TRANSPARENCY, DIGITIZATION, DECARBONIZATION

BY REGINA LIM

We have identified four common themes that are driving transparency improvements across most markets:

•

Steady improvements in sustainability and resilience measures, as ESG considerations come into the mainstream;

The rise of proptech adoption, ‘big data’, and digital tools across the industry;

• Enhanced tracking of new alternatives sectors; and

• A rapidly changing legal and regulatory environment.

•

Singapore stands as Asia’s most transparent market. It is a regional hub for proptech companies, ranking in the top ten for proptech adoption, falling second in the Asia Pacific after South Korea. Its proptech ecosystem includes startups and well-established operators in a range of verticals including virtual and augmented reality, artificial intelligence, online listings and transactions, and property management and smart buildings. Singapore has also emerged as a leader on sustainability, moving into the top six for the first time by its strengths in energy and water efficiency standards and BCA Green Mark initiatives.

Singapore can improve its transparency in three key areas to break into the top ten globally. Firstly, for transaction process, Singapore’s rank is held back primarily by the relatively low visibility of service charges for tenants and lack of tenant’s ability to audit and negotiate any discrepancies in landlord accounts. Secondly, our ranking for legal and regulatory frameworks is affected by limited information on real estate financing collected by the central bank, including data on the total amount of commercial real estate debt, new originations and delinquency rates, typical loan-to-value ratios, or lending margins. Beneficial ownership information is also not as readily available as in some other markets. Lastly, improvement in the alignment of interest and more disclosures for our listed vehicles will also bring up our score.

Why is transparency important? Simply put, the higher the transparency, the higher the investment. They create a virtuous feedback loop as investors push for higher standards. In turn, this encourages higher levels of real estate investment. Institutional investors are faced with requirements of ever-rising levels of disclosure. They gravitate to highly transparent markets, where risk can be better managed. Singapore’s push to join the ranks of highly transparent countries will, in turn, help it attract greater investment.

Regina Lim is Head of Capital Markets Research, APAC at JLL.