Tier 3 cities move up transparency table
By Cherry Cao |
July 10, 2012, Tuesday
|
Print Edition
Print Edition
CHINA'S Tier 3 cities have become the only market in the Asia Pacific region that has moved into a higher transparency category, from the "Low-transparency" to "Semi-transparent," according to a biennial index released recently by Jones Lang LaSalle and LaSalle Investment Management, which calculates transparency in 97 real estate markets worldwide.
And the Chinese mainland, which now sits in the middle ranking of "Semi–transparent" category, has pulled away over the last two years and its Tier 1 cities are moving toward the "Transparent" category, the 2012 Global Real Estate Transparency Index, which weighs 83 different factors, has found.
However, some deterioration has also been seen in certain areas, such as accuracy of pre-sale information and agency standards, in part due to government measures to cool the residential market, the index compiler said.
"China's Tier 1 cities are now more transparent in regard to property-related taxation. In cases of compulsory purchase, property owners, both domestic and foreign, in China's Tier 1 and Tier 2 cities are usually fairly compensated," said Eric Pang, head of investment for Jones Lang LaSalle Beijing. "Information at the Land Registry has also improved, although availability and completeness of title records remains an issue."
In Asia Pacific, where real estate transparency levels vary widely, most of the markets have pushed forward in terms of transparency since 2010 with Chinese mainland cities, Hong Kong and emerging South East Asia countries, consisting of the Philippines, Indonesia and Vietnam, being the most notable regional risers in terms of global rankings, according to the index compiler.
Globally, the United States ranks as the world's most transparent real estate market in 2012, followed closely by the United Kingdom and Australia.
Nearly 90 percent of markets have registered advances in real estate transparency during the past two years, driven by improving market fundamentals data and performance measurements as well as better governance of listed vehicles, following a slowdown in progress during the financial crisis in 2008 and 2009.
"While the world economy is still in recovery, the 2012 Index reveals that real estate investors and corporate occupiers are widening their activity across a broader range of markets," said Jacques Gordon, global head of strategy for LaSalle Investment Management, the investment management arm of Jones Lang LaSalle.
"This cross-border activity encourages faster rates of transparency improvement in growth and emerging economies as the markets open up further to international competition and their real estate sectors embrace global best practices."
The relationship between real estate investment volumes and transparency has been reaffirmed by the 2012 results. Rising levels of transparency are associated with higher levels of foreign direct real estate investment, a powerful incentive for encouraging the free flow of information as well as the fair and consistent application of local property laws.
The world's fastest-growing direct commercial real estate investment markets during the past two years - such as Brazil, Turkey, Indonesia and Vietnam - are all among the world's Top 10 transparency improvers.
While steady progress in real estate transparency has been made during the past two years, much still needs to be done.
"The pace of regulatory and legal reform has been slow," said Jeremy Kelly, national director, Global Research at Jones Lang LaSalle. "And we have seen limited improvement on the transparency of transaction processes, despite recognition by government and industry bodies that transparent real estate markets are necessary."
And the Chinese mainland, which now sits in the middle ranking of "Semi–transparent" category, has pulled away over the last two years and its Tier 1 cities are moving toward the "Transparent" category, the 2012 Global Real Estate Transparency Index, which weighs 83 different factors, has found.
However, some deterioration has also been seen in certain areas, such as accuracy of pre-sale information and agency standards, in part due to government measures to cool the residential market, the index compiler said.
"China's Tier 1 cities are now more transparent in regard to property-related taxation. In cases of compulsory purchase, property owners, both domestic and foreign, in China's Tier 1 and Tier 2 cities are usually fairly compensated," said Eric Pang, head of investment for Jones Lang LaSalle Beijing. "Information at the Land Registry has also improved, although availability and completeness of title records remains an issue."
In Asia Pacific, where real estate transparency levels vary widely, most of the markets have pushed forward in terms of transparency since 2010 with Chinese mainland cities, Hong Kong and emerging South East Asia countries, consisting of the Philippines, Indonesia and Vietnam, being the most notable regional risers in terms of global rankings, according to the index compiler.
Globally, the United States ranks as the world's most transparent real estate market in 2012, followed closely by the United Kingdom and Australia.
Nearly 90 percent of markets have registered advances in real estate transparency during the past two years, driven by improving market fundamentals data and performance measurements as well as better governance of listed vehicles, following a slowdown in progress during the financial crisis in 2008 and 2009.
"While the world economy is still in recovery, the 2012 Index reveals that real estate investors and corporate occupiers are widening their activity across a broader range of markets," said Jacques Gordon, global head of strategy for LaSalle Investment Management, the investment management arm of Jones Lang LaSalle.
"This cross-border activity encourages faster rates of transparency improvement in growth and emerging economies as the markets open up further to international competition and their real estate sectors embrace global best practices."
The relationship between real estate investment volumes and transparency has been reaffirmed by the 2012 results. Rising levels of transparency are associated with higher levels of foreign direct real estate investment, a powerful incentive for encouraging the free flow of information as well as the fair and consistent application of local property laws.
The world's fastest-growing direct commercial real estate investment markets during the past two years - such as Brazil, Turkey, Indonesia and Vietnam - are all among the world's Top 10 transparency improvers.
While steady progress in real estate transparency has been made during the past two years, much still needs to be done.
"The pace of regulatory and legal reform has been slow," said Jeremy Kelly, national director, Global Research at Jones Lang LaSalle. "And we have seen limited improvement on the transparency of transaction processes, despite recognition by government and industry bodies that transparent real estate markets are necessary."
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