Transparency: Tracking City-Level Market Fundamentals

JLL’s recently released Global Real Estate Transparency Index evaluates real estate transparency across 109 markets. What role does the city-level dimension play in the transparency story?

Investors are increasingly shifting the focus of their portfolio strategies from countries to cities. Access to robust, reliable and deep data is a key component of real estate transparency and investors’ decision making, but availability can vary within, as well as between, national markets. It begs the question – is the same level of market information available in London and Birmingham; New York and Seattle; or Shanghai and Chengdu?

For the latest Global Real Estate Transparency Index, we took a look at a wider range of cities and investigated the availability of market fundamentals data beyond the prime markets covered in the main body of the report. We looked at an additional 28 secondary and tertiary markets across 21 countries – from Montreal and Monterrey, to Busan and Surabaya.

The World’s Most Data-Rich Cities

Toronto (1st) leads the list of cities with best market data availability and coverage, followed by Auckland (2nd) and New York (3rd). Most leading cities are, unsurprisingly, located in the ‘Highly Transparent’ and most liquid markets. Time series data going back twenty or thirty years; coverage of multiple sectors; extensive deal databases covering the whole metropolitan area – these are the hallmarks of a ‘Highly Transparent’ city market.

The high positions of Auckland (2nd), Austin (11th), Eindhoven (17th) and Birmingham (20th) suggest some competitive advantage for smaller cities with more scalable markets that are much easier to monitor. By contrast, the poor scores of Seoul (48th) and Tokyo (58th) highlight the difficulties of obtaining comprehensive coverage in some of the world’s megacities and largest real estate markets.

Transparency blog

 

Selected Emerging Cities Outperform…

But it’s not just the ‘Highly Transparent’ markets that have strong data availability, with cities like Warsaw (15th) and Shanghai (23rd) possessing extensive data coverage. It is no surprise that these cities represent two of the most heavily invested in emerging cities – though whether improvements in data drove investment, or vice versa, can be debated.

Meanwhile, the Southeast Asian capitals of Kuala Lumpur (25th), Jakarta (34th) and Bangkok (36th) have transparency of market fundamentals that exceed their overall transparency scores, in part reflecting more recent data initiatives by international firms such as JLL.

…and Some ‘Transparent’ Cities Show Weaknesses

On the other hand, the likes of Oslo (41st), Tokyo (58th), Geneva (61st), Vienna (62nd), Zurich (75th) and Osaka (84th) have relatively poor data availability. These markets have historically tended to be domestically-driven and self-contained, and have had fewer external pressures to significantly improve data coverage. Improving market fundamentals data transparency will help push these ‘Transparent’ markets towards the ‘Highly Transparent’ tier.

Varied Consistency within Countries

‘Highly Transparent’ markets, due to their long history of transparency, seem to have deep and consistent coverage beyond their primary cities. In the United States, Australia, the UK, Netherlands and Canada, excellent data coverage is available in secondary, even tertiary, cities.

Yet, in France, Germany, Italy and Spain, the same cannot be said, with coverage dropping off outside of the major cities. In the larger emerging economies, beyond the international cities of Shanghai and Moscow, data availability rapidly drops off.

The Importance of Cities

Looking at a snapshot of transparency across a wider range of cities reminds us that country-level analyses can obscure the complex world of cities. Data quality, coverage and availability vary both between and within countries, and remain a key differentiator in the attractiveness of different locations.

This analysis has looked at just one of five sub-indices – market fundamentals – but raises the question as to what the index may look like if this approach was taken across the whole range of sub-indices. Already the index takes a multi-tiered, multi-city approach to Brazil, Russia, India and China, and reveals substantial differences between different city tiers. Would this approach give a new, more complex view of global real estate transparency?

To find out more about this research and to see where individual markets rank visit our website: www.jll.com/transparency

 

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