European property? Have you thought about transparency?

July 2, 2012

Often European property markets and developing overseas property markets get compared. There is a disparity perceived between returns associated with buying in emerging markets and property returns from more mature European property markets. But with those differences in return, or proftability, comes higher risk.

Buying property abroad-transparencyInterestingly, the latest Jones Lang LaSalle 2012 Global Real Estate Transparency Index  / Property Index sheds some insight into this. Its focus is on the commercial property side, but it nevertheless acts as a proxy indicator of the state of residential markets, since many processes are similar e.g. ownership or title registration.

European Property and other International Property markets

The last report in 2010, picked up that transparency improvements had taken a slower gear in some markets, in the wake of the Global Financial Crisis, as the property industry grappled with survival ahead of progression.

Now many developed markets have begun to come out of the recession of 2008 and 2009 and, whilst there is still residual risk, the global property industry is progressing.

As global businesses have more choice over where to locate and base their offices and subsidiaries, this in turn creates an even greater need for high-quality market information, on which to base those decisions. Many countries are waking up to this, to become more competitive in their fight for this inward investment.

The table of the world’s most transparent markets continue to be topped by the Anglophone countries: The United States, the United Kingdom and Australia, which also tend to have the more developed, sophisticated and liquid property markets. This means the UK remains a good benchmark when comparing other overseas property markets in terms of how the property buying process works and how transparent it is to buy property abroad.

Buying European property?

It is noticeable how many of the European property markets are ranked as being “Transparent” or “Highly Transparent”, whereas many of the more emerging markets, BRIC countries as well as some of the Asian and African countries, tend to sit in the less “Transparent” and “Opaque” category. Although, surprising to some, Turkey (part Europe, part Asia) ranks higher than Greece in Europe.

It is also interesting to note that several Central Eastern European markets (such as Poland property and the Czech Republic), “are setting new standards by establishing a collaborative approach to data collation”

In a world of uncertainty about buying a European property, or overseas property, transparency of purchasing process and ease of buying, nevertheless remains a consideration. This should be taken into account, when considering returns and risks associated with buying in a country.

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The focus is mainly greater Europe: Poland property, UK investments, Spain property, Turkey property, Cyprus property

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Global Real Estate Transparency Index 2012

Global Real Estate / Overseas Property Transparency – High

RANK  COUNTRY  SCORE

1          United States  1.26

2          United Kingdom  1.33

3          Australia  1.36

4          Netherlands  1.38

5          New Zealand  1.48

6          Canada  1.56

7          France  1.57

8          Finland  1.57

9          Sweden  1.66

10        Switzerland  1.67

Global Real Estate / Overseas Property – Transparent

11        Hong Kong  1.76

12        Germany   1.80

13        Singapore  1.85

14        Denmark  1.86

15        Ireland  1.96

16    Spain  2.06

17        Belgium  2.07

18        Norway  2.08

19     Poland  2.11

20        Italy   2.16

21        South Africa   2.18

22        Austria  2.22

23        Malaysia  2.32

24        Czech Republic  2.34

25        Japan  2.39

26        Hungary  2.53

27        Brazil – Tier1  2.54

28        Portugal  2.54

Global Real Estate / Overseas Property – Semi -Transparent

29        Taiwan  2.60

30        Brazil – Tier 2  2.75

31     Turkey  2.76

32        China – Tier 1  2.83

33        Greece   2.84

34        Israel   2.85

35        Philippines   2.86

36        Slovakia  2.90

37        Russia – Tier 1  2.90

38        Indonesia  2.92

39        Thailand  2.94

40        Romania  2.96

41        South Korea  2.96

42        Puerto Rico  2.96

43        Mexico  2.97

44        Russia – Tier 2  2.98

45        Chile   3.01

46        China – Tier 2  3.04

47        UAE – Dubai   3.05

48        India – Tier 1   3.07

49        India – Tier 2   3.08

50        India – Tier 3   3.15

51        Croatia    3.16

52        UAE – Abu Dhabi   3.23

53        Macau 3.27

54        Russia – Tier 3  3.28

55        China – Tier 3   3.31

56        Botswana   3.36

57      Bulgaria  3.41

58        Argentina   3.42

59        Mauritius   3.43

60        Cayman Islands  3.45

61        Ukraine   3.46

62        Slovenia   3.50

63        Bahrain   3.62

64        Saudi Arabia   3.63

65        Kenya  3.70

66        Lebanon    3.75

67        Kuwait     3.76

 

Global Real Estate / Overseas Property – Low Transparency

68        Vietnam    3.76

69        Serbia  3.78

70        Costa Rica   3.79

71        Bahamas     3.81

72        Qatar   3.82

73        Jamaica     3.85

74        Oman  3.85

75        Panama      3.87

76    Morocco   3.88

77        Egypt  3.88

78        Zambia      3.93

79        Peru     3.95

80        Jordan 3.97

81        Uruguay    4.04

82        Colombia    4.05

83        Kazakhstan     4.09

84        Dominican Republic   4.15

85        Honduras        4.20

86        Guatemala       4.20

 

Global Real Estate / Overseas Property – Opaque

87        Venezuela     4.23

88        Mongolia       4.31

89        Tunisia  4.38

90        Ghana  4.41

91        Iraq      4.44

92        Pakistan       4.48

93        Algeria          4.49

94        Belarus    4.52

95        Angola     4.57

96        Nigeria    4.58

97        Sudan      4.59

Source: Jones Lang LaSalle, LaSalle Investment Management ( 97 markets covered and  83 factors assessed)

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