1. THE CHANGING REAL ESTATE MARKET TRANSPARENCY IN THE EUROPEAN REAL ESTATE MARKETS PROFESSOR GRAEME NEWELL University of Western Sydney (g.newell@uws.edu.au) June 2015

2. Significance of real estate transparency Focus: Europe  JLL Real Estate Transparency Index Transparency analysis - JLL- WEF- TI Are European real estate markets becoming more transparent ??? Real estate investment implications PURPOSE OF PAPER

3. GLOBAL INVESTABLE UNIVERSE OF REAL ESTATE Source: CBRE (2011)

4. PLAYERS IN THE GLOBAL REAL ESTATE INVESTMENT LANDSCAPE  Local  International  REITs/PCs  Unlisted RE funds  Private equity funds  Pension funds  Sovereign wealth funds  Insurance companies  High wealth individuals

5. Brookfield : #1 CBRE Global Investors : #2 Blackstone : #3 TIAA Henderson : #4 AXA : #5 UBS : #6 LaSalle : #10 Credit Suisse : #12 Deutsche : #14 M & G : #16 APG : #17 MAJOR REAL ESTATE INVESTMENT MANAGERS

8. CONTEXT: EUROPEAN REAL ESTATE MARKET TRANSPARENCY Increased REITs Increased regulations Increased players @ RE Increased RE information, data Increased RE services Increased RE market sophistication Impact on European RE transparency???

9. PREVIOUS TRANSPARENCY RESEARCH : MARKETS Newell : PRPRJ : 2008 Chin et. al : JREPM : 2006 Brounen et. al : JREPM : 2007 Lieser and Groh : JREPM : 2011 Various market “maturity” papers; e.g: Keogh and D’Arcy; Ke and Sieracki

10. PREVIOUS TRANSPARENCY RESEARCH : LISTED Eichholtz et. al: JREFE: 2011 Newell and Lee: JPIF: 2012 An et. al: REE: 2011 Lecomte and Ooi: JREFE: 2013 Issues: Corporate governance, disclosure

16. Established 1999 2014 = 8th edition; each 2 years 102 markets assessed; tiers; growth Levels of transparency (5) - Highly transparent (9) -Transparent (19) - Semi-transparent (33) - Low transparency (21) - Opaque (20) Real estate transparency index: scored 1.0 – 5.0 - 1.0 = high transparency - 5.0 = low transparency JLL REAL ESTATE TRANSPARENCY INDEX

17. 5 transparency sub-indices: contributions - Performance measurement : 25% - Market fundamentals : 20% - Governance of listed vehicles : 10% - Regulatory and legal : 30% - Transaction process : 15% 13 transparency topics 115 transparency measures - Quantitative (56) - Qualitative (59) - Market data, survey information JLL REAL ESTATE TRANSPARENCY INDEX

18. Developed (21) ; Emerging (81) Americas (20) ; Europe (33) ; Asia-Pacific (21) ; Middle East/ North Africa (16) ; Sub-Sahara Africa (12) JLL REAL ESTATE TRANSPARENCY INDEX

19. TRANSPARENCY SUB-INDICES

20. REAL ESTATE TRANSPARENCY MAP

21. GLOBAL REAL ESTATE TRANSPARENCY INDEX: 2014

22. TRANSPARENCY LEVELS : 2014 Level#% High transparency98.8% Transparent1918.6% Semi-transparent3332.4% Low transparency2120.6% Opaque2019.6% Total102

23. #1 : UK : 1.25 #2 : US : 1.34 #3 : Australia: 1.36 #4 : New Zealand : 1.44 #5 : France : 1.52 #6 : Canada : 1.52 #7 : Netherlands : 1.57 #8 : Ireland : 1.62 #9 : Finland : 1.69 HIGHLY TRANSPARENT REAL ESTATE MARKETS

24. #93 : Pakistan : 4.25 #94 : Belarus : 4.29 #95 : Angola : 4.36 #96 : Honduras : 4.41 #97 : Iraq : 4.45 #98 : Ethiopia : 4.46 #99 : Mongolia : 4.47 #100 : Myanmar : 4.48 #101 : Senegal : 4.52 #102 : Libya : 4.63 OPAQUE REAL ESTATE MARKETS

25. High transparency (5/9): UK (1), France (5), Netherlands (7), Ireland (8), Finland (9) Transparent (13/19): Switzerland (10), Sweden (11), Germany (12), Belgium (15), Denmark (16), Poland (17), Spain (18), Norway (19), Austria (21), Italy (22), Portugal (23), Czech Republic (24), Hungary (25) Semi-transparent (8/33): Romania (30), Israel (31), Slovakia (32), Greece (33), Turkey (34), Russia – Tier 1 (37), Croatia (46), Russia – Tier 2 (59) Low transparency (5/21): Slovenia (62), Serbia (65), Bulgaria (66), Russia – Tier 3 (70), Ukraine (74) Opaque (2/20): Kazakhstan (84), Belarus (94) EUROPEAN REAL ESTATE MARKET TRANSPARENCY: 2014

26. High transparency : UK (1.25), France (1.52), Netherlands (1.57), Ireland (1.62), Finland (1.69) Transparent : Switzerland (1.73), Sweden (1.79), Germany (1.79), Belgium (1.92), Denmark (1.96), Poland (2.02), Spain (2.05), Norway (2.07), Austria (2.10), Italy (2.10), Portugal (2.18), Czech Republic (2.20), Hungary (2.21) Semi-transparent : Romania (2.56), Israel (2.63), Slovakia (2.66), Greece (2.71), Turkey (2.72), Russia – Tier 1 (2.82), Croatia (3.00), Russia – Tier 2 (3.37) Low transparency : Slovenia (3.47), Serbia (3.55), Bulgaria (3.55), Russia – Tier 3 (3.63), Ukraine (3.71) Opaque : Kazakhstan (3.98), Belarus (4.29) EUROPEAN REAL ESTATE MARKET TRANSPARENCY: 2014

27. TRANSPARENCY LEVELS: 2014 CategoryAverage transparency Transparency levels High transparency (1.00 - 1.70) 1.481.25 – 1.69 Transparent (1.71 – 2.45) 2.041.73 – 2.44 Semi-transparent (2.46 – 3.46) 3.002.55 – 3.44 Low transparency (3.47 – 3.97) 3.693.47 – 3.97 Opaque (3.98 – 5.00) 4.273.98 – 4.63

28. TRANSPARENCY ANALYSIS: 2014 CategoryAverage transparency All 3.08 Developed1.75 Emerging 3.42 Americas3.35 Asia-Pacific2.81 Europe2.50 MENA3.81 Sub-Sahara Africa3.72

29. TRANSPARENCY ANALYSIS: 2014 Category Average transparency Spread (Dev. vs Emerg.) Asia-Pacific: Developed Emerging 1.74 3.14 1.40 Europe: Developed Emerging 1.80 3.01 1.21 Americas Developed Emerging 1.43 3.56 2.13

30. #1 : Romania : 2.96 2.56 #2 : Portugal : 2.54 2.18 #3 : Ireland* : 1.96 1.62 #4 : Hungary : 2.53 2.21 #5 : Slovakia : 2.90 2.66 #6 : Serbia : 3.78 3.55 #6 : Belarus : 4.52 4.29 #8 : Israel : 2.85 2.63 #9 : Croatia : 3.16 3.00 #10: Belgium : 2.07 1.92 EUROPE TRANSPARENCY: TOP IMPROVERS: 2012 - 2014 * : improved real estate transparency level

31. #1 : Nigeria #2 : Peru* #2 : Colombia #4 : Qatar* #5 : Zambia #6 : Ghana #7 : Romania #8 : Portugal #9 : Jordan #10 : Ireland* * : improved real estate transparency level GLOBAL TRANSPARENCY : TOP IMPROVERS: 2012 - 2014

32. #1 : Turkey*: 3.75 2.72 #2 : Croatia: 3.42 3.00 #3 : Romania: 2.922.56 #4 : Poland: 2.37 2.02 #5 : Hungary*: 2.50 2.21 #6 : Belarus: 4.53 4.29 #7 : Switzerland: 1.87 1.73 #8 : Czech Republic: 2.32 2.20 #9 : Greece: 2.79 2.71 #10 : Kazakhstan: 4.043.98 * : improved real estate transparency level EUROPE TRANSPARENCY: TOP IMPROVERS : 2008 - 2014

33. #1 : Turkey* #2 : China – Tier 3* #3 : Vietnam #4 : Indonesia* #5 : China – Tier 2 * #6 : China – Tier 1 #7 : Algeria #8 : Taiwan #9 : India – Tier 3* #10 : Brazil*, India – Tier 2, India – Tier 1 * : improved real estate transparency level GLOBAL TRANSPARENCY: TOP IMPROVERS : 2008 - 2014

34. #1 : Romania**: 4.71 2.56 #2 : Turkey**: 4.50 2.72 #3 : Poland*: 3.12 2.02 #4 : Russia – Tier 1* : 3.64 2.82 #5 : Czech Republic*: 2.88 2.20 #6 : Portugal*: 2.85 2.18 #6 : Hungary*: 2.88 2.21 #8 : Italy*: 2.73 2.10 #9 : Greece: 3.31 2.71 #10 : Israel: 3.21 2.63 *,** : improved real estate transparency level EUROPE TRANSPARENCY: TOP IMPROVERS : 2004 - 2014

35. #1 : Romania** #2 : Turkey** #3 : Indonesia* #4 : Brazil** #5 : Abu Dhabi* #6 : Poland* #6 : Saudi Arabia* #8 : India* #9 : Vietnam* #10 : Egypt* #11 : China* *,** : improved real estate transparency level GLOBAL TRANSPARENCY: TOP IMPROVERS : 2004 - 2014

36. 2012 vs 2014 : 96 markets Improved RE transparency - All (96) : 72% - Asia-Pacific (19) : 79% - Europe (33) : 73% - Americas (20) : 55% - MENA (15) : 73% - Sub-Sahara Africa (9) : 89% IS REAL ESTATE TRANSPARENCY IMPROVING ?

37. 2004 vs 2014 USE ALL JLL MARKETS EACH YEAR ? ………. NO “ALL YEARS” MARKETS ONLY : 49 markets - Asia-Pacific* : 14- Europe* : 23 - Americas* : 8- MENA : 3 - Sub-Sahara Africa : 1 IS REAL ESTATE TRANSPARENCY IMPROVING ?

38. Region 200420062008201020122014 All2.812.582.402.322.452.37 Asia-Pacific2.892.692.662.612.512.43 Europe2.342.262.001.852.142.05 Americas3.062.832.752.732.832.76 Europe improving 

39. WEF Global Competitiveness Index - 148 countries - Rated 1 to 7 Transparency International Corruption Perception Index - 175 countries - Rated 1 to 100 RELATED MEASURES

42. REAL ESTATE TRANSPARENCY AND CORRUPTION CategoryR2R2 All59.3% Americas44.9% Asia-Pacific68.9% Europe72.3% MENA74.0% Sub-Sahara Africa72.3%

43. Significance of “over – achievers” and “under – achievers”

44. REAL ESTATE TRANSPARENCY AND GLOBAL COMPETITIVENESS CategoryR2R2 All64.0% Americas77.4% Asia-Pacific70.6% Europe54.8% MENA59.3% Sub-Sahara Africa22.1%

45. Increased real estate transparency  Europe  Investor landscape  Importance of real estate transparency for RE investors’ decision-making Future improvements in real estate transparency : 2016 (?) - Switzerland ?- Sweden ?- Germany ? - Romania?- Israel?- Slovakia ? - Slovenia ? - Serbia ? - Bulgaria ? REAL ESTATE INVESTMENT IMPLICATIONS

46. Regional analyses : Asia – Pacific , Americas Transparency drivers : panel analysis JLL real estate environmental sustainability transparency index : analysis - 2014- 33 countries FUTURE TRANSPARENCY RESEARCH

47. REAL ESTATE ENVIRONMENTAL SUSTAINABILITY TRANSPARENCY INDEX 2014 Source: JLL (2014)

48. ACKNOWLEDGEMENT JLL 