Emerging markets improve transparency
From "FOH News" on 25 June 2008
The research revealed that in 2008, eight countries moved up a full transparency tier since the last index in 2006. Dubai, Romania, Ukraine and Russia showed the biggest improvements in transparency over the last two years.
In keeping with 2006’s results, the Australian and US real estate markets remain among the most transparent in the world. The report said that Canada’s, this year’s number one, elevation to the top of the chart comes after the addition of new variables relating to the quality and frequency of valuations, service charge transparency and financing transparency.
The Index, which provides a framework for comparing the level of real estate transparency in 82 markets around the world, shows that nearly half of the countries surveyed in 2006 demonstrated a significant improvement in their transparency score two years later. Transparency levels globally are improving as governments seek to streamline regulatory and legal hurdles to aid cross-border movement of capital and corporate facilities. Only Venezuela posted a lower transparency score this year compared with 2006, principally due to changes in government regulations and new taxation policies targeting foreign investors.
"The steady improvement in transparency, particularly over the last four years, is closely linked to the forces of globalization that drive investors to move across borders in search of higher risk-adjusted returns," said Jacques Gordon, global strategist at LaSalle Investment Management. "This movement of both capital and corporations around the world has created an even greater need for information about markets. It has also created an incentive for governments to streamline bureaucratic practices which prevent the free flow of capital into and out of global markets."
"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. Opaque markets, such as Algeria, Belarus and Cambodia, are still very problematic," he added.
The Index shows that 28 countries posted transparency scores that were within 10 basis points of their scores in 2006. Jones Lang LaSalle researchers say that consistency in transparency scores over the years is expected in real estate markets such as Australia, the UK, the U.S., Singapore and Hong Kong where a high degree of transparency already exists. However, countries such as Argentina, Greece, Indonesia, and Peru have consistently scored in the low transparency range over the last few years despite an increase in cross-border trade, finance and commerce over the same time period.
A number of countries in the 'frontier markets' have been included in the Index for the first time, with Belarus, Sudan, Algeria, Cambodia and Syria scored as 'opaque'. Other new entrants into the Index, Bahrain, Bulgaria, Estonia, Latvia, Croatia, Abu Dhabi, and Lithuania, scored in the 'semi- transparent' range, while Oman, Qatar, Morocco, Kuwait, Pakistan and Kazakhstan all scored in the 'low transparency' range.
Top Ten Most Transparent Countries 2008
Country Score
1 Canada 1.17
2 Australia 1.20
2 United States 1.20
4 New Zealand 1.21
5 United Kingdom 1.31
6 Netherlands 1.33
7 France 1.34
8 Sweden 1.43
9 Belgium 1.48
10 Ireland 1.52
Largest Transparency Score Changes 2006-2008
Country Change in Score
Dubai 1.04
Romania 1.02
Ukraine 0.76
Russia Tier 1 Cities 0.57
Egypt 0.56
Saudi Arabia 0.52
Poland 0.36
Czech Republic 0.34
Panama 0.33
China Tier 1 Cities 0.33
Vietnam 0.29
Italy 0.26
Brazil 0.25
Portugal 0.25
Venezuela -0.13
