real estate: transparency of Indian real estate market among the most improved in the world: report

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Through the series of policy decisions, including the implementation of the Real Estate (Regulation and Development) Act 2016 and the digitization of land records and market data, the level of transparency in the Indian real estate market has increased.

The level of transparency in the county’s real estate sector is now among the ten most improved markets in the world and is in the semi-transparent category at 36th out of 94 countries, the Global Real Estate Transparency Index showed. 2022 by JLL (GRETI).

India’s improvement in transparency score between 2020 and 2022 – from 2.82 to 2.73 – is higher than some of the highly transparent markets, due to digitalization and availability of data for processes trading in addition to general market fundamentals.

Improved transparency is bolstered by increased institutional investment and the growing number of real estate investment trusts (REITs) which are helping to broaden market data and further professionalize the industry to complement regulatory initiatives such as the Model Tenancy Act.

“The move towards greater transparency in India will heighten investor interest and build occupant confidence. As a result, we will see more deployment of capital in the country as it demonstrates continued efforts to make accurate data available, enforce legal protections for ownership and improve the regulatory environment to facilitate transactions,” said Radha Dhir, CEO and Head of Country. , India, JLL.

Regulatory changes in Indian real estate sectors such as RERA and digitalization in all transaction processes have led to more sanitized and transparent data availability, helping the country make solid strides in transparency in a sector known for its opaque modes of operation.

“Sustainability continues to be the key focus for the world ahead. We have seen India make great strides in sustainability over the past few years, but there is a need for a thought process and a more concerted and cohesive action plan to bring sustainability into the mainstream,” added Dhir.

To be able 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 Responsible Business Conduct Guidelines from 2021, reporting for the 1,000 largest companies by market capitalization to be mandatory from 2022-23, and local plans such as the Mumbai Climate Action Plan, released in 2022, which is expected to put in place a system to regularly benchmark the energy performance of buildings by 2025, and mandate a management system building energy in all new buildings.

Making green certifications/ratings and adherence to the Energy Conservation Building Code (ECBC) a mandate would give a bigger boost to sustainability. Regulatory momentum for mandatory tracking and reporting is still lacking, but is set to receive a major boost following India’s call for Net Zero by 2070.

India’s score improvement was highest for the transaction process improvement parameter. Given regulatory initiatives and the availability of better and more in-depth data, access to asset information has improved significantly. 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.

“India’s investment performance metric has remained stable with a conducive investment environment in place and healthy opportunities for investors. have found increased favor with investors and moved up the rankings. India has maintained its stable ranking, although it has improved its composite score in this metric,” said Samantak Das, Chief Economist and Head of research, REIS, India JLL.

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.

The path from regulation to practice – through financial regulations, land use planning, taxation, anti-money laundering and eminent domain – will be necessary to increase levels of transparency and respond to heightened expectations.

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