Canada retains its fifth place ranking and its status as a highly transparent real estate market in JLL’s newly released biennial survey of key drivers of investor confidence. For 2022, the Global Real Estate Transparency Index evaluates 94 countries and 156 urban regions on 254 metrics related to regulatory certainty, market governance, transaction oversight, data availability and ESG factors, drawing on both quantitative and qualitative evidence.
“We believe that a robust global benchmark is an essential tool for the real estate industry,” asserts Richard Bloxam, JLL’s chief executive officer, capital markets. “Transparency is the foundation which allows corporate occupiers, investors and lenders to operate and make decisions with confidence.”
He tallies “geopolitical conflict, the climate emergency and wide scale changes in how we live and work, together with mounting economic pressures” in the defining backdrop of this year’s results. Those are conveyed via composite scores in range of 1 to 5, with 1 being the highest possible score, and a further breakdown into six variously weighted sub-categories.
The five most transparent markets are all repeats from 2020. The United Kingdom tops the list with a score of 1.25. France and the United States come next with matching scores of 1.35, followed by Australia at 1.38. Canada’s composite score of 1.44 is a 0.07 improvement since the 2020 analysis and one of the 10 largest gains achieved across the database.
Seven other countries — the Netherlands, Ireland, Sweden, Germany, New Zealand, Belgium and Japan — also rank in the highly transparent tier with scores ranging from 1.54 to 1.88. Finland’s score of 1.96 earns it the top place among the 22 countries in the second tier of transparent markets, which ends with Thailand’s score of 2.63.
Investment performance measurement and the country’s regulatory environment are weighted most prominently among the sub-categories, together accounting for 48.5 per cent of the composite score. Other transparency considerations hinge on tracking of market fundamentals, monitoring of transaction processes, governance of listed investment vehicles and sustainability reporting.
Canada’s highest rank is third in the regulatory and legal sub-category, which includes considerations such as real estate tax, land use planning, building controls, property registration, enforceability of contracts and debt regulation. Its lowest rank is 10th in transaction processes, which includes considerations such as pre-sale information, professional standards for agents, bidding processes and regulations to address money laundering.
Interestingly, Canada actually outperformed its composite score in the transaction processes sub-category, with a score of 1.20. However, five countries — the U.K., France, Ireland, Denmark and New Zealand — attained perfect scores of 1.
Four countries — the U.S., Australia, the U.K. and Ireland — likewise achieved the highest possible score for governance of listed investment vehicles, a category in which Canada was ranked eighth with a score of 1.17. Leaders fell farthest from the mark for availability of data about market fundamentals, which the U.S. bested with a score of 1.48, and sustainability reporting, where France and the U.S. registered matching top scores of 1.70.
Comparisons of the 20th ranked scores reinforce the discrepancies between some of the sub-categories. Notably, the best 20th placing is Belgium’s 1.46 for transaction process; the worst is Slovakia’s 3.08 for sustainability. Canada placed fourth in the sustainability sub-category with a score of 1.90, just behind the U.K.’s 1.80 and one notch ahead of Australia’s 2.10.
“The sustainability transparency sub-index is the lowest scoring within the survey on average,” JLL analysts confirm. “Beyond the leading markets, there is still low implementation of mandatory standards in areas such as building resilience standards and emissions reporting, as well as in the uptake of green leases and financial performance tracking. The regulatory environment and industry practice around measuring and reporting sustainability metrics is also highly fractured across jurisdictions and companies, making it even more difficult to navigate.”
Meanwhile, JLL analysts cite recent Canadian initiatives that complement burgeoning investor interest in alternative asset classes and sustainability. “In Canada, higher-frequency and non-traditional data has become more available, while the national government’s move towards TCFD-aligned company reporting and a beneficial ownership registry have also been supplemented with plans to drive higher sustainability standards, like Toronto’s Transform to Net Zero strategy and Vancouver’s Zero Emissions Building plan,” they observe.
