Where transparency broadens, real estate capital flows and market change follows. JLL now reports this trend has finally made its way to one of the “final frontiers” of commercial real estate: Sub-Saharan Africa (SSA), which has claimed five of the global top 10 spots for greatest improvements in real estate market transparency: Kenya, Ghana, Nigeria, Zambia and Mauritius. With an influx of corporate occupiers, the region’s top-rising economies are moving to encourage more global real estate interest.
Across the globe, key drivers of transparency improvement include:
- Governments’ recognition that poor transparency affects investment and quality of life
- Media spotlight on corruption, scandals and building accidents
- A rise in cross-border investments fuelled by more robust real estate markets
- Millennials’ expectations, pushing “Open Data” and sustainability practices up the agenda
According to the 2014 release of JLL and LaSalle Investment Management’s bi-annual Global Real Estate Transparency Index, SSA countries are in the very early stages of building and reforming their commercial real estate industry infrastructure; their responses to outside interest, however, mirrors top improvers from previous surveys, such as the MIST (Mexico, Indonesia, South Korea and Turkey) countries, which dominated the 2012 Global Top 10, and BRICs (Brazil, Russia, India and China) in 2010.
“The top improvers in each cycle generally correlate with a surge in foreign direct investment, as investors push through transparency reforms and because governments quickly realize that poor transparency will deter continued inward investment,” said Jeremy Kelly, Director, JLL Global Research. “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 initiated a number of real estate industry infrastructure improvements, including land record digitization, enhanced property market research and analysis, and the introduction of a REIT framework for the country. These measures propelled Kenya to 55th place in the Transparency Index from 67th in 2012.