Asia Pacific Is Most Improved Region For Real Estate Transparency: JLL

 Asia Pacific made the greatest progress globally in terms of real estate transparency over the past two years, according to JLL’s Global Real Estate Transparency Index (GRETI) 2016. 

The index measures transparency by looking at factors including data availability, governance, transaction processes, and the regulatory and legal environment.

Asia Pacific is a diverse region in terms of real estate transparency. Australia continues to hold the top spot as the region’s most transparent real estate market, and together with New Zealand, is classified as ‘Highly Transparent’.

Overall, improvements in most countries across the region have been small. The biggest improver in the latest survey is Taiwan, which has moved into the ‘Transparent’ category for the first time. More moderate improvements were achieved by Japan, South Korea, India and China, with China’s Alpha cities now on the cusp of the ‘Transparent’ category. At the other end of the spectrum, Myanmar retains the title as the least transparent market in Asia Pacific, although it was amongst the ten biggest improvers globally.

“India has made improvements in overall transparency scores across all markets, and has achieved higher ranks for tier-I, II markets. Improved market fundamentals, policy reforms, and liberalisation of FDI into realty sector and strengthening of information in public domain were main influencers, along with digitization of land records and opening up of REITs,” says Anuj Puri, Chairman & Country Head, JLL India.

India’s low score in transaction process (e.g. high costs of investment transactions, and weak professional standards for local agents) will improve during the 2016-18 assessment period of JLL’s next Transparency Index, on account of enactment of the Real Estate (Regulation and Development) Act and establishing of the real estate regulator.

The major factor driving improvements in Asia Pacific has been the increased availability and quality of market data. For example, Sri Lanka makes a debut in the rankings for the first time and is on the cusp of entering the 3rd tier of markets from its current 4th tier. In some countries improvements have also been seen in regard to performance benchmarking, the enactment of new legislation, the introduction of higher ethical standards, and the wider adoption of ‘green building’ regulations and tools.

“These results are encouraging as they highlight the steady advance of the region’s real estate industry,” says Jeremy Kelly, director, Global Research Programmes at JLL and main author of the report “Taking Real Estate Transparency to the Next Level”.

The launch of GRETI 2016 comes at a time when international institutions, national governments and businesses are demanding greater integrity and clarity in investments and transactions. It reflects a growing recognition of the crucial role that a transparent real estate sector plays, not only as a facilitator of new investment and business activity but also, significantly, in community well-being and inclusiveness, according to the report.

Additionally, capital allocations to real estate are growing. JLL forecasts that within the next decade in excess of US$1 trillion will be targeting the sector globally, compared to US$700 billion now. This growth means investors are demanding further improvements in real estate transparency, expecting standards in real estate to be at least on a par with other asset classes.

“While the region as a whole has shown improvement, most countries in Asia Pacific are still not transparent. There are ongoing examples of poor corporate governance, opaque and corrupt practices and failures in regulatory enforcement that are resulting in serious consequences for society, for business activity and for investment,” says Dr Jane Murray, Head of Research, Asia Pacific.

“Looking ahead, the continued development of the region’s economies and real estate industry will fuel the need for future enhancements in transparency as investor interest rises and the demand for quality buildings and management grows. Regulatory reforms will be essential for further progress in transparency and although public sector initiatives are essential, private sector involvement will also be crucial.”

JLL’s Transparency Index is updated biennially and has been charting the evolution of real estate transparency across the globe for 17 years. The latest survey covers 109 markets worldwide.

JLL India And Khaitan & Co Release Definitive Report On Real Estate Regulatory Bill

Mumbai: Leading international real estate consultancy JLL India, in partnership with eminent law firm Khaitan & Co. has released ‘Deciphering The Legal And Commercial Aspects of RERA’ - a definitive report on the game-changing Real Estate (Regulation and Development) Act 2016 (RERA) at a press conference here today.

RERA was recently passed in the Parliament and it received the assent of the President of India on 25 March 2016. It has paved the way to setting up of a real estate regulator, which is proposed to be set up within one year from the date of coming into force of the Act, to deal with commercial and residential realty.

Anuj Puri, Chairman & Country Head, JLL India said, "This Bill, which was waiting in the wings for far too long, will significantly reduce the various irregularities and contrasts currently plaguing the Indian real estate sector once it is implemented. Among many other things, RERA will provide a positive impetus towards achieving the Government’s 'Housing For All' vision, while ensuring a level-playing field for developers and buyers. This report examines the various nuances and implications that this very important Bill holds for all real estate industry stakeholders.”

RERA will help make the Indian real estate sector more mature, and more attractive for foreign investments as well as for Indian consumers. It will, for instance, disallow the common practice among many developers of pre-launching projects without getting requisite approvals from the local authorities, and it will make mandatory project registration with the regulator. Developers will also have to disclose approval status, project layout and timeframe for completion to the regulator as well as customers. However, there are a number of other ways in which this BILL will influence the real estate sector.

Haigreve Khaitan, Partner - Khaitan & Co said, "RERA is poised to revolutionize the way in which real estate is built, sold and consumed in India. It is an important milestone in the country's quest towards increasing transparency and ease of doing business. It is important to understand the legal implications that it holds for all related industries and stakeholders. This report is therefore very pertinent and timely."

All in all, the incumbent government has succeeded against various odds and given Indian real estate its most valuable card. RERA is a verdict to end the age of information asymmetry, lack of accountability and unwarranted project delays, and marks the beginning of rising transparency, liquidation of assets – and, importantly, positive sentiment.