The transparency of the Indian real estate market is among the 10 most improved markets in the world, according to JLL’s Global Real Estate Transparency Index (GRETI) 2022. India’s improvement in transparency score from 2.82 to 2.73 between 2020 and 2022 is higher than some of the highly transparent markets such as Canada, Belgium and Spain.
The improvement in India is due to digitalization and availability of data for transaction processes in addition to general market fundamentals, JLL said in a statement.
He added: “India’s improved transparency is bolstered by the increase in institutional investments and the growing number of real estate investment trusts (REITs) helping to broaden market data and further professionalize the sector to complement regulatory initiatives such as the Model Tenancy Act and the digitization of land records and market data, such as through the Dharani and Maha RERA platforms.
Radha Dhir, CEO and Country Head (India) at JLL, said the move towards greater transparency in India will heighten investor interest and build occupant confidence, and as a result, the country will see more deployment of capital as it demonstrates ongoing efforts to make accurate data available, enforce legal protections for ownership, and improve the regulatory environment to facilitate transactions.
“Regulatory changes in Indian real estate sectors like RERA and digitalization in all transaction processes have led to more sanitized and transparent data availability, helping the country make huge strides in the index,” added Dhir.
She also said that sustainability remains at the center of the world’s agenda in the future and that India has made great strides in sustainability over the past few years. However, a more concerted and coherent thought process and action plan is needed to bring sustainability into the mainstream.
Sustainability requires sustained thought
JLL said that in order to move to the coveted transparent list from the current semi-transparent list, the country needs to improve sustainability tracking. Sustainability has not been one of the major areas of change over the past couple of years for India, but investors and occupiers are driving that change.
“Several initiatives are underway at the national or local level, including national guidelines on responsible business conduct from 2021, with reporting for the 1,000 largest companies by market capitalization which will be mandatory from 2022-23 , and local plans such as the Mumbai Climate Action Plan, released in 2022, which is expected to establish a system to regularly benchmark the energy performance of buildings by 2025, and mandate a management system building energy in all new buildings,” he added.
Mandating green certifications/assessments and ECBC membership would provide a greater push for sustainability. Regulatory impetus for mandatory tracking and reporting is still lacking, but is expected to receive a major boost following India’s call for Net Zero by 2070. Sustainability has been the main driver for improving the transparency on the markets according to the 2022 index of JLL.
With a growing number of countries and cities setting mandatory energy efficiency and emissions standards for buildings and the more widespread adoption of green and healthy building certifications. However, sustainability metrics remain among the least transparent in the world, and the fractured regulatory landscape – with different standards set at the municipal, state, regional and national levels, and a proliferating array of sustainability benchmarks, benchmarks and standards – the makes it increasingly difficult for investors and companies to navigate and understand their responsibilities.
Improved transaction process
This is the parameter on which India’s improvement in score was the highest in GRETI 2022. Given regulatory initiatives and better and deeper data availability, access to asset information has improved considerably. With the reforms also creating pressure for better professional standards for real estate agents and an environment to weed out illicit finance through strict anti-money laundering regulations, the transaction process in India has become more transparent and meaningful.
India’s improvement in this parameter was second only to Vietnam and Malaysia, among other APAC countries.
Samantak Das, Chief Economist and Head (Research), REIS, India, at JLL, said: “India’s investment performance metric has remained stable with a conducive investment environment in place and good opportunities for investors. . The past two years have also been marked by upheaval and a resetting of investor strategies. Some countries have found increased favor with investors and moved up the rankings. India kept its ranking stable, although it improved its composite score in this metric.
JLL’s GRETI is an index that provides an understanding of the transparency spectrum across real estate metrics, which is especially useful for real estate investors around the world. It offers countries a window of opportunity to identify lagging indicators and make a concerted effort to improve global investment flows.
Interest in alternative real estate assets
Diversification remains a central theme for many investors in Asia-Pacific. Institutional capital, such as that controlled by asset managers, pension funds and sovereign wealth funds, is active in alternative real estate sectors in nearly two-thirds of the markets tracked. This means that expectations for transparency on niche property types like labs, data centers or student accommodation have increased.
India has made rapid progress in the availability of high-frequency data in its major cities and major asset classes through the intervention of technology platforms and regulatory reforms. It needs to be replicated for other cities and alternative sectors with the work already underway through a mix of private sector participation and government push towards digitizing land and property records. As market transparency improves through access to data, better corporate governance practices, and more publicly traded REITs creating more publicly available datasets, the sustainability agenda needs to be pushed further for India to move quickly to the transparent level.
JLL said transparency and sustainability now collide to create insightful and revolutionary new trends for the real estate industry. Standardized sustainability metrics will facilitate asset valuation globally.
“Making the reporting of this data mandatory will be key to decarbonizing the built environment and mitigating climate risks in all countries. The increasing diffusion of technology is creating a push towards granular, high-frequency data tracking and aggregation. While this works best in countries with digitized data sources and governance, advanced infrastructure, and deeper capital markets, the converse of improving transparency through the proliferation of these data aggregators that build market data from dispersed sources is also true,” he added.
The path from regulation to practice – through financial regulation, land use planning, taxation, anti-money laundering and eminent domain – will be necessary to increase levels of transparency and respond to heightened expectations, JLL said.
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