KSA improves real estate transparency

Jamil Ghaznawi, national director and country head of JLL Saudi Arabia.
Updated 29 June 2016

KSA improves real estate transparency

JEDDAH: Saudi Arabia has moved up the rankings to finish in the ‘semi-transparent’ category for the first time in the JLL and LaSalle Investment Management’s 2016 Global Real Estate Transparency Index (GRETI).
Strong advances over the past two years have seen Saudi Arabia (63rd) and Egypt (65th) move into the dynamic ‘semi-transparent’ group, which is largely dominated by large emerging markets, including the BRIC countries (Brazil, Russia, India and China) and all four of the fast-growing MIST economies (Mexico, Indonesia, South Korea and Turkey).
Dubai (48th) has retained its position as the most transparent real estate market in the Middle East and North Africa (MENA) region, with Abu Dhabi (59th) following closely behind, according to the report.
“This is very good news for Saudi Arabia,” said Jamil Ghaznawi, national director and country head of JLL Saudi Arabia.
“Moving into this category for the first time shows the advances the Kingdom is making and is an indication of the focus the country has on strengthening corporate governance, transparency and market data.”
The 10 countries identified as ‘highly transparent’ by GRETI account for 75 percent of global investment into commercial real estate, highlighting the extent to which transparency drives real estate investment decisions.
A number of key factors are driving progress and frame the broader issues raised by both high and low transparency:
l Capital allocations to real estate are growing. JLL forecasts that within the next decade in excess of $1 trillion will be targeting the sector, compared to $700 billion now. This growth means investors are demanding further improvements in real estate transparency, expecting standards in real estate to be on a par with other asset classes.
l There is a growing recognition that transparent real estate practices play a significant role in capital formation, municipal finance, and as a foundation to improve the quality of life in many communities. This foundation includes security of property ownership, safe housing and workplaces and the ability to trust agents to act honestly and professionally.
l Technology is both a driver of the digitization of all kinds of real estate data and also an enabler in disseminating and analyzing this data; improvements in data capture techniques are allowing a more granular and timely assessment of real estate markets.
The formation of real estate committees in Saudi Arabia’s chambers of commerce has highlighted the issue of low transparency in the market and encouraged more action toward addressing the issue.
As a result, there has been some mild improvement in ‘open data’ platforms such as registering property transactions with the Ministry of Justice which is then shared publicly on its website.
“Saudi Arabia is now positioned in a very dynamic tier, which is considered the most improved transparency group, and a category which is seeing growing middle classes mobilizing against corrupt practices,” added Ghaznawi.
The JLL report highlights a number of factors which will influence real estate transparency in the next several years:
l Revelations of the Panama Papers in early 2016 have led to mounting pressures for greater real estate transparency and put the fight against corruption decisively on the international political agenda.
l New data capture techniques get adopted, the pressure mounts for real estate to raise the bar and achieve even higher levels of transparency.
l The mounting intolerance of corruption within the world’s growing middle classes will force the pace of change, especially among the Semi-Transparent countries, and social media will help people mobilize around this issue.
l Technology will continue to advance and will allow some countries to leapfrog the traditional route to transparency; we are already seeing this happen in places like Kenya, Ghana and Ecuador.
l There will be greater emphasis on regulatory reform, but also on enforcement, particularly in semi-transparent markets where the greatest disconnect currently exists.

Merkel seeks united front with China amid Trump trade fears

Updated 22 May 2018

Merkel seeks united front with China amid Trump trade fears

  • Merkel seeks common ground to ward off trade war
  • Plans complicated by US policy moves

Chancellor Angela Merkel visits China on Thursday, seeking to close ranks with the world’s biggest exporting nation as US President Donald Trump shakes up explosive issues from trade to Iran’s nuclear deal.

Finding a common strategy to ward off a trade war and keep markets open will be Merkel’s priority when she meets with President Xi Jinping, as Washington brandishes the threat of imposing punitive tariffs on aluminum and steel imports.

“Both countries are in agreement that open markets and rules-based world trade are necessary. That’s the main focus of this trip,” Merkel’s spokeswoman Martina Fietz said in Berlin on Friday.

But closing ranks with Beijing against Washington risks being complicated by Saturday’s deal between China and the US to hold off tit-for-tat trade measures.

China’s economic health can only benefit Germany as the Asian giant is a big buyer of Made in Germany. But a deal between the US and China effectively leaves Berlin as the main target of Trump’s campaign against foreign imports that he claims harm US national security.

The US leader had already singled Germany out for criticism, saying it had “taken advantage” of the US by spending less than Washington on NATO.

Underlining what is at stake, French Economy Minister Bruno Le Maire warned the US-China deal may come “at the expense of Europe if Europe is not capable of showing a firm hand.”

Nevertheless, Merkel can look to her carefully nurtured relationship with China over her 12 years as chancellor.

No Western leader has visited Beijing as often as Merkel, who will be undertaking her eleventh trip to the country.

In China, she is viewed not only as the main point of contact for Europe, but, crucially, also as a reliable interlocutor — an antithesis of the mercurial Trump.

Devoting her weekly podcast to her visit, Merkel stressed that Beijing and Berlin “are both committed to the rules of the WTO” (World Trade Organization) and want to “strengthen multilateralism.”

But she also underlined that she will press home Germany’s longstanding quest for reciprocity in market access as well as the respect of intellectual property.

Ahead of her visit, Beijing fired off a rare salvo of criticism.

China’s envoy to Germany, Shi Mingde, pointed to a “protectionist trend in Germany,” as he complained about toughened rules protecting German companies from foreign takeovers.

Only 0.3 percent of foreign investors in Germany stem from China while German firms have put in €80 billion in the Asian giant over the last three decades, he told Stuttgarter Nachrichten.

“Economic exchange cannot work as a one-way street,” he warned.

Meanwhile, looming over the battle on the trade front is another equally thorny issue — the historic Iran nuclear deal, which risks falling apart after Trump pulled the US out.

Tehran has demanded that Europe keeps the deal going by continuing economic cooperation, but the US has warned European firms of sanctions if they fail to pull out of Iran.

Merkel “hopes that China can help save the atomic deal that the US has unilaterally ditched,” said Die Welt daily.

“Because only the giant emerging economy can buy enough raw materials from Iran to give the Mullah regime an incentive to at least officially continue to not build a nuclear weapon.”