Metropolitan governments and public bodies are increasingly recognizing that the real estate industry plays a crucial role in a city’s success. It helps create a more competitive, efficient and flexible environment for businesses, as well as contributing to improvements in quality of life and creating a more sustainable future for its citizens.

To fulfil this role and operate efficiently, the real estate sector requires high levels of transparency, the foundations of which include rigorously enforced laws and regulations; high quality, easily accessible market information and performance benchmarks; clear and fair practices; and high professional standards. These foundations allow businesses and investors to make decisions with confidence, while enabling governments to function effectively, providing long-term benefits to local communities and the environment.

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For example, high-quality property market data sends developers and investors a clear signal about when and what types of space to build, while benchmarks on the energy efficiency of commercial buildings enable businesses to make informed choices and helps cities on a more sustainable path. For individuals, transparency means they can enjoy security of property ownership, safe housing and workplaces, and reliable and professional services.

The world’s most transparent cities

JLL and LaSalle’s biennial Global Real Estate Transparency Index measures and ranks real estate transparency across 158 cities in 100 countries. This year’s index confirms that the world’s most transparent cities are found in Europe, North America and Australasia, with London, Los Angeles, Sydney and San Francisco taking the top spots.

Unsurprisingly, the leading ‘Highly Transparent’ cities are the preferred destinations of real estate investors, drawn by favourable operating conditions, transparent market practices, readily available data and performance benchmarks. ‘Highly Transparent’ markets account for around 75% of all commercial real estate investment globally. In fact, of the world’s top 30 cities for real estate investment, only two – the Chinese megacities of Shanghai and Beijing – are categorised as ‘Semi-Transparent’.

But even the leading cities are seeing transparency tested by new challenges, with standards pushed ever higher by rising expectations from investors, businesses and the public. In the wake of the 2016 and 2017 Panama and Paradise Papers revelations, which uncovered extensive patterns of illegal financing, tax avoidance and complex beneficial ownership structures in international property markets, a raft of new guidelines and legislation has been introduced in many ‘Highly Transparent’ property markets that have found themselves preferred destinations for ill-gotten gains.

While high-end residential deals were the focal point of the media storm surrounding the data leaks, commercial real estate is under greater scrutiny than ever before, as investors and businesses, as well as society at large, demand higher industry standards.

Meanwhile at the other end of the transparency spectrum, cities in emerging economies are still grappling to establish the foundations of transparent real estate sectors, from effective corporate governance to market data availability and robust legal and regulatory frameworks. For the rapidly urbanizing cities in Africa, Asia and Latin America, transparency is an absolute imperative for successful long-term urban planning and sustainable economic growth. In many cases, lack of transparency is holding these cities back from becoming globally competitive and limiting their ability to capitalize on their strengths.

Nonetheless, cities in the largest emerging economies – Brazil, China, India, Indonesia, Mexico, Russia, Thailand and Turkey – are making progress. Shanghai, Bangkok, Mumbai and Sao Paulo are now on the cusp of transparency. Improvements have been patchy and these cities must continue to raise standards and ensure any new legal frameworks and regulations are properly enforced.

For example, India’s government has already taken strides to curb corruption through tougher regulation, increasing accountability among developers, improving data availability and helping to protect buyers. These measures are paying off. Its leading cities – Mumbai, Delhi and Bengaluru – are now among the world’s fastest improving real estate markets, sitting within striking distance of ‘Transparency’. Private equity investment has been rising in tandem with transparency improvements, reaching $6.3 billion in 2017, and foreign investment into real estate has also risen in parallel with these changes.

Transparency through technology

Dubai, another top improver, has seen a range of technology-led innovations. New and enhanced online apps for managing contracts, broker information and unified lease forms have contributed to improved transparency. In the future, tools such as blockchain could lead to greater global standardization in all areas relating to property, from city planning to environmental reporting.

Globally, the property industry is enjoying a technological leap, with more than $6 billion raised in funding by proptech start-ups in the last two years. As these companies mature, proptech will be an important future driver of real estate transparency improvements and has the potential to accelerate change in emerging cities. This may help them to leapfrog the normal process of transparency evolution.

Across the full range of the transparency spectrum, from the ‘Highly Transparent’ cities in developed economies in North America, Europe and Australasia to the emerging cities in sub-Saharan Africa and Latin America, the property sector will continue to play a key role in transforming city futures. However, the industry will need to work hard to stay ahead of the game as expectations continue to rise. Technology will have a significant role to play in advancing real estate transparency in the years to come.