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JLL Anticipates Growth in REIT Industry

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Real estate transparency is slowly moving in the right direction around the world and many countries – including India, China and Turkey – are on the cusp of transparency. That is according to a recent report from JLL.

India has introduced wide-reaching regulations in the last two years, ranging from rules that require brokers to be registered, to mechanisms to resolve disputes with developers, the report says. “Foreign investment into India’s real estate sector has risen in parallel with these changes, to US$6.3 billion in 2017 from US$2.2 billion in 2014, according to JLL data. The anticipated growth in the REIT industry bodes well for further gains.”

According to Jeremy Kelly, director of Global Research at JLL, governments worldwide have been gradually forging greater transparency in real estate markets, addressing growing demands from investors and the public to deliver significant change. “Over the 20 years that JLL has been publishing its biennial proprietary Global Real Estate Transparency Index, increased regulatory requirements and greater data availability have driven incremental improvements. Since 2016, 85 of the 100 countries surveyed recorded an improvement, and the growing impact of technology may propel this positive trend in the future.”

Kelly explains that “Transparency is increasingly important for commercial real estate, where investors are allocating ever more capital. The availability and quality of information – from prices to ownership – is crucial when trying to make investment decisions, especially in new markets.”

Government measures are aimed at improving their competitive position as both real estate investors and companies looking to lease space increasingly demand standardized data, the report explains.

Transparency in real estate “increases accountability and quality of governance, and improving it is an important step for countries and cities that want to cultivate a productive business environment,” says Fernando Ferreira, Associate Professor of Real Estate and Business Economics & Public Policy, Wharton School, University of Pennsylvania.

There have been noteworthy regulatory improvements, such as the UK’s proposed beneficial ownership register and the European Union’s Fifth Anti-Money Laundering Directive. India’s government has introduced a raft of initiatives aimed at reducing corruption. The U.S., one of the most transparent property markets globally, has adopted proptech faster than anywhere else.

Whatever changes are on the horizon, investors and the public will continue to scrutinize every move. “The industry is in the spotlight,” Kelly says.