vehicles in a more professional manner with the
existing laws being enforced with greater ef¿ciency and consistency. $t the same time, Qatar’s &entral Bank is
also taking a more active role in monitoring and overseeing real estate appraisals and lending, and is enforcing
the regulations more freTuently.
$nother important milestone is the decision by 1ew <orkbased index 0&SI to upgrade the Qatar stock exchange
from Cfrontier market’ to ‘emerging market’ status. The upgrade is a positive step that will result in a maMor
increase in international capital being invested in the stock exchange. This will magnify existing international
attention on Qatar and is likely to result in calls for improved openness and transparency of market data and
reporting over the next few years.
39
40
Global Real Estate Transparency Index 2014
JLL
Sub-Saharan Africa:
Largest Improver Globally
Findings from the 2014 survey reveal that SubSaharan $frica SS$ has made the world’s strongest advances in
real estate transparency. Five out of eight SS$ markets – namely Kenya, Ghana, 1igeria, =ambia and 0auritius –
have demonstrated signi¿cant improvement in transparency scores ! 25 bps. $ll of these markets have secured
a position in the Global Top 10 improvers, whilst $ngola has also seen a moderate transparency improvement
since 2012. Signi¿cant improvements in the subindices scores of investment performance, regulation,
governance, and transaction process across most markets have underpinned the positive movement in scores
for the region as a whole. While signi¿cant transparency challenges remain in SubSaharan $frica – particularly
in Senegal, Ethiopia and $ngola which all feature in the bottom 10 of the Index – tangible progress is being made
across the region.
Three of top Àve global transparency improvers in SSA
The fastgrowing economies of Kenya, 1igeria and Ghana are amongst the top ¿ve improvers globally, and they
are now clearly on the radars of international corporate occupiers seeking regional hubs for operations in East
and West $frica respectively. Growth in manufacturing, technology and telecoms, ¿nance, outsourcing, retailing
and hospitality sectors has created an urgent need for modern commercial real estate as the continent continues
to attract interest from international investors and occupiers. The improvement in transparency in these markets
is an outcome of concrete efforts taken by the respective countries to upgrade their physical infrastructure, and to
improve governance and the regulatory framework to create a businessfriendly environment.
Kenya emerges as the top global improver
Kenya has demonstrated an impressive 50 basis points improvement in its transparency score, and now occupies
55th position globally, compared to 67th in 2012. The country has made signi¿cant progress in the areas of
investment performance and regulatory and legal practices. 0oreover, as Kenya has continued to establish
itself as the economic hub for East $frica, growing interest from international investors has created a need for
greater regulation of the real estate market. One example of this is the Kenyan government’s introduction of
a framework for REITs in the country. With the government mandating the &apital 0arkets $uthority &0$ to
develop REIT regulations, REIT legislation was ¿nally passed in mid2013. 3roperty legislation is also undergoing
a maMor overhaul. The 0inistry of Lands with the support of US$ID has set a goal of digitising all land records and
creating a land rent database. The strength of market fundamentals data has also started to improve as private
companies are beginning to collect real estate data in a systematic way. There is growing evidence of published
property market research and analysis, with the increased entry of international real estate advisors bringing
improvements in data availability, consistency and collection.
Ghana and Nigeria also show positive signs of increasing real estate transparency
Ghana’s overall transparency score has also improved signi¿cantly, pushing the country forward by six positions
to 83rd in the global ranking. Several reforms undertaken by the Ghanaian government have enhanced the
regulatory and legal practices in the country. The establishment of &redit Reference Bureaus has enabled
the creation of a database on borrowers, making the country one of the easiest places in the region to register
property, enforce contracts and access credit. The World Bank’s Second Land $dministration 3roMect is helping
to consolidate and strengthen land administration and management systems and, increasingly, real estate
developers operating in Ghana are following internationallyaccepted processes and standards with regard to new
development proMects.
41
42
Global Real Estate Transparency Index 2014
1igeria is also making concerted efforts to improve real estate transparency. Lagos State has been an important
focus of World Bank operations in recent years, reÀecting the state’s commitment to pursuing reforms and
development obMectives. The new comprehensive Second Lagos State Development 3lan LSD3, adopted in
2013, aims to streamline the regulatory environment and improve incentives for private investment and business;
for example, land registration initiatives, the creation of GIS maps and the piloting of an eapproval system for
development permits. The World Bank’s Doing Business 2014 report on "Understanding Regulations for Small
and 0ediumSize Enterprises" found that 1igeria was already implementing some of the global best practices in
the areas of ‘doing business’ and that, since 2009, it had moved closer to those relating to business regulations.
South Africa remains the most transparent market in SSA
South $frica is still head and shoulders above the rest of SS$ in the global transparency rankings, but has made
little progress in transparency since 2012. It remains the regional leader and the only market from the SS$ region
to feature amongst the world’s top 20 transparent markets. Despite recording only a slight movement in its overall
score over 2012, South $frica has moved up in its global ranking from 22nd to 19th in the latest survey, close to
Italy and 3oland.
Botswana and Mauritius – SSA’s second and third most transparent markets
Botswana and 0auritius continue to feature in the ‘SemiTransparent’ category. Botswana has seen a
signi¿cant improvement in its overall score, moving up three ranks to occupy 48th position on the global Index.
Improvements across a host of indicators such as investment performance, market fundamentals, governance
of listed real estate vehicles and regulatory and legal practices have helped enhance the country’s transparency.
The recent launch of an I3D index in Botswana is a key milestone to achieving greater real estate market
transparency. This initiative is in association with the Real Estate Institute of Botswana REIB, which is the
recognised body representing the interests of the country’s property profession. REIB also liaises with the Real
Estate $dvisory &ouncil to address matters of professional incompetence and unethical conduct.
Both 0auritius and Botswana have bene¿ted from high levels of development and investment, and more robust
legal and regulatory frameworks than some of their regional counterparts. The real estate markets in each country
have matured over the past two years, with greater involvement of international real estate consultancies helping
to boost professional standards and enhance the Tuality of real estate market data.
While challenges remain, the outlook is positive
Despite the region being the largest global improver in terms of overall rankings, it is still some distance away
from its global counterparts, with these improvements coming from a low base. +owever, the region’s improving
fundamentals and longterm growth prospects will continue to attract foreign investment. Real estate investment
in SubSaharan $frica is on the increase. In recent months, Grosvenor has announced that it will invest up to
250 million in the real estate markets in the region, while private eTuity ¿rm $ctis LL3 has made a commitment
to lead investment of as much as US1.5 billion in shopping centres, of¿ce towers and new industrial and logistics
parks in key SS$ markets.
The penetration of more international players into the region will inevitably lead to structural changes in the
way real estate markets operate. It should also increase the accuracy, timeliness and Àow of information and
data related to real estate, making the SS$ markets more transparent and predictable. 0any of the region’s
real estate markets, and indeed transparency initiatives, are at a nascent stage, and there remains a lot to be
done before transparency in the rest of SubSaharan $frica reaches the level of South $frica or indeed other
mature international markets. 1evertheless, the pace of change is impressive, and with continued focus from
policymakers, alongside growth and international investment, transparency looks set to improve.
JLL
Real Estate Transparency in
Sub-Saharan Africa, 2014
South $frica
Transparent
Botswana, 0auritius, Kenya
SemiTransparent
=ambia, Uganda
Low Transparency
Ghana, 1igeria, 0ozambiTue, $ngola, Ethiopia, Senegal
OpaTue
EG
SA
SD
SD
SN
NG
ET
GH
UG
AO
ZM
Highly Transparent
Transparent
Semi-Transparent
Low Transparency
Opaque
Not Covered
Source: JLL, LaSalle Investment 0anagement
BW
ZA
KE
MZ
MU
43
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Global Real Estate Transparency Index 2014
JLL
Kenya
Transparency in Kenya’s real estate market has improved notably over the past two years, evidenced by the
country’s growing attractiveness as a destination for FDI. E<’s $frica $ttractiveness Survey 2014 reported more
than 25% growth in FDI proMects in 2013. Increasing investment and the presence of international corporates has
triggered construction activity across the country, from individual commercial buildings and industrial parks through
to new cities. For example, a US14.5 billion information technology hub – Konza Technology &ity – is being built
to strengthen the country’s position as an emerging T0T hub. Furthermore, Àagship proMects under ‘Kenya Vision
2030’ – a national longterm development blueprint – include the creation of ¿ve small and mediumsize enterprise
S0E industrial parks in key urban centres.
The rapidly expanding real estate market is encouraging the industry to improve data Tuality. There is growing
evidence of published property market research and analysis, with the increased entry of international real estate
advisors bringing improvements in data availability, consistency and collection. Local players such as the Kenya
3roperty Developers $ssociation are also keen to identify sector data gaps and have been developing regular
outputs like the $nnual State of Development Report with a view to creating and disseminating comprehensive
market information.
$t the same time, Kenya’s land registry is being completely transformed; following the new constitution, all land is
now reTuired to be registered. $llocation or sale of public land to private individuals or entities is now conducted
by a special commission to cut down on opportunities for corruption. The 0inistry of Lands has also set a goal of
digitising all land records. 3rogress towards these goals includes the construction or refurbishment of land registry
buildings in several districts, the digitising of some paper records, and the creation of a land rent database. In
support of this initiative, US$ID’s Kenya Transition Initiative KTI has helped the 0inistry of Land Registries with
improving land record storage and access. In due course, the government aims to provide public electronic access
to all information on land registration. In 2013, digitisation of the land registry was estimated to have increased
government revenue from US9 million to over US100 million.
$s Kenya continues to establish itself as the economic hub for East $frica, growing interest from international
investors has created a need for greater regulation of the real estate market. One example of this is the Kenyan
government’s introduction of a framework for REITs in the country. With the government mandating the &apital
0arkets $uthority &0$ to develop REIT regulations, REIT legislation was ¿nally passed in mid2013. Two REIT
licenses were granted in December 2013 &entum $sset 0anagers Limited and U$3 Investments Limited and
three more were approved in $pril 2014 ST$1LIB Kenya Limited, Fusion Investment 0anagement Limited and
&I& $sset 0anagement Limited.
Following extensive deliberations of the ‘Kenya Vision 2030’ Delivery Board, the government is working towards
its forthcoming initiative to make investment processes faster, ef¿cient, simpler and transparent. This includes
setting up a onestop shop where investors can obtain business permits. The move seeks to help boost Kenya’s
positioning as an investment destination that can compete with emerging regional competitors.
45
46
Global Real Estate Transparency Index 2014
Real Estate Environmental
Sustainability Transparency Index
In recognition of the growing relevance of environmental sustainability to the real estate industry, JLL in 2012
created a Real Estate Environmental Sustainability Transparency Index for a subset of 28 countries. The Index
assesses the tools and regulations for building energy design ef¿ciency, operational performance, carbon
emission reporting and green building certi¿cations.
For the 2014 survey we have been able to expand the Index to include 33 countries. Whilst the overall average
transparency score has not changed since 2012, there has been a large increase in the number of countries in
the ‘+ighly Transparent’ and ‘Transparent’ categories. These two groups now account for Must over half of all
countries and contain almost twice as many countries compared to the last survey. This is a further sign that
sustainability considerations are becoming a widely established element of the real estate market.
The three leaders are the same as two years ago with $ustralia, France and the UK keeping top scores. Seven
countries, representing all the maMor regions, improved their scores suf¿ciently to Moin the ‘Transparent’ category Belgium, &anada, Denmark, +ong Kong, Italy, 1ew =ealand and Spain.
Improvements in country scores were driven by two key factors: the greater availability of marketspeci¿c green
building certi¿cation schemes and the wider adoption of energy benchmarking systems. +owever, what sets the
top three countries apart is the introduction of ¿nancial performance indicators. Such indicators try to establish a
link between levels of sustainable buildings and ¿nancial performance.
0inimum energy ef¿ciency standards are now in place in virtually all countries, with 73% even making it a
mandatory compliance element for new buildings. In parallel with the high penetration rate of minimum energy
ef¿ciency levels, countryspeci¿c green building systems are available in 80% of surveyed markets with a
maMority of them providing publicly available information on certi¿ed buildings. $nother indicator of the popularity
of green building rating schemes is the presence of the U.S. LEED certi¿cation scheme in all of the 33 countries.
JLL
In some of the larger markets with signi¿cant presence of institutional real estate investment activity, several
green building rating systems are available, some homegrown and some adapted from international
assessment schemes.
For investors, some of the most signi¿cant transparency tools are ¿nancial performance indicators for
sustainable buildings. In our last survey only the top three countries had this type of tool at their disposal:
$ustralia, France and the UK. This year, two more countries introduced such an indicator: &anada and 1ew
=ealand.
Whilst average scores of most categories improved, still only half of all surveyed countries have building
energy benchmarking systems in use. In Europe, EU member states have, as a result of the 2002 European
Energy 3erformance in Buildings Directive, introduced energy consumption benchmarking systems based on
building design or actual consumption. Since our last survey, building energy benchmarks are reTuired to be
made available through print and electronic communications to potential tenants who intend to let a building,
or to potential purchasers who target buildings for investment purposes. $nother very popular and widely
used energy benchmarking system around the world is the U.S. Energy Star initiative that rates building
energy consumptions and benchmarks them, taking into account local climate conditions.
These U.S. and EU energy consumption benchmarking systems, and similar ones that exist in other countries,
help establish consumption baselines and provide a basis for energy reduction measures. +owever, only
very few countries impose any mandatory energy ef¿ciency improvement works despite a large proportion of
existing stock – in some mature economies up to 20% or more – that is in need of such measures. Energy
ef¿ciency improvements reduce building obsolescence and help futureproof assets against more stringent
environmental regulations expected to be introduced over the coming years and decades.
Real Estate Environmental Sustainability Transparency Index, 2014
Transparency +ierarchy
Highly Transparent
Transparent
Semi-Transparent
Low Transparency
Source: JLL, LaSalle Investment 0anagement
Australia
France, UK
Austria, Belgium, Canada
Czech Republic, Denmark
Germany, Hong Kong, Italy
Japan, Netherlands, New Zealand
Singapore, Spain, Sweden
Brazil, China, Croatia, India
Ireland, Poland, Russia, Switzerland, United States
Romania, UAE – Abu Dhabi , South Korea, Slovakia
UAE – Dubai, Mexico, Turkey
47
48
Global Real Estate Transparency Index 2014
JLL
Financial Performance Transparency of Sustainable Buildings
In ¿ve countries around the globe – $ustralia, &anada, France, 1ew =ealand and the UK – investors are able to
track the ¿nancial performance of sustainable buildings and can compare this asset type with comparable non
sustainable buildings.
$ few years ago, the real estate analytics company I3D, now part of ¿nancial index and analytics provider
0S&I, established a framework with the goal to track the ¿nancial performance of sustainable buildings. The
methodology varies from country to country but includes a series of factors that de¿ne a building as ‘green’ or
‘sustainable’. In most cases, I3D uses a set of environmental, energy performance or Green Building certi¿cation
criteria to de¿ne such buildings. It then calculates the same ¿nancial criteria, i.e. income return and capital growth
values in order to provide total return performance data. This environmental or sustainable assets data set can
then be compared with buildings that lack sustainable features or show different environmental Tualities.
Whilst the aggregate results are published by I3D, individual asset performance is only available to the asset
owner. I3D is currently exploring the expansion of this approach to additional countries and we may see the result
in our next Real Estate Environmental Sustainability Transparency Index.
Real Estate Environmental Sustainability Transparency Index, 2014
Score by &ategory
1
Sustainability Transparency Score
Transparent
2
3
4
Opaque
5
Energy Efficiency Green Building
Energy
(New Build) Ratings System Benchmarking
Overall
Green Lease Energy Efficiency
Carbon Green Performance
Clauses
(Existing Buildings) Reporting
Index
Green Building Rating Systems
Source: JLL, LaSalle Investment 0anagement
49
50
Global Real Estate Transparency Index 2014
Transparency in Tables and Charts
Real Estate Transparency by Sub-Index, Top 20
Performance Measurement
Sub-Index
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Market
United Kingdom
Australia
United States
Netherlands
Switzerland
France
New Zealand
Japan
Germany
Sweden
Canada
Singapore
Italy
Finland
Hong Kong
Austria
Belgium
South Africa
Norway
Portugal
Market Fundamentals
2014
Sub-Index
Score
2014
Composite
Score
Sub-Index
Rank
1.01
1.40
1.40
1.44
1.46
1.61
1.79
1.86
1.98
2.03
2.04
2.05
2.09
2.09
2.14
2.31
2.38
2.41
2.45
2.49
1.25
1.36
1.34
1.57
1.73
1.52
1.44
2.22
1.79
1.79
1.52
1.81
2.10
1.69
1.87
2.10
1.92
2.09
2.09
2.18
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
1=
1=
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Market
United States
Ireland
United Kingdom
Belgium
Switzerland
New Zealand
Australia
Finland
Sweden
Singapore
Netherlands
Canada
South Africa
France
Denmark
Norway
Austria
Italy
Mexico
Spain
United States
Australia
New Zealand
United Kingdom
Netherlands
Canada
Hong Kong
Poland
France
Germany
Finland
Denmark
Ireland
Czech Republic
Sweden
Spain
Belgium
Singapore
Russia - Tier 1
China - Tier 1
2014
Sub-Index
Score
2014
Composite
Score
1.32
1.48
1.52
1.56
1.64
1.69
1.70
1.71
1.80
1.93
2.02
2.15
2.15
2.18
2.22
2.23
2.24
2.25
2.38
2.50
1.34
1.36
1.44
1.25
1.57
1.52
1.87
2.04
1.52
1.79
1.69
1.96
1.62
2.20
1.79
2.05
1.92
1.81
2.82
2.73
Regulatory and Legal
Governance of Listed Vehicles
Sub-Index
Rank
Market
2014
Sub-Index
Score
2014
Composite
Score
Sub-Index
Rank
1.00
1.00
1.04
1.08
1.08
1.09
1.11
1.18
1.19
1.22
1.25
1.25
1.28
1.28
1.35
1.48
1.50
1.53
1.59
1.61
1.34
1.62
1.25
1.92
1.73
1.44
1.36
1.69
1.79
1.81
1.57
1.52
2.09
1.52
1.96
2.09
2.10
2.10
2.89
2.05
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Market
Ireland
Canada
United Kingdom
Australia
Denmark
Singapore
United States
New Zealand
Israel
Austria
Norway
Finland
France
Belgium
South Africa
Switzerland
Sweden
Poland
Malaysia
Romania
2014
Sub-Index
Score
2014
Composite
Score
1.05
1.21
1.29
1.31
1.34
1.35
1.41
1.43
1.45
1.53
1.53
1.55
1.55
1.57
1.59
1.60
1.64
1.69
1.74
1.76
1.62
1.52
1.25
1.36
1.96
1.81
1.34
1.44
2.63
2.10
2.09
1.69
1.52
1.92
2.09
1.73
1.79
2.04
2.35
2.56
JLL
Transaction Process
Sub-Index
Rank
1=
1=
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Market
New Zealand
Ireland
France
Finland
Canada
United Kingdom
Germany
Netherlands
Hungary
United States
Switzerland
Spain
Australia
South Africa
Sweden
Czech Republic
Portugal
Denmark
Norway
Slovakia
2014
Sub-Index
Score
2014
Composite
Score
1.00
1.00
1.07
1.20
1.22
1.27
1.31
1.31
1.31
1.33
1.33
1.38
1.40
1.42
1.53
1.56
1.60
1.80
1.82
1.82
1.44
1.62
1.52
1.69
1.52
1.25
1.79
1.57
2.21
1.34
1.73
2.05
1.36
2.09
1.79
2.20
2.18
1.96
2.09
2.66
1ote: Scores shown rounded to two decimal places; rankings are
based on unrounded scores
Source: JLL, LaSalle Investment 0anagement
51
52
Global Real Estate Transparency Index 2014
Source: JLL, LaSalle Investment 0anagement
Occupier Services
Market Fundamentals
Sales Transactions
Debt Regulation
Eminent Domain
Transaction Process
Land and Property
Registration
Regulation
Corporate
Governance
Listed Vehicles
Financial Disclosure
Market
Fundamentals Data
Performance Measurement
Valuations
Unlisted Fund
Indices
Unlisted Fund Indices
Direct Property Indices
Market Fundamentals
Data
Listed Real Estate
Securities Indices
Debt Regulation
Corporate Governance
Overall
Sales Transactions
Financial Disclosure
Occupier Services
Land and Property
Registration
Eminent Domain
Valuations
Regulation
5
Listed Real Estate
Securities Indices
Direct Property
Indices
2014 Transparency Score
2014 Transparency Score
JLL
Real Estate Transparency by Topic Area
Transparency by Topic Area, 2014
2
Transparent
3
4
Opaque
Regulatory and Legal
Source: JLL, LaSalle Investment 0anagement
Transparency – Score Distribution by Topic Area, 2014
1.0
Transparent
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Opaque
53
Global Real Estate Transparency Index 2014
Transparency Compared
Real Estate Transparency Index and Corruption
$ 0ultiDimensional 0easure &losely &orrelated with &orruption
R 2 = .55
5.0
Libya
Opaque
4.5
Iraq
2014 Transparency Score
Tunisia
Ghana
Algeria
4.0
Egypt
Uruguay
Qatar
Saudi Arabia
3.5
Chile
Botswana
3.0
India
Russia
Brazil
China
2.5
Dubai
South
Korea
Israel
Japan
Spain
2.0
South Italy
Africa
Portugal
Poland
1.5
Norway
Hong Kong
Ireland
Germany
France
Transparent
USA
1.0
10
20
Most Corrupt
30
40
50
60
New
Zealand
Australia
UK
70
Denmark
80
90
100
Least Corrupt
Corruption Perceptions Index (Transparency International)
Sources: JLL, LaSalle Investment 0anagement, Transparency International
Real Estate Transparency Index and Investment Volumes (2009 – 2014)
Transparency Rises with Investment $ctivity
R2= 0.3434
20%
Hong Kong
18%
16%
Transaction Volume as % of GDP
54
Singapore
14%
UK
12%
Sweden
10%
8%
Australia
6%
4%
USA
Norway
Netherlands
Taiwan
Germany
Macau
South Korea
Brazil Russia
2%
Ireland
1
1.5
China
Italy
0%
2
2.5
2014 Transparency Score
Based on direct commercial real estate volumes, 20092014
Sources: JLL, LaSalle Investment 0anagement, Oxford Economics
3
3.5
4
JLL
Real Estate Transparency by Region and Sub-Region
Real Estate Transparency – Regional Divergence, 2014
Regional Divergence
1.0
Transparent
2014 Transparency Score
1.5
2.0
2.5
3.0
Highest
3.5
75th Percentile
4.0
25th Percentile
4.5
Lowest
Opaque
5.0
Europe
Asia Pacific
Americas
Sub-Saharan
Africa
Middle East
& North Africa
Source: JLL, LaSalle Investment 0anagement
Real Estate Transparency 2014 – Composite Index by Sub-Region
Transparent
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Central America
South America
North America
North Asia
South Asia
Greater China
South East Asia
Australasia
Sub-Saharan Africa
Gulf States
Eastern Europe
South East Europe
Central Europe
Southern Europe
Nordics
Western Europe
British Isles
Source: JLL, LaSalle Investment 0anagement
North Africa _
Opaque
5.0
Levant
2014 Transparency Score
1.0
55
56
Global Real Estate Transparency Index 2014
Global Real Estate Transparency Index:
Technical Note
The Transparency Index
The JLL Global Real Estate Transparency Index is based on a combination of Tuantitative market data and
information gathered through a survey of the global business network of JLL and LaSalle Investment 0anagement
across 102 markets. For each market, we use 115 separate factors, both Tuantitative datapoints and survey
Tuestions, to calculate the composite score. The survey data and Tuantitative measures complement each other.
For instance, knowing the market coverage and length of a country’s direct real estate index is only one half of the
story; for a complete picture, we also gather Tualitative data on whether investors actually trust and use the index.
Local research teams, in consultation with business leaders and real estate professionals active in each market,
complete the survey. $ table summarising the factors behind the Index is at the end of this note.
In the 2014 Index, we have continued to break general Tuestions into more speci¿c, granular components, moving
from 83 constituent factors to 115. For example, in place of a single Tuestion on valuation Tuality in 2012, we
have broken it into three Tuestions in 2014: the independence of thirdparty appraisers; the extent marketbased
appraisal methods are used; and the competition in the market for thirdparty appraisals. These changes allow
us to drill deeper into where markets differ and to reduce measurement error by making the overall scoring less
reliant on any single factor.
Quantitative Factors
56 of the 115 scoring factors, accounting for 35.5% of the overall factor weighting, are Tuantitative. These
Tuantitative factors, added to the Index in 2012, include the number of years fundamentals’ data series like
vacancy have been available, the market coverage of property return indices, and the free Àoat of public listed
real estate securities markets. We score most of these Tuantitative factors on a continuous scale from 1 to 5,
with 1.00 indicating very high transparency. For datapoints on performance measurement indicators, such as the
market coverage of property return indices, we have set the top score of 1 eTual to the 90th percentile observation
in 2012. The cutoff thresholds to Tualify as a ‘highly transparent’ market have been ¿xed at their 2012 level, so
that markets can improve to higher tiers over time. For datapoints on market fundamentals data, such as the
length of a market’s of¿ce vacancy series, we have set the top score of 1 eTual to a time series of 30 years or
more, which we view as the ‘gold standard’.
Researchers at JLL and LaSalle Investment 0anagement have collected detailed data on the available market
fundamentals’ timeseries for each of ¿ve property types: of¿ce, retail, industrial, residential and hotels. We have
included all available data series, not only those produced by JLL. The market fundamentals data is based on
conditions in the principal city of each country, with the exceptions of Brazil, &hina, India and Russia, where the
Index differentiates between primary, secondary and tertiary cities.
Data on propertylevel returns indices is from Investment 3roperty Databank I3D, 1&REIF and other industry
associations. Data on public listed real estate comes from the European 3ublic Real Estate $ssociation E3R$,
Bloomberg, 1$REIT and the LaSalle Investment 0anagement Securities group. Fundlevel index data is primarily
from I1REV, 1&REIF, I3D and $1REV.
JLL
Qualitative Survey Factors
The balance of the scoring factors, totalling 59 datapoints, are Tualitative survey Tuestions scored by local JLL
and LaSalle Investment 0anagement teams. For each, local research teams are provided with a detailed rubric of
¿ve answer choices, ranging from 1 – most transparent – to 5 – opaTue. Based on where their market ¿ts within
that rubric of options, local experts assign a score. Respondents consult JLL’s local accounting, ¿nance, asset
management and legal experts to inform their responses to Tuestions in those topic areas.
Scores within each region are then reviewed by regional and then global coordinators to ensure obMectivity and
rigour. Global and regional reviewers interrogate country teams’ responses and challenge teams to Mustify changes
in Tuestion scores from prior updates. The review process, high level of detail provided in the answer choices,
and improved Tuestion granularity reduce subMective bias in scoring, and all contributors strive for impartiality in
their responses.
Compiling the Composite Transparency Index
We group the 115 individual transparency measures into 13 topic areas, summarised in the table at the end of this
note. These topic areas are grouped and weighted into ¿ve broad SubIndices:
‡ 3erformance 0easurement – 25%
‡ 0arket Fundamentals – 20%
‡ Governance of Listed Vehicles – 10%
‡ Regulatory and Legal – 30%
‡ Transaction 3rocess – 15%
The Transparency Index scores range on a scale from 1 to 5. $ country or market with a perfect 1.00 score has
total real estate transparency; a country with a 5.00 score has total real estate opacity. 0arkets are then assigned
to one of ¿ve transparency tiers. The thresholds for these tiers are based on Jenks’ 1atural Breaks classi¿cation.
2012 scores are used to ¿x the thresholds, so that markets can move between tiers as transparency changes over
time, even if their relative position does not change. This algorithm ¿nds the cutoffs that minimise withingroup
variance and maximise betweengroup differences. We create 10 groups using this method and then aggregate
them into ¿ve tiers with the following thresholds:
‡
‡
‡
‡
‡
Tier 1: +ighly Transparent
Tier 2: Transparent
Tier 3: SemiTransparent
Tier 4: Low Transparency
Tier 5: OpaTue
Total &omposite Score: 1.00 – 1.70
Total &omposite Score: 1.71 – 2.45
Total &omposite Score: 2.46 – 3.46
Total &omposite Score: 3.47 – 3.97
Total &omposite Score: 3.98 – 5.00
57
58
Global Real Estate Transparency Index 2014
Transparency Index Time Series
2014 marks the eighth edition of the JLL Global Real Estate Transparency Index. Since its inception in 1999, the
Transparency Index has evolved and been re¿ned to reÀect the changing demands of crossborder investors and
corporate occupiers.
In 2008, new Tuestions were added to embrace the perspective of corporate occupiers relating to occupier service
charges and facilities management. Questions concerning debt ¿nancing and the freTuency and credibility of
property valuations were also added.
In 2010, the existing Tuestions regarding debt ¿nancing were substantially revised to more appropriately reÀect
the key issues of debt transparency, relating to the availability of information on commercial real estate debt and
the role of bank regulators in monitoring commercial real estate lending. There were also revisions to Tuestions
on the transaction process covering presale information and the bidding and negotiating process.
In 2012, maMor additions were made to incorporate a greater number of Tuantitative measures of investment
performance and market fundamentals. In each of these two areas, general Tuestions were divided into many
different granular Tuestions to better capture nuanced differences between markets. In all, 50 new factors were
added by decomposing general Tuestions into more detailed Tuestions.
In 2014, we continued to decompose general Tuestions into more speci¿c ones, resulting in the addition of 32
new factors. These additions were spread across categories, as shown in the table below. For example, rather
than asking a single general Tuestion on tax fairness as we did in 2012, we include four Tuestions on tax in 2014,
covering the consistency of enforcement and predictability of tax rates for both domestic investors and foreign
investors.
Factor Comparison
Number of Factors in 2012
Number of Factors in 2014
Direct 3roperty Indices
5
6
Listed Real Estate Securities Indices
5
7
Unlisted Fund Indices
2
3
Valuations
2
4
0arket Fundamentals Data
47
47
Financial Disclosure
2
4
&orporate Governance
2
3
Regulation
6
13
Land and 3roperty Registration
3
7
Eminent Domain
2
3
Debt Regulation
2
7
Sales Transactions
3
5
Occupier Services
2
6
In previous Transparency Indices, we calculated a ‘&omposite’ score for the current update and an additional
‘&lassic’ score to make comparisons over time. Rather than continuing to calculate two parallel indices, in this
update we have cleaned the historical data to make a single time series, from 2004 to 2014. For factors added
over time, we have included them historically where available. Where no historic data is available, we have
extended back 2012 data so that changes in the added factors do not drive movement in the historic scores.
JLL
Real Estate Environmental Sustainability Transparency Index
$ separate Real Estate Environmental Sustainability Transparency Index has been developed for a subset of 33
countries. The Index is based on a survey completed by JLL Energy and Sustainability Services experts in each
country. The survey comprises seven Tuestions relating to different components of environmental sustainability,
covering:
1.
2.
3.
4.
5.
6.
7.
Financial 3erformance Indices for Green Buildings
Green Building Rating Systems
&arbon Reporting Frameworks
Energy Benchmarking Systems
Energy Ef¿ciency ReTuirements for 1ew Buildings
Energy Ef¿ciency ReTuirements for Existing Buildings
Green Lease &lauses
For each Tuestion, our expert teams were provided with a detailed rubric of three answer choices, ranging from
1 – most transparent – to 5 – opaTue. Based on where their market ¿ts within that rubric of options, respondents
assigned a score. The Tuestions were answered with respect to commercial of¿ce real estate. $n overall Real
Estate Environmental Sustainability Transparency Index was calculated by eTually weighting the scores for the
seven Tuestions.
59
60
Global Real Estate Transparency Index 2014
Global Real Estate Transparency Index, Transparency Components
Sub-Index
13 Topics
Direct Property Indices
Performance Measurement
Listed Real Estate Securities Indices
Unlisted Fund Indices
Valuations
Market Fundamentals
Market Fundamentals Data
Financial Disclosure
Governance of Listed
Vehicles
Corporate Governance
Regulation
Regulatory and Legal
Land and Property Registration
Eminent Domain
Debt Regulation
Sales Transactions
Transaction Process
Occupier Services
Source: JLL, LaSalle Investment 0anagement
Factors (115 Total)
Existence of Direct Property Index
Reliability of the Index and Extent to which it is Used as a Benchmark of Performance
Type of Index (Valuation-based vs. Notional)
Length of Direct Property Level Returns Index Time Series
Size of Institutional Invested Real Estate Market
Market Coverage of Direct Property Index
Dominant Type of Listed RE Securities (i.e. Long-term Holders of Real Estate vs. Homebuilders and Conglomerates)
Use of Listed Real Estate Securities Data on the Real Estate Market
Years Since the First Commercial Real Estate Company was Listed
Value of Public Real Estate Companies as % of GDP
Existence of a Domestic Listed Real Estate Index and Its Use as a Benchmark
Existence of an International Listed Real Estate Index and Its Use as a Benchmark
Length of Public Real Estate Index Time Series
Existence of a Domestic Fund Index and Its Use as a Benchmark
Existence of International Fund Index and Its Use as a Benchmark
Length of Unlisted Fund Index Time Series
Independence and Quality of Third-Party Appraisals
Use of Market-based Appraisal Approaches
Competition in the Market for Valuation Services
Frequency of Third-Party Real Estate Proposals
Existence and Length of Time Series on Property Rents (Office, Retail, Industrial, and Residential)
Existence and Length of Time Series on Take-up/Absorption (Office, Retail, Industrial, and Residential)
Existence and Length of Time Series on Vacancy (Office, Retail, Industrial, and Residential)
Existence and Length of Time Series on Yields/Cap Rates (Office, Retail, Industrial, Residential, and Hotels)
Existence and Length of Time Series on Capital Values (Office, Retail, Industrial, Residential, and Hotels)
Existence and Length of Time Series on Investment Volumes (Office, Retail, Industrial, Residential, and Hotels)
Existence and Length of Time Series on Revenue per Available Room for Hotels
Existence of a Comprehensive Database of Individual Buildings (Office, Retail, Industrial, Residential, and Hotels)
Existence of a Comprehensive Database of Leases (Office, Retail, Industrial, Residential, and Hotels)
Existence of a Comprehensive Database of Property Transactions (Office, Retail, Industrial, Residential, and Hotels)
Stringency of Accounting Standards
Level of Detail in Financial Statements
Frequency of Financial Statements
Availability of Financial Reports in English
Manager Compensation and Incentives
Use of Outside Directors and International Corporate Governance Best Practice
Free Float Share of the Public Real Estate Market
Extent to which the Tax Code is Consistently Applied for Domestic Investors
Extent to which Real Estate Tax Rates are Predictable for Domestic Investors
Extent to which the Tax Code is Consistently Applied for Foreign Investors
Extent to which Real Estate Tax Rates are Predictable for Foreign Investors
Existence of Land Use Rules and Zoning
Predictability of Changes in Land Use and Zoning
Enforcement of Land Use Rules and Zoning
Existence of Building Codes and Safety Standards for Buildings
Enforcement of Building Codes and Safety Standards for Buildings
Simplicity of Key Regulations in Contract Law
Efficiency of the Legal Process
Level of Contract Enforceability for Domestic Investors
Level of Contract Enforceability for Foreign Investors
Existence of Land Registry
Accessibility of Land Registry Records to Public
Availability of Title Insurance
Accuracy of Land Registry Records
Completeness of Land Registry Records on Ownership
Completeness of Public Records on Transaction Prices
Completeness of Public Records on Liens and Easements
Notice Period Given for Compulsory Purchase
Fairness of Compensation to Owners in Compulsory Purchase
Ability to Challenge Compulsory Purchase in Court of Law
Availability of Data on Real Estate Debt Outstanding
Availability of Data on Maturities and Originations of Real Estate Loans
Depth and Length of Real Estate Debt Data
Data on Delinquency and Default Rates of Commercial Real Estate Loans
Regulatory Requirements for Lenders to Monitor Property Collateral Values and Cash Flow
Regulatory Requirements for Lenders to Carry Out Appraisals
Strength of Regulatory Enforcement
Quality and Availability of Pre-Sale Information
Fairness of the Bidding Process
Confidentiality of the Bidding Process
Professional and Ethical Standards of Property Agents
Enforecement of Professional and Ethical Standards of Property Agents
Providers of Property Management Services Known to Occupiers
Service Expectations for Property Management Clear to Occupiers
Alignment of Occupier and Property Manager Interests
Frequency of Service Charge Reconciliation
Accuracy and Level of Detail in Service Charge Reports
Ability for Tenants to Audit Landlord's Accounts and Challenge Discrepancies
JLL
61
62
62
Global
Global Real
Real Estate
Estate Transparency
Transparency Index
Index 2014
2014
JLL
Global Real Estate
Transparency Index Team
Global
Jeremy Kelly
JLL, London
Meremy.kelly#eu.Mll.com
+44 20 3147 1199
Paul Guest
LaSalle Investment 0anagement, Singapore
paul.guest#lasalle.com
+65 6494 3599
Europe
Jacques Gordon
LaSalle Investment 0anagement, &hicago
MacTues.gordon#lasalle.com
+1 312 228 2760
Oliver Kummerfeldt
JLL, London
oliver.kummerfeldt#eu.Mll.com
+44 203 147 1170
Anne Koeman
LaSalle Investment 0anagement, London
anne.koeman#lasalle.com
+44 20 7852 4520
Middle East and Africa
Dan Mahoney
LaSalle Investment 0anagement, &hicago
daniel.mahoney#lasalle.com
+1 312 228 2054
Americas
Josh Gelormini
JLL, &hicago
Mosh.gelormini#am.Mll.com
+1 312 228 2060
Manuel Zapata
LaSalle Investment 0anagement, 0exico
manuel.zapata#lasalle.com
+52 55 5980 8090
Asia PaciÀc
Jane Murray
+ead of Research, $3$&
+852 2846 5274
Mane.murray#ap.Mll.com
Myles Huang
JLL, +ong Kong
myles.huang#ap.Mll.com
+852 2846 5793
Craig Plumb
JLL, Dubai
craig.plumb#eu.Mll.com
+971 4 436 2492
Tom Carroll
JLL, London
tom.carroll#eu.Mll.com
+44 20 3147 1207
Sustainability
Franz Jenowein
JLL, London
franz.Menowein#eu.Mll.com
+44 20 3147 1752
Contributors
Contributing Authors:
Dalia $khras, Tom &arroll, Josh Gelormini,
0yles +uang, Franz Jenowein, $nne Koeman,
Oliver Kummerfeldt, Dan 0ahoney, 0atthew
0c$uley, &raig 3lumb, 0asha Seymour,
Richa Walia
Editors:
Rosemary Feenan, JacTues Gordon, 3aul
Guest, Jeremy Kelly, Jane 0urray
63
JLL Regional Headquarters
Chicago
200 East Randolph Drive
&hicago, IL 60601
US$
+1 312 782 5800
London
30 Warwick Street
London W1B 51+
United Kingdom
+44 20 7493 4933
Singapore
9 RafÀes 3lace
3900 Republic 3laza
Singapore 048619
+65 6220 3888
$ special thanks go to the following organisations that have helped JLL complete the
2014 Global Real Estate Transparency Index:
‡
‡
‡
‡
‡
‡
‡
‡
‡
‡
‡
$pex 3roperties, Botswana – www.apexproperties.co.bw
$kershus Eiendom $S, 1orway – www.akershuseiendom.no
$thens Economics, Greece – www.athenseconomics.gr
Blue 3oint &onsultants Ltd., &ayman Islands – bluepointproperty.com
Emerging 0arkets &onsultants – www.emergemarkets.com
0r. Ephraim K 0unshifwa, Dept of Real Estate Studies, &opperbelt University, =ambia – Ephraim.munshifwa#uct.ac.za
Gonzalez &alvillo, S.&., 0exico
K30G, &ayman Islands
0.$.D. Investment Solutions, 0ongolia – www.madmongolia.com
RE& Real Estate &onsultancy, 0ozambiTue
Sadolin $lb k, Denmark – www.sadolinalbaek.dk
&O3<RIG+T ‹ JO1ES L$1G L$S$LLE I3, I1&. 2014. This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics
discussed, which are inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently veri¿ed those sources and we do not guarantee that the infor
mation in the report is accurate or complete. $ny views expressed in the report reÀect our Mudgment at this date and are subMect to change without notice. Statements that are forwardlooking involve
known and unknown risks and uncertainties that may cause future realities to be materially different from those implied by such forwardlooking statements. $dvice we give to clients in particular
situations may differ from the views expressed in this report. 1o investment or other business decisions should be made based solely on the views expressed in this report.