India now a transparent real estate market, improvement in global rankings set to attract major investments
Strides in transaction processes has helped India's Tier 1 markets move to the transparent tier, improvement in global rankings set to attract major investments
Increasing institutional participation, along with a push for transparency, has led to the adoption of best industry practices in India's commercial real estate market. This has led to the country's Tier 1 markets move to the transparent tier for the first time in JLL's Global Real Estate Transparency Index.
Institutionalization in the commercial market and improved access to diverse real estate datasets is expected to attract capital inflows and boost India's standing among global investors. Markets with high transparency ratings garner 80% of global capital flows, the Transparency Index noted.
India has moved to 31st rank under the transparent tier with a composite score of 2.44 in GRETI 2024. The top slot under the High Tier has been taken by United Kingdom (1.24) and France (1.26). Singapore has marked its entry into the Highly Transparent group this year.
Top 13 countries are categorised as highly transparent, while those in the 14th position to 35th are termed as transparent. Countries ranked 36th to 50th are termed as semi-transparent.
The Index showed that a more proactive financial regulatory, new climate risk disclosure guidelines, streamlined building regulations and digitised land records have contributed to India entering the transparent tier for the first time. It was ranked 36th under the semi-transparent tier in 2022.
It also showed that India is the only country in Asia that features in the top 10 of the ‘Transaction process’ parameter. Greater share of single ownership assets in office leasing, organised transaction process, regulatory changes such as RERA have led to India scoring high on this parameter.
JLL and LaSalle's Global Real Estate Transparency Index (GRETI) is published every two years, is a benchmark of market transparency for property investors, developers and corporate occupiers. The index evaluates the legal and regulatory environment, enforcement mechanisms and data availability and provides a global comparison of operating conditions across a wide range of geographies. This year's 13th edition includes 256 individual indicators to assess market transparency across 89 countries and territories and 151 cities globally.
India ranks among the top 10 global destinations for transaction process and 12th for market fundamentals. The country's improvement is fueled by institutional participation, improved access to asset-level information, and reduced information asymmetry. Regulatory and legal landscape improvements have been significant, but efficient dispute resolution mechanisms need further enhancement, it said.
India ranked among the top 10 global improvers and was the most improved in APAC in the 2022 rankings. This time, the sustained impact of various measures and market evolution has seen India jump to the top position globally in terms of improvement shown between two GRETI reports the rise in institutional participation, adoption of best industry practices, growth of the REIT market, regulatory enhancements, digital land registry implementation, and green initiatives are the contributing factors, it noted.
The performance and growth of the REIT market have significantly contributed to transparency, with more progress expected in the future. Sustainability is a priority, with more green-certified office stock and climate risk disclosures becoming part of ECBC, it said.
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“With India's office REIT market comprising 12% of Grade A office stock, there is ample room for the listed vehicle market to expand. Regulatory enhancements such as RERA and the Insolvency and Bankruptcy Code have improved investor protection, while digital land registry records and strict monitoring by RBI and SEBI have created a robust regulatory landscape. Additionally, India's focus on sustainable real estate has seen a surge in WELL certification, reaching 70 million sq. ft in 2023, a 40% increase from 2021, further highlighting the commitment to climate risk mitigation,” said Samantak Das, Chief Economist and Head – Research & REIS, India, JLL.
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“India's ascent to the transparent tier in JLL’s Global Real Estate Transparency Index underscores the industry's cohesive efforts and governmental backing. This achievement is poised to attract capital inflows and boost India's standing among global investors. Markets with high transparency ratings garner 80% of global capital flows,” said Karan Singh Sodi, senior managing director – Mumbai MMR and Gujarat, and Head - Alternatives, India, JLL.
Scope for improvement
However, JLL identifies room for improvement, particularly in establishing efficient dispute resolution mechanisms. Despite a robust regulatory evolution, the report suggests that enhancing transparency further requires collective action to democratize data access, bolster institutional participation in public markets, and commit to sustainability goals.
“These measures are critical as India anticipates near-record capital inflows into real estate, with $4.8 billion recorded in H1 2024,” he added.
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