Thanks to its tremendous potential, real estate remains one of the most sought-after global asset classes. But just as investors pour growing volumes of investments into property, their expectations towards market transparency are rising too. Is the industry capable of meeting their needs?
It’s definitely learning to, according to the latest edition of Global Real Estate Transparency Index by Jones Lang LaSalle. Of 100 countries, 85 show steady progress in building real estate transparency. And, as the report goes on, new technology and improved regulations are the driving forces that pave the way towards greater transparency in the industry.
Demand for increased transparency is on the rise
In recent years, money laundering, property ownership and tax evasion have made headlines across the world. This is a major risk for investors who need to scrutinize investment assets they’re considering — and same goes for the governments and the public they represent.
According to Jeremy Kelly, Director, Global Research, JLL,
“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.”
New technology to address transparency issues
Proptech, or technology tailored specifically to the industry needs, opens up new opportunities for commercial real estate. From democratizing the data to lowering costs, it’s proving to be incredibly helpful.
For example, blockchain initiatives will allow for digital identities of people and properties which would greatly speed up pre-lease due diligence. Countries like Saudi Arabia (Dubai emirate), the Netherlands, Sweden, Georgia and others are highly successful in adopting blockchain for land title registries.
Another promising area is opening the data which the CRE industry has long been known to carefully safeguard. However, the benefits of open data are vast:
“It 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,”
according to Fernando Ferreira, Associate Professor of Real Estate and Business Economics & Public Policy, Wharton School, University of Pennsylvania.
Add to this that the data stored on the blockchain cannot be modified. This makes it a powerful tool to foster transparency in this multi-million dollar industry.
Technology wise, the next wave of innovation has only just started and it definitely has a lot in store for industry professionals, governments and investors.