The Transparency Transformation

A look at how the Indian real estate industry has emerged as one of the more transparent markets in the world!

Amid the gloom cast by the COVID-19 pandemic, Indian real estate received a boost a couple of weeks ago. The industry registered one of the biggest jumps in Jones Lang LaSalle’s (JLL) biennial Global Real Estate Transparency Index (GRETI), scoring a rank of 34.

According to the report, the Asia Pacific markets have been among the best improvers, with India making the most progress in the region and globally. That’s quite an achievement for the industry as a whole.

So, what’s the Transparency Index all about?

JLL has been tracking real estate transparency since 1999 and GRETI serves as a unique benchmark of real estate transparency. For its 2020 edition, GRETI has covered 99 countries and territories, and 163 cities.

The Index evaluates transparency based on 210 individual measures divided into 14 topic areas, including transaction processes, regulatory & legal frameworks, corporate governance, performance measurement, data availability and sustainability.

The scores are grouped and weighted into six broad sub-indices - Investment Performance (25%), Market Fundamentals (16.5), Governance of Listed Vehicles (10%), Regulatory & Legal (23.5%), Transaction Processes (15%) and Sustainability (10%).

Each country gets an overall score between 1 and 5;the lower the score, higher the rank. India’s overall score was 2.69,s with a rank of 34. The United Kingdom led the GRETI with a score of 1.31.

The country’s real estate market,often marred by a lack of transparency in the past,has been steadily improving its rank on the GRETI over the last decade. The industryis now on the cusp of entering the ‘Transparent’ category. Based on their ranking, countries fall into five broad categories: Highly Transparent, Transparent, Semi-Transparent, Low Transparent and Opaque. Countries ranked 11 to 33 in the 2020 Index are categorised as ‘Transparent’. India is just one rank away from it.

Regulatory reforms drive openness

The real estate sector has seen a slew of reform measures, which has brought in greater corporate and institutional interest, leading to higher levels of transactional transparency.

Some of the key regulatory reforms include the Real Estate Regulation and Development Act 2016 (RERA), the Benami Transaction Prohibition (Amendment) Act, 2016, the Insolvency and Bankruptcy Code and the digitisation of land records, among others.

The JLL report has emphasised the role played by the country’s Real Estate Investment Trusts (REIT) since the launch of the country’s first REIT in 2019. The reportattributed the transparency improvement to the progress made in attracting greater interest from institutional investors.

Growing sustainability

A key driver in the jump in India’s rankings is its performance under the ‘Sustainability’ head, which measures 11 elements of sustainability, including health and wellness certifications, zero-carbon frameworks, green building codes

India had a sustainability score of 3.18, better than countries such as Switzerland, Malaysia, China and UAE-Dubai. The report highlighted the role of organisations such as the Indian Green Building Council and Green Rating for Integrated Habitat Assessment, which played an active role in enabling India to breakthrough into the top 20 on the Sustainability Index within GRETI.

The growing transparency and focus on sustainability are positive news for Indian and global organisations looking to expand commercial operations in India.