Although transparency levels have improved in 80% of the Mena markets in the past two years, these gains have been relatively “modest” and real estate markets in the region remains less transparent than other global regions, according to Jones Lang LaSalle’s 2012 Global Real Estate Transparency Index.
Craig Plumb, Head of Research for Jones Lang LaSalle Mena, said more needs to be done to increase the level of transparency across the region, particularly with respect to investment performance indicators and data on market fundamentals. “The lack of progress on these areas in recent years has contributed to the low level of investment activity and the oversupply that is currently being experienced in some sectors of the market,” he said.
Plumb expects to see more improvement in transparency over the next few years as policy makers recognise this will attract greater demand from overseas investors and occupiers familiar with higher levels of transparency and market information.
“The increased focus on sustainability is also likely to result in higher levels of transparency and disclosure,” he said.
Dubai and Abu Dhabi topped the region in the survey, ranking 47th and 52nd, respectively, on the index.
Dubai scores most strongly for its regulatory framework, with the Real Estate Regulatory Authority widely acknowledged as the market leader within the region, and the Dubai International Financial centre, which is emerging as the vehicle of choice for listed real estate funds, the study noted.
But JLL also pointed out that the quality of market data in Abu Dhabi is better than Dubai in some sectors and the planning system is more regulated, through the Urban Planning Council.
“The UAE has reinforced its position as the most transparent real estate market in the region, with progress being recorded in both Dubai and Abu Dhabi,” the study noted. “This reflects the UAE’s status as one of the most stable and secure real estate markets in a still volatile region heavily affected by the social unrest and political turmoil resulting from the Arab Spring.”
Lebanon has seen the greatest improvement in transparency within the Mena region over the past two years, JLL said, although this market is currently experiencing some instability due to events in neighbouring Syria. By contrast, Egypt is the only market globally to have registered deterioration in transparency over the past two years.
The US topped the index, which compared dozens of performance measures across 97 property markets worldwide – including regulatory standards, corporate governance and financial disclosure. The UK placed second, followed by Australia, the Netherlands, and New Zealand.