Real estate transparency in an era of instability

July 3, 2011 / By  

A few weeks back a number of colleagues and I attended the Real Estate Investment World conference in Singapore. As my colleague Megan has already alluded to, the two keynote speakers –Marc Faber of and Graeme Maxton, freelance write for The Economist– competed for who had the gloomier view of the global economy’s next few years. Having spoken at length with Dr. Nouriel Roubini earlier this year, I’ve had a full serving of the coming economic apocalypse.

Real estate markets, except the super-prime, are not immune to the broader economy and a European or US debt crisis, soaring commodity prices, a jobless recovery, etc. etc. can all dampen the performance of real estate assets. But there is a very real appeal for bricks and mortar (or glass and steel in 21st century parlance) which, if well managed, can provide stable income and a measure of security less available from other assets classes. If Faber, Maxton, Roubini, et al. are correct and we’re heading into an era of economic instability, then good property should benefit.

Which brings me to transparency: Jones Lang LaSalle is gearing up for the 2012 edition of its Global Real Estate Transparency Index (GRETI). There is a close connection between property investment inflows and transparency and a quick correlation between GRETI and the country risk classifications done by the OECD this morning proves transparency and stability are related (duh!).

So if you are of the ‘glass is half empty’-economic Armageddon persuasion: buy super-prime or buy transparent.

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