India is now a Transparent Real Estate Market: JLL GRETI 2024

India has made history by entering the transparent tier in JLL's Global Real Estate Transparency Index (GRETI) for the first time. This achievement is attributed to the country's strong financial regulator, new climate risk disclosure guidelines, streamlined building regulations, and digitized land records.

• India is the top global improver in the 2024 GRETI, making significant strides in transaction processes and market fundamentals.
  
  
• The country's transparency has also improved in sustainability and performance measurement, but further implementation is required.
   

MUMBAI, AUGUST 27, 2024: India has made a remarkable leap forward in JLL's Global Real Estate Transparency Index 2024, reaching the transparent tier for the first time. This progress is a result of institutionalization in the commercial market and improved access to diverse real estate datasets. India is leading the global front in enhancing transparency, with expanded data coverage and improved data quality across various property sectors.

Samantak Das, Chief Economist and Head – Research & REIS, India, JLL, stated, "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. Notably, four existing REITs have driven growth in stabilized commercial assets, while standardized market valuation processes and REIT regulations have fostered market-based approaches. 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.”

Karan Singh Sodi, Senior Managing Director – Mumbai MMR & Gujarat, and Head - Alternatives, India, JLL said, “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. 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 USD 4.8 billion recorded in H1 2024.”

India's progress towards transparency is notable:

Tier 1 markets in India have moved to the Transparent tier for the first time, driven by institutionalization, data accessibility improvements, initiative-taking financial regulation, climate risk disclosure guidelines, streamlined building regulations, and digitization of land records. India ranks among the top ten global destinations for transaction process and 12^th 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. 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.
 

India sets the global standard for transparency improvement:

India ranked among the top ten 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.
 

India's journey to the next tier of becoming a highly transparent market on GRETI requires focused efforts:

The adoption of more detailed investment performance indices, enriched data coverage for alternative sectors, comprehensive information on real estate financing, accessibility of public beneficial ownership records and intensifying commitment to ESG including the reporting of nature-related risks, resilient building standards, and biodiversity, and the adoption of green leases are essential for India to move up the Transparency ratings to the next tier. As we enter a new real estate cycle in 2024, countries with deep market understanding, transparency, broad capital markets, and diversification potential will lead the recovery in real estate liquidity.

Access the global report here or deep dive into India insights.