India Excerpts and Perspectives - Global Real Estate Transparency Index 2020

Tue, 06/29/2021 - 00:00

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The 2020 Index is launched at a time of massive economic and societal disruption. As governments, businesses and communities grapple with the impacts of COVID-19, the pandemic has brought the issues of transparency and trust into even sharper focus. During times of such uncertainty, the need for transparent processes and accurate, timely data becomes more important than ever. The 2020 Index reveals that transparency is progressing across most countries and territories, but overall improvement is the weakest since the period directly following the Global Financial Crisis. While 70% of territories have registered an improvement in score, many jurisdictions are struggling to maintain progress. It is imperative now that real estate transparency takes a leap with growing pressure from investors, businesses and consumers as it competes with other asset classes. Drivers of real estate transparency improvement - Steady improvement in sustainability transparency Technology, proptech and transparency Transparency deepens in alternative property types. India has recorded the region’s biggest improvement, with gains observed across several areas. The key reasons attributable to the significant gains achieved are as below: While India amongst other countries such as Ireland, Germany, Philippines and Belgium have made significant progress in terms of strengthening the regulatory infrastructure through enactment of new reforms and policies, a lot is yet desired on the enforcement front. • The much-anticipated launch of the country’s first REIT took place in 2019 and this helped attract a greater level of investor interest, particularly from foreign institutional investors, to the real estate sector. The heightened investor demands have further necessitated the need for greater market intelligence to evaluate and benchmark investments. This listing heralds the institutionalization of real estate assets and indicates increased maturity of real estate markets. While the launch of REIT symbolizes that markets have definitely become more professional and transparent, this new investment vehicle will in turn, ensure further transparency and maturity. India’s first REIT was oversubscribed to the tune of 2.5x times, despite uncertainty in primary and secondary markets. The issue saw participation from global funds and investors indicating increasing confidence in the Indian real estate sector. • The transaction process has also made positive progress in becoming somewhat more transparent, with a higher level of activity by foreign occupiers and investors, coupled with the Indian government tightening up on its anti-money laundering law in 2019. The government has introduced amendments to the erstwhile Prevention of Money Laundering Act, 2002 (PMLA). India has also made rapid strides on ‘Sustainability Transparency’ through the active role of organizations like the Indian Green Building Council (IGBC) and Green Rating for Integrated Habitat Assessment (GRIHA).
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