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Proptech sector boosts Singapore to 1st rank in Asia in global real estate transparency index

Ravi Philemon

Proptech sector boosted Singapore to 1st rank in Asia in JLL’s Global Real Estate Transparency Index (GRETI) 2018. The 10th edition of GRETI contains the most comprehensive country comparisons of data availability, governance, transaction processes, property rights and the regulatory/legal environment around the world.

The proptech sector is all set to not only impact, but also disrupt traditional business operating models in real estate. Proptech (short for Property Technology) is a term which refers to the myriad of startups and new technologies cropping up in response to decades of inefficiencies and antiquated processes in the real estate industry.

The GRETI 2018 comes at a time when the importance of transparency in aiding investment activity continues to be underscored. The clear relationship between an open and transparent market and higher investment activity is one which has been thoroughly investigated and confirmed – with the ten highly transparent countries accounting for 75 percent of all investment volumes.

proptech sector

Image credit: JLL

As countries make progress in improving transparency, investors and occupiers are demanding more accurate, frequent and granular market data and performance measurement. Even the most transparent markets, such as the UK, U.S. and Australia, are striving to make improvements in the way real estate data is collected and reported as part of the effort to raise transparency standards.

Singapore, which is one Asia Pacific’s mature economies along with Hong Kong and Japan, have a significant opportunity to advance real estate transparency through proptech sector adoption. These leading investment destinations are on the cusp of the ‘Highly Transparent’ tier, according to JLL’s Global Real Estate Transparency Index (GRETI) 2018, and are poised to join the top group, which includes countries such as Australia, New Zealand, the U.S. and the UK.

“The proptech sector is growing fast, especially in Asia, though adoption is still relatively low compared to North America and Europe,” said Jeremy Kelly, Director, Global Research, JLL. “We believe the Singapore government could play a key role in promoting proptech adoption through open-data initiatives and the pioneering of blockchain technology.”

“The potential benefits of proptech are certainly not limited to transparent markets,” he added. “It could also help improve transparency in semi-transparent markets like China, which has a vibrant proptech sector, and where traditional data sources are lacking.”

Proptech to impact and disrupt traditional business operating models in real estate

Another key area of potential improvement for both Singapore is in sustainability transparency. Strengthening energy efficiency requirements, carbon reporting and stricter energy consumption disclosure will help them make the step up; and in this regard, they could emulate Japan, which has become a global leader in sustainability transparency.

“Singapore has come in within the top-20 in the areas of Performance Measurement, Market Fundamentals and Governance of Corporate Vehicles, but is out of the top-20 for the remaining areas of Regulatory & Legal, Transaction Process and Sustainability,” said Ms Tay Huey Ying, Head of Research & Consultancy, JLL Singapore.

“To advance, efforts could be geared towards improving financial transparency in real estate debt and equity holdings, as well as elevating transparency around the occupier services aspects of the transaction process. There is also opportunity to enhance transparency of sustainability frameworks and practices, perhaps through stricter energy consumption disclosure, for example. These could form some of the proptech focus for the recently launched real estate industry transformation map.”

“Asia Pacific as a whole has made the strongest transparency improvements since 2016 compared to the other four regions covered by the study,” says Dr Megan Walters, Head of Research, Asia Pacific at JLL. “This is supported by developments in Myanmar, Macau, Thailand, India and South Korea.” Singapore was ranked 3rd in the Asia Pacific region, behind Australia and New Zealand, and 12th globally.

Myanmar registered the most significant improvement globally, moving up 15 places to join the ‘Low Transparency’ group. According to the report, the country continues to open up its economy as increasing investor demand translates into greater market intelligence.

For the first time, South Korea has nudged into the ‘Transparent’ tier, with heightened investor activity pushing improvements in data coverage and a new carbon emissions trading scheme.

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Dr Walters added: “It’s also worth noting that India’s reform-driven government has made significant progress in its agenda to improve transparency and reduce corruption. The Real Estate Regulatory Act, which was passed in 2016 and implemented in 2017, is a regional highlight. The country joins China, Indonesia and Thailand at the top end of the ‘Semi-Transparent’ tier.”

“Looking to Southeast Asia, Thailand and Vietnam are both moving towards the cusp of the next tier of transparency. Thailand’s improvement is underpinned by greater regulatory enforcement, the planned introduction of a new property tax system and steps to digitise its land registry. Macau has also advanced with a focus on anti-money laundering, resulting in increased monitoring by financial regulators,” said Dr Walters.

Progress has been made on sustainability transparency across the region. South Korea introduced a carbon emissions trading scheme; meanwhile Vietnam established its own market-specific Green Building Certification System several years ago and is implementing mandatory minimum energy efficiency standards for all new buildings and major retrofits.

Improvements in transparency in some Asian countries have been accompanied by record-breaking commercial real estate investment volumes. In 2017, real estate transactions in the Asia Pacific region reached a record US$149 billion.

The Index is updated every two years and has been charting the evolution of real estate transparency across the globe for 20 years. The 2018 Index covers 100 countries and 158 city markets, and the number of individual factors covered has increased by 36% to 186 factors.

Mr Paul Ho, the chief mortgage consultant at icompareloan.com said that proptech sector disrupting traditional business operating models in real estate here is inevitable. In keeping up with proptech, property agents “must upgrade or die”, said Mr Ho.

He noted that many property agencies struggle to keep up with all the regulatory changes in the industry, as well as the changing financial calculations for acquiring a property. He urged property agents to master the basics in property financing, refinancing, taxation and CPF.

Mr Ho said that iCompareLoan.com runs a full 2 – 3 days course on how property agents can produce such reports for their customers. He added that the trademarked course teaches Property Agents how to generate complicated Financial calculations using –  Home Loan Report (TM) – in 3 mins flat. This helps Property agents to close deals faster and serve customers more professionally.

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