Dubai remains the most transparent market within the Middle East and North Africa (Mena) region, while Abu Dhabi holds the second spot in Jones Lang LaSalle’s (JLL) 2012 Global Real Estate Transparency Index released on Wednesday.
In terms of the global ranking, Dubai and Abu Dhabi hold the 47th and 52nd position, respectively, on the index.
According to the report, despite transparency levels have improved in 80 per cent of the Mena markets in the past two years, these gains have been relatively “modest” and real estate markets in the region remains less transparent than other global regions.
Dubai, JLL states, scores most strongly for its regulatory framework, with the Real Estate Regulatory Authority widely acknowledged to be the market leader within the region, and the Dubai International Financial centre, which is emerging as the vehicle of choice for listed real estate funds. Although Abu Dhabi is one to two years behind Dubai in its property development cycle, the report points out that it has seen a similar improvement in transparency to Dubai since 2010.
“The quality of market data is better in Abu Dhabi than Dubai in some sectors and the planning system is more regulated (through the Urban Planning Council); advances in these areas have reinforced Abu Dhabi’s position as the second most transparent market in the Mena region,” JLL says.
Craig Plumb, Head of Research for Jones Lang LaSalle Mena, says more needs to be done to increase the level of transparency of the market both in Dubai and across the broader region, particularly in respect of investment performance indicators and data on market fundamentals.
“The lack of progress on these areas in recent years has contributed to the low level of investment activity and the oversupply that is currently being experienced in some sectors of the market.”
Plumb expects to see more improvement in transparency over the next few years as policy makers recognise this will attract greater demand from overseas investors and occupiers familiar with higher levels of transparency and market information.
“The increased focus on sustainability is also likely to result in higher levels of transparency and disclosure.”
Saudi Arabia, Qatar, Kuwait, Oman and Bahrain registered only negligible changes in transparency levels since 2012, as the region has remained more focused on the political/social tensions that have followed the Arab Spring and in dealing with higher levels of supply.
In general terms these markets score better in terms of their regulatory framework and least well in respect of market fundamentals. The Gulf Cooperation Council markets remain positioned at the lower end of the “semi-transparent” category or the upper end of the “low transparency” category.
The US tops the chart
Dominating the list of the world’s most transparent markets are the Anglophone countries.
The United States tops as the world’s most transparent real estate market this year, followed closely by the United Kingdom and Australia. New Zealand occupies the fifth position and Canada is in sixth place.
They are joined by several European markets - Netherlands (4th), France (7th), Finland (8th), Sweden (9th) and Switzerland (10th), which together constitute the world’s “highly transparent’ markets.”