TransparencyFebruary 27, 2013 / By
Transparency is Corporate Real Estate (CRE) executives’ key issue when expanding into developing and emerging markets, as answers to our Global CRE Survey 2013 (to be published in April 2013) illustrate. Other complications such as lack of suitable real estate offer, high start-up costs or lack of unified real estate standards are deemed less challenging.
What is the main issue when expanding into developing and emerging markets?
• 19% real estate market transparency
• 18% political transparency
• 17% economic transparency
• 10% lack of suitable real estate offer
• 7% start-up costs
• 7% lack of unified real estate standards
Source: Global CRE Survey 2013
A few regional variations are to be noted. While a lack of unified real estate standards is a main concern for 11% of respondents based on the American continent and 9% in APAC, it is largely irrelevant for respondents based in EMEA (2%).
Among APAC markets, the lack of real estate transparency is a major issue for companies based in India (33%), while the lack of political transparency comes first for those based in Japan (32%) and Australia (17%), and the lack of economic transparency for companies based in China (43%).
Western multinationals in these countries do not share the same concerns as domestic corporations. In particular, the lack of real estate market transparency is a clear #1 issue for a majority of Indian (56%) and Chinese (50%) domestic companies.
It is interesting to contrast these findings with the Global Transparency Index, Jones Lang LaSalle’s biennial survey that covers 97 markets worldwide to help identify differences when transacting, owning and operating abroad.
Real estate transparency levels vary widely across APAC. The region has two of the world’s most transparent markets – Australia and New Zealand – and two other mature economies – Hong Kong and Singapore- rank relatively highly, on a par with most Western European countries. However, its largest investment market, Japan, has low levels of transparency compared with its economic maturity. There is also room for improvement in South Korea, and the region still contains some of the world’s least transparent markets, such as Vietnam and Mongolia.
Comparing the 2012 index with its previous issues, we see that South East Asia clearly leads improvements in real estate transparency. In China and India, the increasing penetration of national and international occupiers has acted as a catalyst to improving transparency levels beyond Tier 1 cities, boosting the market up from opaque in the 2006 ranking to semi-transparent in 2012.
A subset of the main index, the Global Transparency Index for Occupiers, attributes more weight to factors that are pivotal to corporate occupiers such as regulation, market fundamentals, occupier services as well as land and property registration. For those of you who would like to play with the index’ 13 factors, a Transparency Tool Kit allows you to create a custom index by entering a weight for each of the transparency building blocks. This is the latest of a suite of tools providing you with insightful knowledge at a click of a button.