JLL’s latest Global Real Estate Transparency Index reveals solid improvement in India, Southeast Asia and Mainland China
Australia and New Zealand remain the region’s most transparent real estate markets
Regional transparency improvement driven by increased focus on corporate social responsibility and adoption of new technology
SINGAPORE, July 7, 2020 – Asia Pacific’s emerging markets have made the most significant gains in improving real estate transparency, led by a greater emphasis on corporate social responsibility and wider adoption of new technologies. According to JLL’s (NYSE: JLL) biennial Global Real Estate Transparency Index, higher levels of transparency were observed in India, Southeast Asia and Mainland China, but globally the slowest rate of improvement was observed since the period directly following the Global Financial Crisis.
The 2020 Index is launched at a time of massive economic and societal disruption where the need for transparent processes, accurate and timely data and high ethical standards are in closer focus. The backdrop of COVID-19 is also ensuring that transparency within Asia Pacific’s real estate legal and regulatory systems is more important than ever to global investors, as they look to deploy approximately $40 billion* in dry powder capital into the region.
According to JLL, pressure exists from investors, businesses and consumers to further improve real estate transparency to compete with other asset classes and meet heightened expectations about the industry’s role in providing a sustainable and resilient built environment in the age of COVID-19. Furthermore, innovative new property technology (proptech) is changing how real estate data is gathered and analyzed and influencing industry transparency at a regulatory level.
“While investment into commercial real estate has inevitably paused during the pandemic, the overarching trend toward rising allocations to this asset class will continue. As investors look to allocate more capital into Asia Pacific real estate, transparency becomes fundamentally more important, as will the enforcement of robust regulatory frameworks,” says Roddy Allan, Chief Research Officer, Asia Pacific, JLL.
Emerging markets have once again shown the greatest advancement in the Index, with six Asia Pacific markets – Mainland China (32nd), Thailand (33rd), India (34th), Indonesia (40th), Philippines (44th) and Vietnam (56th) – among the top 10 biggest improvers globally. Mature markets such as Australia (3rd) and New Zealand (6th) have maintained their positions near the top of the global ranking.
Key geographic takeaways from the Global Real Estate Transparency Index include:
- India rising: India has registered one of the largest improvements globally, with progress in the country’s REIT framework attracting greater interest from institutional investors. The country entered the top 20 for Sustainability Transparency through the active role of organisations including the Indian Green Building Council (IGBC) and Green Rating for Integrated Habitat Assessment (GRIHA).
- Mainland China hits transparent tier: The country’s major economic hubs, Shanghai and Beijing, have also continued to advance, with improved market fundamentals data, an active proptech sector, and more coordinated land-use planning. These have led to a place among the top global improvers, elevating both cities into the ‘Transparent’ tier for the first time.
- ASEAN surges: Thailand, Vietnam, the Philippines and Indonesia are among the global top 10 improvers. Progress in Thailand’s and Vietnam’s main cities, Bangkok and Ho Chi Minh City, has pushed each into a higher tier – ‘Transparent’ and ‘Semi-Transparent’ respectively.
In both Asia Pacific and outside of the region, JLL’s research concludes that sustainability commitments have become the biggest single driver of real estate transparency globally since 2018. An increased focus on corporate social responsibility and acknowledgement of the need to create sustainable buildings bring environment, social and governance (ESG) considerations into the mainstream. Additionally, green building certification systems and energy efficiency standards are widespread in the region’s most transparent markets and the most improved national real estate sectors.
Another key driver of transparency is the volume of real estate market data now available due to the growing adoption of Proptech platforms, digital tools and “big data” techniques. Although real estate markets have historically faced challenges when implementing new technology, the COVID-19 pandemic is leading to an acceleration in new types of non-standard and high-frequency data – especially relating to health, mobility and space usage – being collected and disseminated in near-real-time.
“The fast-tracking of sustainability initiatives and wider-spread adoption of Proptech underlines that transparency gains will be driven by both an evolving regulatory landscape and the collective actions for national real estate industries. Spurred by the influence of the COVID-19 pandemic, it will become crucial for the real estate industry to work more collaboratively with governments and civil society to achieve greater transparency and meet the changing expectations of investors,” Allan said.
JLL and LaSalle have been tracking real estate transparency and championing higher standards since 1999. This 11th edition of the Global Real Estate Transparency Index (GRETI) covers 99 countries and territories, and 163 city regions. This latest survey has been extended to quantify 210 separate elements of transparency, with additional coverage on sustainability and resilience, health and wellness, proptech and alternatives sectors.