Real estate transparency gap widens in favor of leading global markets
Improvements reflect a post-pandemic focus on sustainability, increased adoption of real estate technology, investment in alternative sectors and better data availability
CHICAGO, June 30, 2022 – While many of the world’s leading commercial real estate markets in North America, Western Europe and Australasia are becoming more transparent, most other countries struggle to maintain the pace of transparency improvement. These findings are according to the biennial, proprietary Global Real Estate Transparency Index (GRETI) from JLL and LaSalle (NYSE: JLL) which provides a unique benchmark of market transparency for property investors, developers and corporate occupiers.
“The influence of external events including geopolitical conflict, economic volatility and lingering effects of COVID-19 that has permeated the last two years has had widespread effects on the global real estate market,” said Richard Bloxam, CEO, Capital Markets, JLL. “Transparency is the foundation which allows corporate occupiers, as well as investors and lenders to the world’s largest asset class, to operate and make decisions with confidence. While we are encouraged to see increased transparency in many of the world’s leading markets, limited improvements in many other global markets have resulted in one of the slowest rates of progress in the index’s history and highlights growing disparity in transparency around the world.”
Global Real Estate Transparency Index, 2022
Top transparency improvers, 2020-2022
Net zero becomes new marker of transparency
“Sustainability is the leading driver of transparency improvements in this year’s survey, a continuing trend since 2018,” said Jacques Gordon, Head of Global Strategy and Research for LaSalle Investment Management. “Net zero emissions are the current focus for many investors, companies and governments in the most transparent countries around the world, with an increasing number of countries and cities following up on previously announced climate commitments by establishing mandatory energy efficiency and emissions standards for buildings. The research also found more widespread adoption of green and healthy building certifications, which we expect will continue to accelerate in the years ahead.”
European markets have made the most progress in sustainability through the implementation of the EU’s updated Energy Performance of Buildings Directive (EPBD) and other regulations including the European Green Deal. Paris, New York City and London topped the sustainability sub-index as the world’s leading cities to set the pace in adopting measures to raise or track progress toward sustainability goals. In particular, New York City has been active in implementing clear, long-term building energy standards through measures that include Local Laws 84 and 97, the Construction Codes Revision Bill and mandating the tracking of energy consumption at the building level.
Sustainability Sub-index, top 10
|Composite rank 2022||Market||Composite score 2022|
Source: JLL, LaSalle, 2022
For the first time in the Index’s history, Japan has been included in the list of ‘Highly Transparent’ markets, as it pushes forward net zero carbon goals through higher building standards and transparency around climate risk reporting. Meanwhile, the UAE markets of Abu Dhabi and Dubai are the top global improvers in 2022 benefiting from a concerted government focus on increasing real estate transparency. As a result, Dubai makes its first appearance in the ‘Transparent’ tier.
Digitization driving innovation
During the COVID-19 pandemic, the pace of technological innovation increased to adapt to the drastic changes affecting the way people live and work. Real estate is no different, as technology platforms expanded data availability, enabling an in-depth understanding of buildings and markets. Available data ranges from pricing information for niche sectors to real-time occupancy tracking and digital simulations of cities and buildings. Advanced data techniques that can scrape information from listings sites, ‘big data’ platforms and geographic information systems (GIS) are all enabling investors and occupiers to compile better information. To this end, adoption of real estate technology is growing rapidly, with venture capital funding for real estate technology companies reaching a record high of $18.2 billion in 2021 and nearly 8,000 companies providing real estate technology solutions globally, an increase of over 300% from 10 years ago.
Many of the countries with the highest rates of transparency also have the highest levels of technology adoption including the UK, U.S., France, Netherlands, Belgium, Ireland, Canada and Germany. Real estate technology adoption is also prevalent in some territories lower down the transparency ranking including Dubai and China.
Technology adoption by market, top 20
|11||UAE - Dubai||2.67|
|16||Hong Kong SAR||2.78|
|17||China - SH/BJ||2.78|
China - SH/BJ = Shanghai and Beijing
Note: Lower score = greater adoption
Source: JLL, LaSalle, 2022
Alternative property investment on the rise
Investments in alternative property sectors such as lab space, senior living facilities, student housing and data centers continue to grow as diversification becomes increasingly important for investors. Global investment in alternative real estate sectors increased by 69% between 2019 and 2021 and every country in the 2022 survey reported having inventory of historically niche property types, with 65% of countries reporting some institutional investment in alternatives. Data centers represented the broadest global reach. The U.S. leads on data for these alternative sectors but they are now becoming much easier to track across Europe and in major Asia Pacific markets like Japan and China.
Historically, reliable market data on alternative properties was often scarce, or non-existent, even in otherwise highly transparent real estate markets, The tremendous global growth in alternative property investment indicates that this will be a critical space to watch in coming years as advanced data technologies create an ideal environment for greater transparency in this space.
Global Real Estate Transparency Index (GRETI)
JLL and LaSalle's Global Real Estate Transparency Index (GRETI), which is published every two years, is a unique benchmark of market transparency for property investors, developers and corporate occupiers. The index evaluates the legal and regulatory environment, enforcement mechanisms and data availability and provides a global comparison of operating conditions across a wide range of geographies. This year’s 12th edition includes 254 individual indicators to assess market transparency across 94 countries and territories and 156 cities globally.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 100,000 as of March 31, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.