The 2014 release of a biennial Global Real Estate Transparency Index report by property services firm JLL and LaSalle Investment Management showed that South East Asia registered improvement in real estate market transparency across the board compared to the 2012 survey.
All countries in emerging South East Asia have seen some advances but less significant than 2012 when the sub-region accounted for 3 out of the top 10 global improvers.
Suphin Mechuchep, Managing Director of JLL in Thailand.
The sub-region continued to display a wide diversity in real estate transparency. Both Singapore and Malaysia were still graded as transparent, with Singapore remaining one of the world’s most transparent real estate markets, ranking 13th globally. On the other hand, Myanmar, which was covered for the first time in the survey, was among one of world’s least transparent real estate markets, ranking 100th among 102 markets surveyed. Thailand, Philippines and Indonesia continued to be categorized as semi-transparent real estate markets and Vietnam remained in the low transparency category.
“Despite no change in grading, Thailand has seen continued improvement in its real estate market transparency score. The country’s improved score and higher ranking in 2014 is good news,” said Suphin Mechuchep, Managing Director of JLL in Thailand.
Thailand’s real estate market transparency score improved to 2.76 in 2014 from 2.94 and 3.02 in 2012 and 2010, respectively. The country has also improved its global ranking from 39th in 2012 and 2010 to the 36th place in 2014.
“Greater availability of market data contributed to improvement in transparency in Thailand’s real estate market,” said Mrs. Mechuchep. “This is in contrast with the past when Thailand suffered from a lack of information about real estate transactions in the market. Major sales and leasing transactions in particular were typically kept confidential by relevant parties, be they owners, investors or occupiers. As a result, actual transacted values against which to benchmark were scarce,” she explained.
“The growing number of listed real estate developers, investors and property funds counts for a lot in this aspect as they are required by law to be transparent,” Mrs. Mechuchep said. “For example, the number of property funds which trade on the SET grew from 38 in 2012 to 48 at present. These listed vehicles are subject to strict governance and regulation, as well as regular and standardized reporting, thus providing more transparency to Thailand’s real estate market. This trend is being reinforced by the introduction of REITs into Thailand, which will gradually supplant the current property funds. REITs allow for investment in more asset types, such as hospitals, educational facilities and institutions and golf courses,” Mrs. Mechuchep concluded.
Dr. Chua Yang Liang, Head of Research South East Asia at JLL, said, “Continuing institutional interest in South East Asia would help to drive rising transparency in the regulatory/legal environment as well as the real estate transaction processes.”
He cited recent interest by institutional players such as GIC RE, Goldman Sachs and Ascendas in the Philippines, and on-going institutionalization of the property market in Thailand as examples. In addition, Dr. Chua also expects a young population in South East Asia, with higher education and increasing usage of social media, to push for greater real estate transparency going forward.
JLL’s latest Global Real Estate Transparency Index reveals continued progress in transparency over the past two years. Over 80% of markets have registered an improvement since 2012, although increases in most markets have been ‘slow but steady’.
Out of 102 markets covered by the index, 14 countries saw a significant improvement in their overall score. Sub-Saharan Africa (SSA) claimed five of the global top 10 spots for greatest improvements in real estate market transparency: Kenya, Ghana, Nigeria, Zambia and Mauritius.