Transparency improved globally in 2024, with Asia rising as a standout as markets make
progress toward sustainability goals and AI adoption
CHICAGO, Aug. 27,
2024 /PRNewswire/ -- Real estate transparency is more
critical than ever in times of uncertainty, and markets emerging as
the most transparent are pulling further ahead based on investments
in technology integration and AI, data availability and
sustainability. This is according to JLL and LaSalle's (NYSE: JLL) biennial, proprietary
Global Real Estate Transparency Index (GRETI), which benchmarks
market transparency to help inform how real estate is invested in,
developed, and occupied in different regions around the globe.
While transparency has increased across most nations and
territories since JLL's 2022 report, the index finds that
Europe remains the most
transparent region, and highly transparent commercial real estate
markets have seen the strongest progress. Among the global top
improvers are the U.S., Canada,
France, and Australia, while Singapore has entered the 'Highly Transparent'
group for the first time, boosted by a focus on sustainability and
digital services. The top set of countries has attracted over
$1.2 trillion in direct commercial
real estate investment over the last two years, representing over
80% of the global total, positioning them to lead the cyclical
recovery in liquidity as capital market activity increases.
In step with Singapore,
countries in Asia have recorded
the strongest average transparency improvements since 2022.
Globally, India is the top
improver in transparency, with greater data coverage and quality
across property sectors ranging from industrial to data centers.
Japan, Australia, cities in Mainland China,
South Korea, the United Arab Emirates, and Saudi Arabia also saw progress in 2024. By
contrast, the Sub-Saharan Africa region saw the least progress in
transparency, though some signs of improvement emerged in
Kenya, Nigeria, and Ghana.
"The focus on transparency for investors has never been greater
in global real estate markets as external challenges such as
geopolitical tensions and election cycles draw increased attention
in the near term," said Richard
Bloxam, CEO, Capital Markets, JLL. "On the horizon,
additional drivers like artificial intelligence and higher
standards of sustainability obligations and reporting will continue
to push investors to seek greater transparency."
"Highly transparent markets in this year's Index represent over
half of income-producing real estate worldwide. Countries with
transparent pricing and fundamentals, especially across the diverse
range of specialty sectors and sub-sectors, will likely lead the
real estate liquidity recovery," said Brian Klinksiek, Global
Head of Research and Strategy for LaSalle Investment Management.
"Diversification will be critical as the investible universe
continues to expand in terms of breadth and complexity."
AI and sustainability drive new transparency opportunities
and challenges
The proliferation of AI has been rapid,
hastening expectations for its impact on real estate with the
influence of tools including JLL's AI platform, JLL GPT. It is
estimated that over 500 companies are currently providing real
estate-specific AI services, and with investment growing
significantly, early findings suggest AI will boost transparency
across the industry with its ability to review and summarize large
volumes of data and analytics, automate building management, and
power urban and architectural design. However, experts and
policymakers have raised the risks of AI and introduced policies
such as the U.S. Executive Order on AI and recently approved EU AI
Act to ensure the responsible deployment of the technology to
maintain transparency.
In parallel, sustainability marked the largest improvement in
the 2024 Index, as nations race to halve carbon emissions by 2030
to meet the Paris Agreement, and the introduction of mandatory
decarbonization pathways set new building performance standards,
sustainability reporting requirements, and corporate commitments.
France, Japan, and the U.S.- with 40 U.S. cities
committed to passing a Building Performance Standard requiring
building energy use or emission reductions by 2026 – emerged as
leaders in sustainability for implementing energy performance
requirements for both existing and new buildings, energy use
reporting, and biodiversity protection and restoration. These
markets with the clearest long-term pathway to more sustainable
real estate will offer the most transparent and predictable
environments, allowing occupiers to make decisions with confidence,
governments to meet decarbonization targets, and investors to
future-proof their portfolios.
However, despite significant progress made, sustainability
metrics continue to be among the least transparent globally. Beyond
the most transparent markets, mandatory building performance
standards, public disclosure of buildings' energy use, climate risk
reporting, and resilience planning are still limited. The rate of
building decarbonization retrofits will need to triple to align
with net zero carbon pathways, while demand for green buildings
significantly outstrips demand – only 30% of demand for low carbon
office space in the major global markets is likely to be met by
2030. Looking ahead, sustainability transparency is expected to
grow over the next two years across the world's largest economies
including the U.S., EU, U.K., China, Japan,
Korea, Canada, and Australia as new requirements are enacted.
With these emerging trends, such as technology integration and
sustainability, comes diversification, as investors look to
identify assets that will benefit most from these long-term themes.
This is resulting in an expansion of the investible universe, and a
significant reallocation of capital; the share of global investment
into the industrial and living sectors has risen from 29% ten years
ago, to account for 50% of global direct investment over the past
year, while institutional investors are increasingly active in
emerging asset types such as data centers or lab space.
Debt markets, money laundering, and beneficial ownership are
among key transparency themes to watch
Approximately
US$3.1 trillion of global real estate
assets have maturing debt between 2024 and 2025, and US$2.1 trillion of debt will need refinancing.
Roughly 30% has been completed over the first half of 2024;
however, monetary authorities have raised concerns about the
potential risks from the relative lack of transparency as non-bank
lenders expand and complement traditional sources of credit. While
commercial real estate lending was historically dominated by
regulated banks, the lender landscape has broadened with new credit
sources such as debt funds, pensions and insurance companies
emerging. This diversification has created a more balanced market,
but also one with less visibility into financing conditions in many
countries, raising new transparency concerns.
Alongside debt markets, money laundering and beneficial
ownership regulations have surfaced as transparency areas to watch.
New guidance from the Financial Action Task Force (FATF), requiring
countries to ensure they can track the true ownership of companies,
paired with widening financial sanctions regimes, have maintained
momentum for improving anti-money laundering (AML) and beneficial
ownership (BO) regulations. Despite global action, the
effectiveness of these regulations remains under scrutiny as
implementation and definitions are often inconsistent and easy to
circumvent. Countries such as India, Indonesia, the United Arab Emirates and the U.S have
introduced changes to AML and BO regulations to help drive
transparency, and additional regulations are underway in the U.S.,
Singapore, Switzerland, Canada, Australia, and the EU.
Global Real Estate Transparency Index (GRETI)
JLL and
LaSalle's Global Real Estate
Transparency Index (GRETI), which is published every two years, is
a unique benchmark of market transparency for property investors,
developers and corporate occupiers. The index evaluates the legal
and regulatory environment, enforcement mechanisms and data
availability and provides a global comparison of operating
conditions across a wide range of geographies. This year's 13th
edition includes 256 individual indicators to assess market
transparency across 89 countries and territories and 151 cities
globally.
About JLL
For over 200 years, JLL (NYSE: JLL), a
leading global commercial real estate and investment management
company, has helped clients buy, build, occupy, manage and invest
in a variety of commercial, industrial, hotel, residential and
retail properties. A Fortune 500 company with annual revenue of
$20.8 billion and operations in over
80 countries around the world, our more than 110,000 employees
bring the power of a global platform combined with local expertise.
Driven by our purpose to shape the future of real estate for a
better world, we help our clients, people and communities SEE A
BRIGHTER WAYSM. JLL is the brand name, and a registered
trademark, of Jones Lang LaSalle Incorporated. For further
information, visit jll.com.
Contact: Allison Heraty
Phone: 312 228 3128
Email: Allison.Heraty@jll.com
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