When it comes to the real estate market, Australia doesn’t have much to hide – compared with the rest of the world.
And that’s a good thing in a global industry with a thirst for data and which increasingly values accurate and timely information, according to JLL.
Australia has been ranked second in the world for transparency in its commercial and residential real estate markets, beaten only by the UK, in JLL’s new Global Real Estate Transparency Index for 2016.
JLL measures transparency by considering factors including the availability of market data, governance, transaction processes, property rights and the regulatory and legal environment.
JLL head of Australasian research David Rees says Australia has a long history of data across all major metrics as well as an established bidding process. File photo: Daniel Munoz
Improvements to data relating to alternative property sectors such as student housing have been credited for Australia’s rise in the rankings.
In the last two-yearly index, released in 2014, Australia ranked third. The country remains in the top spot for the Asia-Pacific region with New Zealand in second place.
Canada and the US placed third and fourth in the latest global rankings. France, New Zealand, the Netherlands, Ireland, Germany and Finland make up the remainder of the 10-strong field in the “highly transparent” tier.
Australia has a strong legal framework to define and protect property rights and an open and established bidding process, said JLL head of Australasian research David Rees.
“The market has a long history of transactional and time series data-information across all the major metrics, data is easily accessible to most participants,” Dr Rees said. “In addition, governance and the regulatory environment are high by international standards.
“Improvements in the coverage of alternative property sectors, such as student housing, contributed to the improvement in Australia’s ranking in this year’s survey.”
Comprehensive comparisons between countries are considered important for companies operating and investing in foreign markets to assess the complexities and risks.
Dr Rees said investors were demanding improvements to transparency as real estate capital spending grew.
“Technology is allowing a more forensic assessment of real estate market patterns, allowing for greater analysis of transparency levels across markets while the rapid growth of cross-border investment means that investors place a big premium on accurate and timely information,” he said.
Residential markets, in particular, often had limited data available, meaning investors relied on information in the public domain to help make decisions.
Dr Rees said evidence from nine transparency indexes over 12 years pointed to a correlation between market transparency and investment volumes.
The JLL report covers 109 markets worldwide and ranks in a three-tier system – highly transparent, semi-transparent and low-opaque.
English-speaking countries dominate the highly transparent tier, which includes Germany for the first time this year. Fifth-placed France is considered to be leasing the way for sustainability and Poland, in 13th position, has moved closer to the highly transparent segment.
Europe is the world’s most transparent region.
JLL names the Asia-Pacific region as the most consistently improving. Taiwan has made the most progress and Japan has advanced the most – up seven places since 2014.
China’s “alpha cities”, including Beijing and Shanghai – which has seen a threefold increase in real estate investment since 2010 – are nearing the transparent group as they mature beyond the semi-transparent category. Government efforts to push reform and make improvements have helped India to advance.
In the Middle East and North Africa, Dubai is the most transparent market with gradual overall improvement. Sub-saharan Africa is making “patchy progress” with other priorities taking precedence, according to JLL.
The Americas deliver mixed results, with Mexico on the edge of entering the transparent category. Index leaders Canada and the US are noted for pushing the boundaries of what it means to be highly transparent.