The Hindu Business Line : India rises in real estate transparency index

Transparency levels globally are improving as Governments seek to streamline regulatory and legal hurdles to aid cross-border movement of capital and corporate facilities.

Our Bureau

New Delhi, July 1 The domestic real estate market, which is grappling with slowdown in demand and a tight liquidity situation, may have some reason to cheer. When it comes to the level of transparency in commercial real estate within Asia Pacific, both India and China have improved their position — moving up from low transparency to semi-transparency, according to Jones Lang LaSalle.

“Five markets moved from Tier 4 (low transparency) to Tier 3 (semi-transparent): China, Dubai, India, Romania, and Ukraine. Vietnam, moved from Tier 5 (opaque) to Tier 4. Although Venezuela’s score declined, it did not move to a lower tier,” the Global Real Estate Transparency Index 2008, said.

The transparency has been measured on parameters such as availability of data on real estate market, data on real estate performance indices, accounting standards and regulations, governance, clarity in taxes, planning codes, land registry, ease of transaction (sale or lease), professional standard for agents, amongst others; hence an improvement in a market’s position in the index augurs well.

“In India, the issue of real estate transparency at a sub-national city level is gaining importance as real estate investors and corporate occupiers extend into new regions in their search for higher returns or cost-effective locations.

“International investors and occupiers are moving into secondary and tertiary cities, which have not been traditional targets of the real estate community,” Mr Anuj Puri, Chairman and Country Head India, Jones Lang LaSalle Meghraj, said.

Cross-border movement

The index, which provides a framework for comparing the level of real estate transparency in 82 markets globally, showed that nearly half of the countries surveyed in 2006 demonstrated a significant improvement in their transparency score. Transparency levels globally are improving as Governments seek to streamline regulatory and legal hurdles to aid cross-border movement of capital and corporate facilities.

In keeping with historical results, the Australian and US real estate markets remained among the most transparent in the world.

With the addition of new variables relating to the quality and frequency of valuations, service charge transparency and financing transparency, Canada now ranks as the world’s most transparent commercial real estate market.

“Many cross-border investors focus on more mature, open and transparent real estate markets such as the UK, Canada, Netherlands and Hong Kong.

“However, opportunistic investors will consider the emerging, less mature, less open and semi-transparent markets, but will require higher returns to compensate for the higher risks associated with lower transparency.

“Only the most opportunistic investors will consider semi-transparent markets found in eastern Europe, Latin America and Southeast Asia,” the report said.

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