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Increases in Transparency Slow Globally but Majority of Markets Still
Register Improvements According to Jones Lang LaSalle
Australia is World’s Most Transparent Real Estate Market; Czech Republic ranks
24th
Prague, 29th June 2010 – Jones Lang LaSalle and LaSalle Investment Management have today
released their 2010 Commercial Real Estate Transparency Index, which shows that Australia is the
world’s most transparent real estate market in 2010, pushing Canada into second place. Whilst one
third of markets globally registered no change or a deterioration, there are a number of bright spots,
and real estate transparency continues to improve, albeit moderately, in the majority of markets. Of
the top 15 improvers, nine are in Europe and six are in Asia Pacific. Turkey tops the league table of
transparency improvers, and progress has been made in China, India, Poland, Portugal, Romania,
Greece and Hungary. The Czech Republic remained stable in its 24th position, while Slovakia ranked
30th, moving up by one rank. Declines in transparency were registered in countries such as Pakistan,
Kuwait, Venezuela, Dubai and Bahrain; although the level of decline was modest in these countries,
the reversal of past gains is notable. Over the past two years, the average improvement in real estate
transparency across the 81 markets covered by the Index has halved, when compared to both the
2006–2008 and 2004–2006 periods.
Table 1 - 2010 Top Ten Most Transparent Countries
2010 Global Real Estate Transparency Index
2010 Composite Rank
Market
2010 Composite Score 2010 Composite Tier
1
2
3
4
4
6
7
8
9
10
Australia
Canada
United Kingdom
New Zealand
Sweden
United States
Ireland
France
Netherlands
Germany
– continued –
1.22
1.23
1.24
1.25
1.25
1.25
1.27
1.28
1.38
1.38
1
1
1
1
1
1
1
1
1
1
Increases in Transparency Slow Globally but Majority of Markets Still
Register Improvements According to Jones Lang LaSalle
22
24
27
30
32
Poland
Czech Republic
Hungary
Slovakia
Romania
1.99
2.15
2.33
2.61
2.68
2
2
2
3
3
Jacques Gordon, Global Head of Strategy for LaSalle Investment Management, the independent
fund management arm of Jones Lang LaSalle said: “The 2010 Global Real Estate Transparency
Index reveals a notable slowdown in the progress of real estate transparency over the past two years.
It suggests that the recent turmoil in global financial, economic and real estate markets has impacted
on market behaviour, with real estate players focusing on survival rather than market advancement. It
is interesting to note that the most highly transparent countries experienced illiquidity and volatility
over last two years, despite their positions at the top of the transparency rankings. That said
transparency does appear to speed up the restructuring process.
He continued: “Transparent real estate caused problems for investors during the credit crisis because
it had been put into opaque vehicles. The 2010 report found that debt transparency is generally
lagging behind overall real estate transparency in many countries. We expect that a new focus on
regulatory and private market-led transparency in the real estate debt markets will be one of the main
reforms to come out of the credit crisis.”
Real Estate Debt Transparency: In addition to the original measures of performance measurement,
market fundamentals, listed vehicles, legal and regulatory environment and transaction process, the
2010 Index measures for the first time two elements of real estate debt transparency: the breadth and
depth of data available on commercial real estate (CRE) debt and how well commercial real estate
lending risks are monitored by regulators of financial institutions. In a parallel trend to the overall
transparency scores, levels of debt transparency vary greatly. In many developed countries, the
regulatory oversight process achieves reasonably high scores, but the scores on the availability of
information on CRE debt markets do not. In less developed countries, scores on both attributes are in
the semi-transparent range, or lower.
EMEA: Europe is a mixed picture of transparency. The traditional leading pack – Australia, New
Zealand, the United Kingdom (third position), the United States and Canada – have now been caught
up by a number of European markets including Sweden, Ireland and France.
Turkey and some Central and Eastern European (CEE) countries have shown good progress as their
markets have become more internationally traded and their regulatory and legal environments
become aligned with core EU economies. In fact, the more advanced CEE countries of Poland, the
Czech Republic and Hungary have now caught up with the laggards in Western Europe, such as Italy,
who have struggled to improve real estate transparency.
– continued –
Increases in Transparency Slow Globally but Majority of Markets Still
Register Improvements According to Jones Lang LaSalle
Poland, the Czech Republic, Hungary, Slovakia and Romania have all witnessed improvement in
transparency over the past couple of surveys. Both the public and private sectors have taken
significant steps into bringing these markets in line with other EU countries, and at the same time,
foreign investor participation continues to drive convergence with international standards. Of all the
sub-indexes measured by the GRETI, the Czech Republic ranked among the top 20 markets in two of
them. The country ranked 7th in Market Fundamentals and 17th in Transaction Process.
In Russia and the Ukraine, transparency improvements have stalled in 2010, a reflection of the
severity of the real estate downturn in both markets and a sharp contrast to the strong improvements
registered in 2008.
Kevin Turpin, Head of CEE Research at Jones Lang LaSalle commented: "The core markets of CEE
(Czech Republic, Hungary, Poland, Romania and Slovakia) have all witnessed accelerated and
improved transparency over the past few years. One of the main contributory factors has been their
accession into the European Union (2004/2008) which brought about a number of improvements and
changes across many of the disciplines/criteria covered by the JLL Transparency Index. In addition,
the ever increasing global nature of the legal, financial, banking and property sectors are also driving
convergence with international standards. The CEE markets have already been and continue to be a
much sought after destination for foreign direct investment. Both the public and private sectors have
taken significant steps into bringing these markets in line with other EU countries in terms of
transparency, which ultimately will continue to enhance the competitiveness of the CEE region."
Jacques Gordon concluded: “The last two years demonstrate how high levels of transparency do not
eliminate risks for investors or occupiers. Free flows of information and consistent enforcement of
local property laws did not prevent values from falling or produce better access to credit at a time
when liquidity dried up. The real value of transparency, though, should become evident when
comparing how quickly markets are able to open up again after a financial crisis. The recapitalisation
of real estate in many countries is being helped by the free flow of information and the protection of
property rights.”
– ends –
Notes to editors
1. The Global Real Estate Transparency Index is jointly compiled by LaSalle Investment
Management and Jones Lang LaSalle and covers 81 countries, territories and administrative
regions on six continents. The survey has been conducted since 1999, and is updated every
two years. GRETI 2010 represents the sixth update. It is compiled from a transparency
survey that assesses these key attributes of real estate transparency – performance
measurement, market fundamentals, listed vehicles, legal and regulatory environment, the
transaction process, data available on commercial real estate debt and how well commercial
real estate lending risks are monitored by regulators of financial institutions. The scores
range between one and five, with one being the highest level of transparency and five being
opaque. Countries are grouped into the following broad bands: Highly Transparent (Tier 1),
Increases in Transparency Slow Globally but Majority of Markets Still
Register Improvements According to Jones Lang LaSalle
Transparent (Tier 2), Semi-Transparent (Tier 3), Low Transparency (Tier 4) and Opaque
(Tier 5).
2. LaSalle Investment Management and Jones Lang LaSalle take a broader approach to
transparency than equating ‘low transparency’ with ‘corruption’. The presence or absence of
corruption is only one component of real estate transparency. Other components include
consistently applied and interpreted laws and regulations, the respect of private property
rights, the access to and time series of investment performance indices and market
fundamentals data, and ethical standards of professionals in the commercial real estate
market.
3. To access the Global Real Estate Transparency Index, including detailed regional
breakdown, rankings, graphs and detailed methodology please visit:
www.joneslanglasalle.com/Transparency
About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specialising in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing
in real estate. With 2009 global revenue of $2.5 billion, Jones Lang LaSalle serves clients in 60 countries from 750 locations worldwide, including 180 corporate offices. The firm is an industry leader in property and corporate facility management
services, with a portfolio of approximately 1.6 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with approximately $40
billion of assets under management.
For further information, please visit our Web site, www.joneslanglasalle.com│ 200 East Randolph Drive Chicago Illinois 60601 │ 22 Hanover Square London W1A 2BN │ 9 Raffles Place #39–00 Republic Plaza Singapore 048619