The more information potential investors have about a specific property or market, the more likely they are to show interest in it. This is supported by JLL’s recently released Global Real Estate Transparency Index 2024, which highlights how transparency impacts investment performance and deal volume. The report identifies key areas of transparency such as legal and regulatory environments, transaction processes, market fundamentals, and sustainability.
Countries with high levels of transparency like the United States, Canada, France and Australia have attracted over $1.2 trillion in direct commercial real estate investment over the past two years – representing 80% of global investments. These nations also boast low risk levels and strong demand dynamics that position them for success during cyclical recovery.
According to the index’s top five countries with highest transparency rankings are:
1) United Kingdom
2) France
3) United States
4) Australia
5) Canada
On the other hand,the following countries were ranked as “Opaque” when it comes to CRE information,sustainability,data,and market fundamentals:
1 )Iraq
2 )Ethiopia
3 )Guatemala
4 )Dominican Republic
5 )Honduras
The report also emphasizes on three important themes:
– The increasing importance of artificial intelligence (AI): Investment in AI is growing rapidly due to its ability to sift through large volumes of data quickly.This technology has improved transparency by automating building management,powering interactive urban design,and enabling faster valuations.
– Sustainability as a critical factor: Accordingtothe report,”sustainability has been oneofthe largest driversoftransparency improvementsinthe2024index.”However,it notes that there is still room for improvement due lack standardized informationand processes.
– Diversification remains an ongoing theme: Factors suchas demographic changes,integrationof technology,changing occupier preferences,and shifting supply chainsare impacting investor decisionsonreal estate.Thereisalsoa significant reallocationofcapitaltaking placeinthe market.
The report also highlights changes in debt markets, noting that while commercial real estate has traditionally been financed by regulated banks with strict reporting requirements, there is now a broader range of lenders including debt funds,pensions,life companies,and other sources. This has led to a more balanced market and investors have raised $120 billion across 411 closed-end debt funds since 2020. Overall,the study emphasizes the importance of transparency in driving investment performance and attracting capital to the global real estate market.
