Ireland a ‘bright spot’ in global market
27 June 2010
Sunday Business Post Article
Ireland has been declared a ‘‘bright spot’’, along with Germany and Denmark, in terms of improved levels of transparency in the property market, according to a new global property market survey.
Ireland achieved a number seven ranking of a total of 81 countries in the 2010 Global Real Estate Transparency Index, by Jones Lang LaSalle and LaSalle Investment Management.
It’s the first time Ireland has made it into the top seven of the world’s most transparent property markets moving us into the top tier of countries.
Australia was ranked the world’s most transparent market, according to the index, which is updated every two years, followed by Canada, Britain and New Zealand in second, third and fourth place respectively.
In contrast, Japan now ranks 26th globally and is significantly below other major advanced economies.
‘‘Ireland’s dramatic rise from tenth place in Tier 2 in 2008 to seventh place in Tier 1 in 2010 is all the more remarkable when you consider that improvements in property transparency across the 81 markets covered by the Index have halved since 2008,” said John Moran, managing director of Jones Lang LaSalle in Ireland.
‘‘The 2010 Index suggests that the recent turmoil in global financial, economic and property markets impacted on market behaviour, resulting in property players focusing on survival rather than on market advancement.
‘‘In many developed countries, the recapitalisation of the property market is being helped by the free flow of information and the protection of property rights. In contrast, the 2010 Index shows that debt transparency is generally lagging behind property transparency in many developed countries.
The exceptions to that are Ireland, Australia and Canada, which recorded the highest scores for consistent and thorough commercial property debt regulation.
‘‘In the future, regulators will rightfully emphasise the importance of greater disclosure in order to gauge the creditworthiness of commercial property and to evaluate the sector’s ability to carry debt.
We expect that a new focus on private market-led transparency in the property debt markets will be one of the main reforms to come out of the global credit crisis.”
Head of research with Jones Lang LaSalle Dr Clare Eriksson said that transparency remains one of the key influencing factors driving investors to move across boarders in search of higher risk adjusted returns.
‘‘The massive financial crises of the last few years and the movement of capital and corporations around the world accentuate the need for reliable information about markets.
Transparency is an extremely important feature in investors’ decision-making, and it adds to a city’s attractiveness as an investment or corporate location,” she said.
The survey – the only index to address the transparency of commercial property – is designed specifically to help investors and occupiers anticipate the challenges of transacting, owning or operating in a foreign market.
The 2010 Index shows that Turkey tops the league table of transparency improvers, while China, India, Poland, Portugal, Romania, Greece and Hungary all recorded progress since the last index was published.
Europe shows a mixed picture of transparency. Australia, New Zealand, Britain, the United States and Canada have been caught up by a number of European markets including Ireland, Sweden and France.
Turkey and some Central and Eastern European (CEE) countries have shown good progress as their markets have become more internationally traded and their regulatory and legal environments become aligned with core EU economies.
In fact, the more advanced CEE countries of Poland, the Czech Republic and Hungary have now caught up with the laggards in western Europe, such as Italy, which has struggled to improve property transparency.
Moran said the last two years show that high levels of transparency do not eliminate risks for investors or occupiers.
‘‘Free flows of information and consistent enforcement of local property laws did not prevent values from falling or produce better access to credit at a time when liquidity dried up.
‘‘The real value of transparency, though, should become evident when comparing how quickly markets are able to open up again after a financial crisis.
The recapitalisation of real estate in many countries is being helped by the free flown of information and the protection of property rights.”