GRETI – Technical Note
The Transparency Survey
The Global Real Estate Transparency Index (GRETI) is compiled from a Survey of the global business network of Jones Lang LaSalle and LaSalle Investment Management. The Survey has been conducted since 1999, and is updated every two years. GRETI 2010 represents the sixth update.
The 2010 Survey consists of 20 major questions that set out to objectively determine relative real estate transparency across the world. The Survey is distributed to the global network of business leaders and researchers across Jones Lang LaSalle and LaSalle Investment Management, who work together to answer the survey for their respective country. Regional coordinators act as point persons to ensure objectivity and rigour. A global benchmarking process is overlaid to ensure that the questions are being interpreted consistently by all participants. Accounting, finance and legal experts are consulted on some technical questions to supplement the collective real estate knowledge.
The Survey is broken out into five major categories that address unique and separate factors affecting real estate transparency across the globe. The categories are:
- Performance Measurement
- Market Fundamentals
- Listed Vehicles
- Regulatory and Legal Environment
- Transaction Process
Survey questions have been developed for each category to capture the experience and perceptions of senior Jones Lang LaSalle or LaSalle Investment Management personnel working in each country. The 20 questions have a five choice answer (1-5); answering ‘1’ for a question means the market is Highly-Transparent for that question; an answer of ‘5’ corresponds to an Opaque market. Unless specified, the Survey is based on conditions in the principal city of each country. The exceptions are in India, China and Russia, where the Survey differentiates between primary, secondary and tertiary cities.
Methodology for Calculating the Transparency Index
The Composite Transparency Index is compiled from the weighted scores of the 20 major questions. 10 of the 20 questions have more than the one part. Of these 10, five questions ask the same question from both the perspective of domestic and non-domestic owners and corporate occupiers. No single major question is given more than a 5.0% weighting of the Composite Transparency Index. Sub-Index scores for each of the five Transparency categories are calculated from the average scores of the relevant questions.
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. Countries/markets are assigned to one of five transparency tiers as follows:
- Tier 1: Highly Transparent Total Composite Score: 1.00–1.49
- Tier 2: Transparent Total Composite Score: 1.50–2.49
- Tier 3: Semi-Transparent Total Composite Score: 2.50–3.49
- Tier 4: Low-Transparency Total Composite Score: 3.50–4.49
- Tier 5: Opaque Total Composite Score: 4.50–5.00
GRETI Time Series
Since its inception in 1999, the Transparency Index has evolved and been refined to reflect the changing demand of cross-border investors and corporate occupiers. Specifically:
- In 2008, new questions were added to embrace the perspective of corporate occupiers relating to occupier service charges and facilities management. Questions concerning debt financing and the frequency and credibility of property valuations were also added.
- In 2010, the existing questions regarding debt financing have been substantially revised to more appropriately reflect the key issues of debt transparency, relating to the availability of information on commercial real estate debt and the role of bank regulators in monitoring commercial real estate lending. There have also been revisions to questions on the transaction process covering pre-sale information and the bidding and negotiating process.
In presenting and mapping out the historic time-series of GRETI, we have used the Transparency Index scores derived from the questions posed at that year’s Survey, rather than attempting to standardise the series since 1999. As a consequence, the historic change in Transparency Index scores between Surveys may not truly reflect the actual change in transparency conditions.
Composite v Standardised Indices
The Composite Index is compiled from the weighted scores of the 20 major questions, and is used to compare and contrast real estate transparency conditions in 2010. However, recognising that recent changes in transparency scores are an important feature of understanding market conditions, we have provided a Standardised Index for both 2008 and 2010 in order to facilitate comparisons. The Standardised Transparency Index strips out the scores relating to debt transparency, and the weighting of the debt questions has been reallocated to other questions.