Dubai remains the most transparent market within the MENA region, while Abu Dhabi holds the second spot in Jones Lang LaSalle’s 2012 Global Real Estate Transparency Index. On a global basis, Dubai and Abu Dhabi hold the 47th and 52nd position, respectively.
According to the report, despite transparency levels having improved in 80% of the MENA markets in the past two years, these gains have been relatively modest and real estate markets in the region remains less transparent than other global regions.
The Global Real Estate Transparency Index is broken out into five categories that address factors affecting real estate transparency: performance measurement, market fundamentals, listed vehicles, regulatory and legal environment, transaction process. The Composite Transparency Index is compiled from the weighted scores of the questions on each sub-category. The Composite Transparency Index scores range on a scale from 1.00 to 5.00. A country or market with a perfect 1.00 score has total real estate transparency; a country or market with a 5.00 score has total real estate opacity.
Dubai scores most strongly for its regulatory framework, with the Real Estate Regulatory Authority widely acknowledged to be the market leader within the region. Although Abu Dhabi is one to two years behind Dubai in its property development cycle, the report points out that it has seen a similar improvement in transparency to Dubai since 2010. The quality of market data is better in Abu Dhabi than Dubai in some sectors and the planning system is more regulated (through the Urban Planning Council); advances in these areas have reinforced Abu Dhabi’s position as the second most transparent market in the MENA region.
Jones Lang LaSalle indicated that more needs to be done to increase the level of transparency of the market both in Dubai and across the broader region, particularly with respect to investment performance indicators and data on market fundamentals. The lack of progress on these areas in recent years has contributed to the low level of investment activity and the oversupply that is currently being experienced in some sectors of the market.
Saudi Arabia, Qatar, Kuwait, Oman and Bahrain registered negligible changes in transparency levels since 2012, as the region has remained more focused on the political/social tensions that have followed the Arab Spring and in dealing with higher levels of supply.
In general terms, these markets score better in terms of their regulatory framework and least well in respect of market fundamentals. The Gulf Cooperation Council markets remain positioned at the lower end of the “semi-transparent” category or the upper end of the “low transparency” category.
The Mena Weekly Monitor – Bank Audi