Sub-Saharan Africa is achieving some of the most significant gains towards transparency in the commercial real estate sector, according to an index by Jones Lang LaSalle, which ranked Kenya as world’s top improver, closely followed by Ghana, Nigeria, Zambia and Mauritius.
Significantly, all five made it into the top 10 transparency improvers in the world in terms of their real estate, ranking alongside other rapidly improving markets such as Qatar, Romania, Algeria, Columbia and Kazakhstan, and beyond these, Serbia, Peru, Ireland and Hungary.
The index presents the real estate assets of all five nations in a very positive light, and should serve to strengthen the already prevalent interest and corresponding growth trends in these markets, furthering confidence in buyers and emboldening in-country and foreign investors.
Jeremy Kelly, director of global research, said: “The top improvers in each cycle generally correlate with a surge in foreign direct investment, as investors push through transparency reforms and governments quickly realize that poor transparency will deter continued inward investment.
“Kenya is a great example – it saw a spike in FDI projects in the last year, and not coincidentally, it made the greatest leap in real estate industry transparency this year.”
Kenya has notably recently initiated land record digitization, enhanced property market research and analysis, and the introduction of a REIT framework for the country – measures that have propelled Kenya to 55th place in the Transparency Index up from 67th in 2012.
Further trends that were identified as contributing factors towards transparency in real estate markets included increases in media attention on corruption, scandals and building accidents, as well as millennial expectations pushing for ‘open data’ and sustainability.
According to the report, the responses of Sub-Saharan countries to mirror the top improvers from previous surveys, like the MIST (Mexico, Indonesia, South Korea and Turkey) countries prominent in 2012, and further back the BRICs (Brazil, Russia, India and China) in 2010.
For investors, the Index provides a risk management tool. Transparent markets allow for easier comparison of occupancy costs; provide more options for strategic action (e.g. the execution of sale and leasebacks); and raise the efficiency of transaction management.
JLL’s bi-annual Global Real Estate Transparency Index was first published in 1999, and is based on a combination of quantitative market data and information gathered through a survey of the global business network of JLL and LaSalle Investment Management.