Creating a competitive and transparent real estate market

SINGAPORE is Asia's most transparent market, and is well positioned to join the United Kingdom and the United States in the "Highly Transparent" tier as it advances in sustainability, proptech and open-data initiatives.

Based on our Global Real Estate Transparency Index (GRETI), Singapore has remained in the "Transparent" group for a number of years, along with Hong Kong, Tokyo and Taiwan. However, the city-state, which ranks 12 on the index, is on the cusp of moving up into the next tier of transparency.

Market transparency is the foundation which allows investors and corporate occupiers to operate and make decisions with confidence. It enables governments and public bodies to function effectively, providing long-run benefits to local communities and the environment.

In this context, Singapore's effort in the governance of listed-vehicles as well as in the measuring of real estate performance and market fundamentals has been exceptional. However, as investors allocate more capital to real estate, they are demanding much higher standards and expecting much greater granularity of data and analytics.

JLL has been tracking the progress of real estate transparency across the globe for over 20 years, and the recent launch of our latest Global Real Estate Transparency Index comes at a time when the real estate industry is under greater scrutiny than ever before. Recent revelations from leaks such as the Paradise Papers (2017) and the Panama Papers (2016) have highlighted the lack of transparency of property ownership in many cities across the globe.

Our latest transparency research measures transparency based on six broad benchmarks: performance measurement (28.5 per cent weightage), market fundamentals (16.5 per cent), governance of listed vehicles (10 per cent), regulatory and legal (25 per cent), transaction process (15 per cent), and sustainability (5 per cent).

Our 2018 GRETI report reveals that the real estate industry is making progress with about 85 per cent of countries surveyed registering an improvement since 2016. Singapore comes from a position of strength, but as with other global gateway cities, it will need to work hard to maintain its competitive edge as other markets in the region start to catch up.

The most significant opportunity for Singapore probably lies in proptech adoption and creating a dynamic proptech ecosystem. Technology is reshaping the real estate sector in myriad ways. Proptech is beginning to generate data at scale, and is creating new types of metrics that could significantly improve transparency.

Playing a key role

In this instance, Singapore could play a key role in promoting proptech adoption through more open-data initiatives and the pioneering of blockchain technology. The integration of proptech will enable extensive tracking of commercial real estate and financing conditions as well as provide visibility on transaction processes. Another critical area of potential advancement for Singapore is in enhancing transparency of sustainability frameworks and practices as they relate to the built environment. Singapore is already at the forefront of green building infrastructure. A further strengthening of energy efficiency requirements, carbon reporting and stricter energy consumption disclosure would push Singapore into the top league.

Encouragingly, Singapore's Environmental Services Industry Transformation Maps addresses several issues relating to real estate transparency and shows that authorities are recognising that a transparent technology-enabled and sustainable real estate market is an integral part of its Smart Nation strategy.

Real estate transparency is a crucial ingredient of city competitiveness. The most transparent markets are some of the most liquid Anglophone markets, with London taking top place and Los Angeles, Sydney, San Francisco and New York City rounding off the top five. Singapore is just one notch away from joining this top group of highly transparent markets. With its efforts in proptech and sustainability, it is well-poised to make that leap.