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News Release

Ireland declared a ‘bright spot’ in latest global property market survey

Number 7 ranking puts Ireland in Tier 1 for first time ever; 81 property markets were examined in 2010 Transparency Index designed to help investors anticipate the challenge of operating in overseas territories


Dublin, Thursday 24 June 2010 – Ireland has been declared a ‘bright spot’ along with Germany and Denmark in terms of improved levels of property market transparency, according to the 2010 Global Real Estate Transparency Index from Jones Lang LaSalle and LaSalle Investment Management.
 
The Index which has been updated every two years since 1999, ranks Ireland in the top seven of the world’s most transparent property markets. In addition, for the first time ever, Ireland has now moved into the Tier 1 level of the Index. Australia, now ranked the world’s most transparent market, is followed by Canada, the UK, New Zealand, Sweden, the US, Ireland, France, the Netherlands, Germany, Belgium and Denmark.  In contrast, Japan now ranks 26th globally and significantly below other major advanced economies.
 
 “Ireland’s dramatic rise from tenth place in Tier 2 in 2008 to seventh place in Tier 1 in 2010 is all the more remarkable when you consider that improvements in property transparency across the 81 markets covered by the Index have halved since 2008. The 2010 Index suggests that the recent turmoil in global financial, economic and property markets impacted on market behaviour, resulting in property players focusing on survival rather than on market advancement”, John Moran, Managing Director, Jones Lang LaSalle in Ireland commented following publication of the Index.
 
“In many developed countries, the recapitalisation of the property market is being helped by the free flow of information and the protection of property rights. In contrast, the 2010 Index shows that debt transparency is generally lagging behind property transparency in many developed countries. The exceptions to that are Ireland, Australia and Canada, which recorded the highest scores for consistent and thorough commercial property debt regulation. In the future, regulators will rightfully emphasise the importance of greater disclosure in order to gauge the creditworthiness of commercial property and to evaluate the sector’s ability to carry debt. We expect that a new focus on private market-led transparency in the property debt markets will be one of the main reforms to come out of the global credit crisis”, Moran added.
  
Commenting on the impact of transparency on cities’ competitiveness, Dr Clare Eriksson, Head of Research with Jones Lang LaSalle in Ireland, said that transparency remains one of the key influencing factors driving investors to move across borders in search of higher risk-adjusted returns.
“The massive financial crises of the last few years and the movement of capital and corporations around the world accentuate the need for reliable information about markets. Transparency is an extremely important feature in investors’ decision-making, and it adds to a city's attractiveness as an investment or corporate location.  Jones Lang LaSalle’s research reveals that in an increasing number of cities, regulations and laws are being enacted to give clarity to the markets. For example, in Abu Dhabi, plans have been announced to establish a regulator for the property market similar to RERA in Dubai. Similarly, in Brazil, all municipalities must now adopt an approved urban master plan helping to provide solid context for land use futures.”
 
The survey – the only index to address the transparency of commercial property – is specifically designed to help investors and occupiers anticipate the challenges of transacting, owning or operating in a foreign market. The 2010 Index shows that Turkey tops the league table of transparency improvers, while China, India, Poland, Portugal, Romania, Greece and Hungary all recorded progress since the last Index was published two years ago.
 
Declines in transparency were recorded in countries such as Pakistan, Kuwait, Venezuela, Dubai and Bahrain.  Although the levels of decline in these countries was modest, the reversal of past gains is notable.
 
Europe is a mixed picture of transparency. The traditional leading pack – Australia, New Zealand, the United Kingdom (third position), the United States and Canada – have now been caught up by a number of European markets including Ireland, Sweden and France.
 
Turkey and some Central and Eastern European (CEE) countries have shown good progress as their markets have become more internationally traded and their regulatory and legal environments become aligned with core EU economies. In fact, the more advanced CEE countries of Poland, the Czech Republic and Hungary have now caught up with the laggards in Western Europe, such as Italy, which has struggled to improve property transparency. However, in Russia and the Ukraine, transparency improvements stalled in 2010, a reflection of the severity of the property downturn in both markets and a sharp contrast to the strong improvements registered in 2008.
 
The Americas markets have shown more modest changes in transparency. Improvements have been static in the region’s two most transparent markets, the United States and Canada, as well as in most of the Latin American markets. Canada and the United States have remained the region’s only two Highly-Transparent (Tier 1) countries, and rank among the world’s most transparent markets.
John Moran concluded: “The last two years demonstrate how high levels of transparency do not eliminate risks for investors or occupiers. Free flows of information and consistent enforcement of local property laws did not prevent values from falling or produce better access to credit at a time when liquidity dried up. The real value of transparency, though, should become evident when comparing how quickly markets are able to open up again after a financial crisis. The recapitalisation of real estate in many countries is being helped by the free flow of information and the protection of property rights.”