Taking Real Estate Transparency to the Next Level

Transcription

1 Taking Real Estate Transparency to the Next Level Global Real Estate Transparency Index 2016

2 Global Real Estate Transparency Index Tracking the evolution of real estate transparency First published in 1999 Updated every two years A unique Index of real estate transparency Comprehensive comparisons of 109 markets world-wide 2

3 The World of Real Estate Transparency Stakeholders Investors Corporates Governments Citizens / Communities Influencers International Organisations Industry Bodies Real Estate Advisors Ingredients Performance Measurement Market Fundamentals Corporate Governance Regulatory & Legal Framework Transaction Processes Green Building Regulations Drivers Rising Expectations Increasing Capital Allocations Technological Advancement Demand for Sustainable Buildings Real Estate TRANSPARENCY 3

4 Transaction Volumes as % of GDP Real Estate Transparency Index and Investment Volumes Transparency rises with investment activity 20% 18% Hong Kong Highly liquid and transparent markets R² = % 14% UK Singapore 12% 10% 8% 6% 4% 2% 0% Sweden Australia New Zealand Norway Luxembourg US Finland Ireland France Denmark Germany Taiwan Canada Japan South Korea Macau Austria Netherlands China Russia Vietnam Chile Brazil India Real Estate Transparency 2016 Based on direct commercial real estate volumes, Sources:, LaSalle Investment Management, Oxford Economics 4

5 Global Real Estate Transparency Index, 2016 The Model incorporates 139 different elements, a 21% increase since 2014 Composite Score 5 Sub-Indices Performance Measurement Market Fundamentals Governance of Listed Vehicles Regulatory and Legal Transaction Process 13 Transparency Topics Direct Property Indices Listed Real Estate Securities Indices Private Real Estate Fund Indices Valuations Market Fundamentals Data Offices Retail Industrial Hotels Residential Financial Disclosure Corporate Governance Real Estate Tax, Land Use Planning, Building Controls, Enforceability of Contracts Property Registration Compulsory Purchase Pre-Sale Information, Bidding Processes, Professional Standards of Agents Occupier Services Alternatives Debt Regulation 139 individual questions and data points Source:, LaSalle Investment Management 5

6 Global Real Estate Transparency Index, 2016 Covers 109 markets worldwide 9 additional markets in 2016 Luxembourg Iran China Tier 3 Cities Ecuador Ivory Coast Djibouti Rwanda Tanzania Sri Lanka Highly Transparent Transparent Semi-Transparent Low Transparency Opaque Source:, LaSalle Investment Management 6

7 What is Driving Greater Real Estate Transparency? Drivers Rising Expectations Citizens demand greater accountability Panama Papers put transparency in spotlight Technology A driver and an enabler More accurate, granular and timely data Increasing Capital Allocations Real estate competing with other asset classes $1 trillion targeting real estate by 2020s Sustainable Buildings Demand for tools to monitor green buildings Real Estate TRANSPARENCY 7

8 Steady Progress in Transparency Across the Globe Global Real Estate Transparency Improvements since 2004 Median Change in Transparency Score Increasing cross border investment boosts transparency 5.6% 3.1% Improvements stall due to Global Financial Crisis 0.6% 2.9% Steady improvements 3.4% Transparency under greater scrutiny 2.4% Median change for all markets included in each two year period Source:, LaSalle Investment Management 8

9 Many New Developments in Real Estate Transparency Canada A new property fund index established Ecuador New digital-based land registry system Europe Launch of new ECB data on CRE debt Greece Launch of new private direct index Japan New Building Energy- Efficiency Labelling System Dubai Introduces mandatory green building standards Dubai Open Data Law, 2015 India Land Acquisition, Rehabilitation, and Resettlement Act of 2014 Real Estate (Regulation and Development) Act, 2016 Kenya National Construction Agency became operational Digitisation of its land registry has been completed in Nairobi First REIT Fahari I-REIT, 2015 Qatar Real Estate Development Law Rwanda Land Administration Information System completed Pakistan First REIT: Arif Habib Dolmen City the first such vehicle in South Asia Taiwan Consolidated housing and land tax introduced in 2016 United States More frequent core fund valuations, plus a new Daily Priced Fund Index UK The UK commits to central database that discloses beneficial ownership information Worldwide GRESB coverage reached 61,000 assets in 2015, a jump of 24% since

10 Transparency Sub-Index Change, Access to Market Fundamentals Data underpin Improvement Transaction Process Regulatory Regulatory and Legal 0.04 Corporate Governance Market Fundamentals 0.23 Investment Performance Transparency Score Covers markets included in both the 2014 and 2016 survey Source:, LaSalle Investment Management 10

11 Highly Transparent The World s Most Transparent Countries, 2016 Highly Transparent group account for 75% of global direct real estate investment 1. United Kingdom 2. Australia 3. Canada 4. United States 5. France 6. New Zealand 7. Netherlands 8. Ireland 9. Germany 10. Finland Anglosphere and core Europe 75% of global real estate investment ½ of global corporate HQs Increasing granularity and frequency of performance measurement and market data Technology driving advancement Beneficial ownership in the spotlight Canada Moves up the rank due to improving performance measurement indices France Strengthens position with advances in the regulatory and legal environment Germany Moves to Highly Transparent, boosted by listed vehicles 11

12 Taking Real Estate Transparency to the Next Level The case for a new Hyper-Transparent category Performance Measurement and Market Data Performance data more granular, higher frequency Alternative sectors tracked Greater data availability beyond prime cities Beneficial Ownership Greater scrutiny of beneficial ownership and anti money laundering Technology Emerging prop-tech sector facilitates data access and efficiencies Sustainable Buildings Financial performance measurement, carbon reporting frameworks 12

13 Transparent The 20 Transparent Markets, Singapore 12. Sweden 13. Poland 14. Switzerland 15. Hong Kong 16. Belgium 17. Denmark 18. Norway 19. Japan 20. Czech Republic 21. Italy 22. Spain 23. Taiwan 24. Austria 25. South Africa 26. Hungary 27. Portugal 28. Malaysia 29. Slovakia 30. Romania Europe and high-income Asia High investment intensity 20% of global real estate investment ⅓ of global corporate HQs Strong regulation, governance and transaction processes But further progress in performance measurement and market fundamentals required Poland Tracking towards Highly Transparent Japan Jumps 7 places on back of market fundamentals data Taiwan Moves to Transparent as occupier services and market tracking improve Slovakia and Romania inch into Transparent 13

14 Semi-Transparent The Semi-Transparent: The Most Dynamic Group 31. Israel 32. Mexico 33. China Tier 1 Cities 34. Brazil Tier 1 Cities 35. Luxembourg 36. India Tier 1 Cities 37. Greece 38. Thailand 39. India Tier 2 Cities 40. South Korea 41. Botswana 42. Russia Tier Brazil Tier 2 Cities 44. Turkey 45. Indonesia 46. Philippines 47. Croatia 48. Dubai 49. China Tier 1.5 Cities 50. Bulgaria 51. Slovenia 52. India Tier 3 Cities 53. Serbia 54. Russia Tier China Tier 2 Cities 56. Argentina 57. Zambia 58. Mauritius 59. Abu Dhabi 60. Cayman Islands 61. Kenya 62. Chile 63. Saudi Arabia 64. Peru 65. Egypt 66. China Tier 3 Cities 67. Bahrain Mexico and China Alpha Cities On the cusp of Transparent India Improves on back of regulatory reforms South Korea Progress, but outlier in Semi-Transparent Botswana Top improver in Sub-Saharan Africa Dominated by large emerging markets BRIC, MIST ¼ of global corporate HQs and growing 5-10% of global real estate investment Strengthening corporate governance and market data Growing middle classes mobilising against corrupt practices Disconnect between regulations and enforcement Slovenia, Serbia and Bulgaria Top global improvers and move into Semi-Transparent Saudi Arabia and Egypt Nudge into Semi-Transparent 14

15 Transparency Score Change ( ) Top Transparency Improvers, Largest improvers in among Semi-Transparent category Slovenia Serbia Bulgaria Botswana Taiwan Mexico Zambia Myanmar Ethiopia Saudi Arabia Highly Transparent Transparent Semi-Transparent Low Transparency Opaque Source:, LaSalle Investment Management 15

16 Low Transparency Slower progress among the Low Transparency Tier The Low Transparency tier 68. Vietnam 69. Sri Lanka 70. Macau 71. Morocco 72. Uruguay 73. Kuwait 74. Qatar 75. Ukraine 76. Puerto Rico 77. Iran 78. Russia Tier Jordan 80. Rwanda 81. Costa Rica 82. Bahamas 83. Nigeria 84. Ecuador 85. Ghana 86. Colombia 87. Kazakhstan 88. Pakistan Emerging targets for corporates in Africa, Asia and South America Predominantly development markets Regulations being introduced Commencement of market tracking Technology enabling this group to leap-frog normal evolution Weak corporate governance Vietnam On the cusp of Semi- Transparent Iran Joins GRETI in a respectable position Nigeria and Ghana Move from Opaque into Low Pakistan South Asia s first REIT pushes Pakistan into Low Transparency 16

17 Opaque Several Opaque Markets Struggling to Maintain Transparency Opaque tier 89. Oman 90. Uganda 91. Lebanon 92. Panama 93. Tunisia 94. Ethiopia 95. Myanmar 96. Algeria 97. Angola 98. Dominican Rep 99. Tanzania 100. Belarus 101. Mozambique 102. Guatemala 103. Iraq 104. Ivory Coast 105. Venezuela 106. Senegal 107. Djibouti 108. Honduras 109. Libya Dominated by Africa and Central America Geopolitical and economic challenges constrain transparency progress Limited regulatory framework, weak corporate governance and market data almost non existent Some Opaque markets are regressing Myanmar Among top global improvers, but from a low base Lebanon, Mozambique and Venezuela Political and economic challenges weaken transparency Libya, Iraq, Honduras and Guatemala Struggle to maintain rudimentary transparency levels 17

18 Real Estate Environmental Sustainability Transparency Index, 2016 Slow Improvement in Sustainability Transparency Energy Efficiency (New build) Green Building Certification Systems France, Australia, Japan, UK France Consistent roll-out of legislation to transition to low-carbon economy Japan New building energy-efficiency labelling system Energy Benchmarking Green Lease Clauses Energy Efficiency (Existing buildings) Carbon Reporting Financial Performance Index Canada, Netherlands, New Zealand, Austria, Denmark, Finland, Germany, Italy, Singapore, Spain, Sweden, U.S. Belgium, Czech Republic, Hong Kong, Switzerland Brazil, China, Croatia, India, Russia, Slovakia, Abu Dhabi, Dubai, Ireland, Poland, Romania, South Korea, Thailand Mexico, Malaysia, Taiwan, Turkey Dubai Mandatory green building standards for new builds Source: 18

19 An Evolving Global Real Estate Market Predictions 2018 Weight of Capital will raise the Transparency Bar A New Hyper-Transparent category? Beneficial Ownership Disclosure Tighter AML Procedures Focus on Tackling Corruption Transparency through Technology Greater Regulatory Enforcement Standardised Carbon Reporting Financial Performance of Sustainable Buildings 19

20 Global Real Estate Transparency Team Global Jeremy Kelly London Jacques Gordon LaSalle Investment Management Chicago Anne Koeman-Sharapova LaSalle Investment Management London Dan Mahoney LaSalle Investment Management Chicago Matthew McAuley London Americas Josh Gelormini Chicago Europe Hela Hinrichs Hamburg Shetal Patel London Asia Pacific Jane Murray Hong Kong Lee Fong Hong Kong Catherine Chen Hong Kong Middle East and Africa Craig Plumb Dubai Fadheelat Noor Mohamed Johannesburg Muhammad Aijaz Dubai Sustainability Franz Jenowein London Real Estate TRANSPARENCY 20

21 Thank you Global Real Estate Transparency Index 2016