Jones Lang LaSalle’s Global Real Estate Transparency Index quantifies real estate market transparency across 81 markets worldwide. The Transparency Index is updated every two years and has been charting the steady progress in real estate transparency across the globe since 1999. The Index aims to help real estate investors, corporate occupiers and retailers understand important differences when transacting, owning and operating in foreign markets. The Index is also a helpful gauge for governments and industry organisations who are interested in improving transparency in their home markets. Rising levels of transparency are associated with rising levels of foreign direct investment – a powerful incentive for encouraging the free flow of information and the fair and consistent application of local property laws.
Jones Lang LaSalle made a number of refinements to the 2010 Index in response to feedback from clients and the ever-changing demands of cross-border investors, corporate occupiers and retailers. In recognition of the increasing relevance of real estate debt transparency, the company has introduced new elements relating to the availability of information on commercial real estate debt and the role of bank regulators in monitoring and publishing data on real estate debt. New markets have been added from North Africa and the Levant (i.e. Tunisia, Lebanon and Jordan) to reflect the ever-widening real estate universe now being targeted by investors, corporate occupiers and retailers.
Out of all the countries rated, Canada is ranked number 2 on the list. This means that Canada is the second most transparent market. The Asia Pacific region has shown the most broadly-based improvements in transparency over the past two years. It is in India and China where the region’s greatest advances have been recorded, a trend that has now filtered across each of their secondary and tertiary cities. U.K. is a close 3rd while number 6, 8 and 10 are United States, France and Germany respectively. Number 1 spot goes to Australia. India is 41 on the list and Pakistan is 73.
Among the world’s most transparent real estate markets, Canada differentiates itself on having a combination of a sound banking system, well-developed commercial real estate lending standards and stable property markets with relatively low vacancy and rental volatility. Historically, lending in Canada has been dominated by large, domestic financial institutions with conservative underwriting standards. Indeed, cash flows and collateral values of commercial real estate loans are monitored regularly. Unlike many other advanced economies, Canada’s major chartered banks are regulated depository institutions which had strong deposit bases and high capital reserve ratios going into the global recession. The largest investment banking operations in Canada are housed within the major chartered banks, making the banking system inherently less prone to bank runs, since chartered banks have access to cash in the form of deposits. In liquidity constrained environments, access to cash via deposits is crucial to the wealth of banks.
Transparency Index provides valuable insights into the changes in real estate transparency across the globe. On an ongoing basis, this will prove to be a valuable decision making tool for the international investor.