CRE Needs to Step Up Its Game on Transparency

Although commercial real estate transparency is progressing across most countries and territories, overall improvement is the weakest since the period directly following the Global Financial Crisis. The average transparency improvement score now stands at 1.1% globally.

So says JLL in the biennial Global Real Estate Transparency Index prepared by JLL and LaSalle. One reason for the slowdown in progress has been the economic and political headwinds that have blown in across the Middle East, Latin America and sub-Saharan Africa.

The report notes that the question of transparency is coming to the fore on a variety of fronts, from cross-border investors’ expectations to health and wellness considerations highlighted by the COVID-19 pandemic.

“With growing pressure from investors, businesses and consumers, real estate transparency will need to improve further and faster to compete with other asset classes and meet heightened expectations about the industry’s role in providing a sustainable and resilient built environment,” the report states.

JLL and LaSalle note the top-ranked “Highly Transparent Markets,” including the UK, U.S., Australia and France, are driving higher standards in sustainability. For example, France and Australia lead on sustainability transparency as the first adopters of new initiatives such as water efficiency standards and resilient building frameworks.

Countries that made the greatest improvements in their overall rankings are undertaking similar efforts. For instance, Abu Dhabi’s score was boosted by government initiatives to improve corporate and real estate sustainability.
 
“Sustainability commitments have become the biggest single driver of real estate transparency globally since 2018,” said Jeremy Kelly, director, global research, JLL. “As companies demonstrate an unwavering commitment to corporate social responsibility, there is increased voluntary adoption of Environmental, Social and Governance (ESG) measures and greater acknowledgement of the need to create a sustainable built environment.”

Another key driver of CRE transparency is the volume of data now available, thanks to the growing adoption of proptech platforms, digital tools and “big data” techniques.

“Online marketplaces, shared economy platforms and asset management tools through to digital twins, smart cities and smart buildings are all serving to improve transparency,” the report states.

It’s a trend being accelerated by current events, according to the report. Although real estate markets have historically faced challenges when implementing new technology, the pandemic is leading to an acceleration in new types of non-standard and high-frequency data being collected and rapidly disseminated, especially relating to health, mobility and space usage.

“With innovation in the use of new technologies now becoming more widespread, coupled with an evolving regulatory landscape, in part due to the COVID-19 pandemic, it will be crucial for the real estate industry to work more collaboratively with governments and civil society to achieve greater transparency,” Kelly said.

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